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The Business Challenges of Globalization

October 18, 2017 Leave a comment


 

Taken from Creating New Superstars by Carol and Ennio Fatuzzo (1)

 

IMG_0065In spite of the chaotic world around us, the risks involved in playing some types of games haven’t changed. For example, playing roulette, whether it is Russian roulette or the more civilized version in Monaco, is the same as it always has been. However, in today’s fast paced environment, the “game” of business has become a much more dangerous venture. Developing a new business or expanding an existing one involves a whole new dimension of risk due to many developing “agents of change.” Globalization, including the rapidly expanding global economy and the consequences of global competition, is one of the most powerful influences.

On a positive note, globalization significantly increases potential market sizes, creating extremely attractive and visible business growth opportunities. Just think about the worldwide explosion of smartphones, or the rapid expansion of wine import and export businesses, or the huge potential for new cancer drugs. Even water is now a global opportunity, as the recent history of San Pellegrino shows. Twenty years ago it was a relatively unknown Italian mineral water. Today, it is distributed worldwide to more than 120 countries on five continents. (2) But with size comes different challenges.

Highly visible, big growth opportunities create new global competitors that were never before threats―Korean car manufacturers, Indian software developers, Chinese computer and internet-based companies, and more. The bottom line: More companies around the world are likely to be pursuing the same specific growth opportunity at the same time. Therefore, the risk of failure for any single company is high—significantly higher than in the past.

Looking at the situation another way, in the past a company had a reasonable possibility of being the only one pursuing a good new opportunity—one that was unrecognized by others. And that resulted in many single-company big successes: Kodak and silver halide film, IBM and computers, Motorola and cell phones, RCA and consumer electronics, and more. But in today’s dynamic global economy, due to the growing technical sophistication of global competitors and the faster pace of everything, there will not be many “lone pioneers.”

And there is another kind of challenge. Pursuing larger global opportunities requires greater resources than what are needed to be successful with smaller, “local” opportunities. This results in the financial risk being much higher, sometimes high enough to place an entire company in jeopardy. If a global project fails, for whatever reason, that failure is extremely costly. Kodak having to declare Chapter 11 bankruptcy as a result of its late and unsuccessful attempt to become a major global player in digital photography is a good example of today’s high cost of failure. (3)

But the risk of large financial investments isn’t the only challenge involving resources. In the past, under-resourcing a project or using resources ineffectively did not matter as much as it does today. Why? Any such “mistakes” will slow down progress; and in a faster paced and more competitive business world, this decreased speed will almost certainly create a significant competitive disadvantage. This, in turn, greatly increases the probability of a costly failure in the marketplace.

And finally, because of today’s need for speed, failure is not only is connected to making wrong or bad decisions. It frequently is the result of making good decisions too slowly. Kodak’s eventual management decision to pursue digital photography was a good one, but the delay in making that decision was a major contributor to the effort’s failure. This delay gave global competitors an insurmountable lead.

Bottom line, in a highly competitive, global business environment that is rapidly changing, a slow decision will almost always be a wrong decision; and being late to the market almost always assures failure. Just as in nature, a slow company will become prey for the faster, more aggressive one.

 


1. Ennio Fatuzzo and Carol L. Fatuzzo, Creating New Superstars: a Guide to Businesses that Soar above the Sea of Normality (USA: September 2016). Available from amazon.com.

2. S. Pellegrino Company Website, accessed October 18, 2017, https://www.sanpellegrino.com/us/en/company-intl-41.

3. Rick Newman, “Four Lessons from Kodak’s Comedown,” U.S. News online, January 19, 2012, http://www.usnews.com/news/blogs/rick-newman/2012/01/19/4-lessons-from-kodaks-comedown; “The last Kodak moment?,” The Economist, January 13, 2012, accessed online October 18, 2017, http://www.economist.com/node/21542796.

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Big Data and YOU: The Promises and the Concerns

by Carol L. Fatuzzo and Ennio Fatuzzo

 

BACKGROUND

Web surveillanceIn our book “Creating New Superstars” (1) and in a previous blog, we focused on Big Data and Business. Now we take a brief look at the more personal side of Big Data: the reality, the promises, and the concerns.

As you must be aware, today vast quantities of data about people (including you) and their interactions with the outside world are being accumulated at unprecedented rates and stored in digital form. This rapidly increasing, already huge, storehouse of personal information is part of what is known as “Big Data.”

Where is this personal information coming from? Everything we do online, such as shopping and banking, leaves a record. But there are a growing number of other sources: social media, google, smartphones and other smart devices, electronic medical records, military and government data bases, surveillance cameras, and much more.

Collecting and storing personal Big Data digitally has become easy and is pervasive, but it is only the beginning. For this vast amount of information to be useful, there must be the ability to access the data rapidly and reliably; and there must be tools that can quickly analyze an immense amount of seemingly unrelated information, and make useful connections. And all of this is now reality. Faster and more powerful computers coupled with software advances (e.g., “artificial intelligence”) are rapidly opening doors to new analytic capabilities.

USES OF PERSONAL BIG DATA

Many large companies and organizations already have access to the growing collection of personal Big Data and are taking advantage of the advanced analytic capabilities. Common examples are targeted marketing and credit checks. And this is only the beginning. There are many less obvious ways personal Big Data is starting to impact your everyday life, including tracking your physical activities and location and even determining choices offered to you in bars and restaurants (2, 3).

Another growing use of Big Data is in sports. Not only individual players’ moves, but entire game strategies can be analyzed to improve players’ performances and/or game strategies. And then there are the fans. Analyzing fan generated Big Data is leading to techniques for generating stronger fan support and providing extra (and more profitable) event-based services. (4)

Then there is the healthcare segment. Here collection and analysis of personal Big Data is already leading to major advances such as improvements in healthcare outcomes (including saving lives), remote patient monitoring and real-time alerting, more cost-effective treatments, programs to prevents opioid abuse, accelerating cancer research, providing access to the latest treatments being tested, and much more. (5,6)

What we have described so far is only the beginning. To repeat, sources of personal Big Data are exploding (GPS tracking, wellness monitoring, surveillance of financial transactions, facial recognition, education records….) as are the capabilities for sophisticated analysis and uses for this data. And yes, the collection and use of personal Big Data has many positives. There is no question that the future benefits arising from the combination of big data and advanced analytics will be immense.

THE CONCERNS

But there is a downside. As summarized by McKinsey and Company: “Privacy issues will continue to be a major concern. Although new computer programs can readily remove names and other personal information from records being transported into large databases, stakeholders across the industry must be vigilant and watch for potential problems as more information becomes public.” (5)

But there is an even more serious concern. So far, we have focused on the use of personal Big Data by businesses and other private or public organizations. It is an entirely different situation when governments enter the arena. A number of articles have raised the concern about Big Data in the hands of government evolving into “Big Brother.” Following we repeat one example of this from our January blog “Big Data: An Exploding Agent of Change.”

Recent articles have focused on a data collection and analysis project being run by the Chinese communist party to develop what they call a “social-credit system.” (7, 8) To summarize, using Big Data technologies, the project’s objective is to develop a system to collect and categorize as “good” or “bad” all available information for each individual citizen. Ultimately, rewards for good behavior (e.g., prizes, better housing) and punishments for bad behavior (e.g., denial of permissions to travel or access to loans and services) would be handed out—all this aimed at improving the allegiance of citizens to the State.

Will China be successful? How far will other governments go towards using Big Data to become “Big Brother” watching over each citizen? Certainly, these are valid concerns. And for those who watch the Television series “A Person of Interest,” it may occur to them that the project described above is much more dangerous than the situation portrayed by the TV series. The latter only monitors each person in real time, but the Chinese scenario not only does this but also builds a history of everything each citizen has done and uses that information for its own purposes.

Yes, the growing availability and use of personal Big Data presents serious concerns. However, keep in mind that every breakthrough new technology has the potential for both good and bad. It all depends on the intentions of those who develop and apply the technology.


 

REFERENCES

1. Ennio Fatuzzo and Carol L. Fatuzzo, Creating New Superstars: A Guide to Businesses that Soar above the Sea of Normality (USA: September 2016). Available for purchase from amazon: http://amzn.to/2hAn6dy.

2. “Big Data in Our Everyday Life,” February 10, 2017, Nordic-IT, https://nordic-it.com/big-data-everyday-life/

3. Mona Lebied, “5 Big Data Examples in Your Real Life At Bars, Restaurants, and Casinos,” Business Intelligence, May 4th 2017, http://www.datapine.com/blog/big-data-examples-in-real-life/

4. “Big Data in Sports: Going for the Gold,” inside BIGDATA, June 4, 2017, https://insidebigdata.com/2017/06/04/big-data-sports-going-gold/

5. Basel Kayyali, David Knott, and Steve Van Kuiken, “The Big-Data Revolution in US Health Care: Accelerating Value and Innovation,” McKinsey & Company, http://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/the-big-data-revolution-in-us-health-care

6. Mona Lebied, “9 Examples of Big Data Analytics in Healthcare that can Save People, Business Intelligence, May 24th 2017, http://www.datapine.com/blog/big-data-examples-in-healthcare/

7. Jamie Condliffe, “China Turns Big Data into Big Brother,” MIT Technology Review, November 29, 2016, https://www.technologyreview.com/s/602987/china-turns-big-data-into-big-brother/

8. “China invents the digital totalitarian state: The worrying implications of its social-credit project,” The Economist, December 17, 2016, https://www.economist.com/news/briefing/21711902-worrying-implications-its-social-credit-project-china-invents-digital-totalitarian

Agents of Change

Agents of Change: Creating a Business World Forever Changed and Changing by Carol L. Fatuzzo and Ennio Fatuzzo

AOC-Cover-web-borderIt is no longer business as usual and it never will be. In today’s chaotic environment, only one thing is certain: CHANGE, and more CHANGE, and CHANGE at an unprecedented, ever increasing pace. Already too much has changed to allow business leaders to rely on business practices from the past, even the recent past.

So what should leaders do differently as they attempt to navigate the treacherous path to business survival and success in the 21st century? The answer to that question is not simple, and many leaders are even ignoring the question itself. They are acting as if the key forces driving radical change are no more than background noise.

Therefore, in our new article we attempt to change that mindset by increasing awareness and understanding of what we consider the most important “Agents of Change” and then exploring their impact on today’s business. Areas addressed include “instant” communication, global “interconnectivity,” social media, science-based management methodologies, and sophisticated data analysis. By taking a step back to provide a different perspective and clearer view on what is happening as these forces converge, we hope to create the knowledge and attitude needed to kick-start a revolution in business management.

Some key messages for business management from the article:

  • Agents of Change are creating a technology dependent future.
  • The pace of change is accelerating and will continue to increase.
  • Speed has become the key to corporate survival.
  • Global-Sourcing is the business path to the future.
  • In today’s global economy, there are not likely to be many “lone pioneers.”
  • “Staying the course” is likely to result in corporate death.
  • Business management needs to move from its empirical, intuitive world to one based on science and technology.

If you are interested in reading more, this article and others are available for purchase and download from our Digital Store on our Web site: fatuzzobooks.com.

The Price of Oil: A Business Tsunami

It affects each of us. It’s both the bane of our existence and the resource that provides for our fast-paced lifestyle. It makes some of us rich, while leaving others of us cash poor. It fuels our economy and determines the destiny of many businesses. It’s oil. And its price is volatile and heavily impacted by external forces beyond our control, as recent events demonstrate.

Beginning with the chaos in Cairo and continuing with the violent protests in Libya and much of the Middle East, oil prices have been on a dramatic upswing since early February. Industry experts have predicted that, as a result, gas prices could reach more than $5 a gallon by the summer months. Just by the middle of March gas prices around the United States were about 90 cents higher than a year ago, according to AAA of Southern California.

But predictions and prices are unsteady, to say the least. Oil prices dropped slightly after the U.N. resolution to use force to stop Moammar Gadhafi’s violent attacks on rebels, as reported in the March 18th edition of the Atlanta Business Journal.

And other external forces impact oil prices. As Japan and the international community cope with the impact of the recent and horrific 9.0 earthquake and the tsunami it caused, the diminished demand for oil in the Pacific Rim caused a slight but temporary further drop in prices. But now, once again, oil and consequently gas prices are on the rise.

What could all of this mean for consumers and business owners and our economy’s fragile recovery? No one is quite sure. Balancing natural disasters with the political fallout across Northern Africa and the Middle East has made for a cloudy crystal ball. It remains to be seen how high or low oil prices will go in the coming months. But one thing is for sure. Many different types of external forces can cause global waves of business disruption. And these “business tsunamis” are potentially as destructive as their counterparts in nature.

So business leaders beware. Business Survival in the sea of economic chaos remains a challenge, whether or not the recession is over.

Categories: Disruptive Change

The RECESSION: Is it over yet?

The Recession: Is it over yet? It’s the question many people have been eagerly (and desperately) waiting to have answered since the bottom fell out of the housing market sending the U.S. economy into a tailspin and shaking the national spirit. In the past three years, each small glimmer of hope has been quickly dashed by a jump in the national unemployment rate or plummeting housing prices. But it seems that recently, there has been some good news. Well, sort of.

Last fall, The National Bureau of Economic Research issued a statement announcing the end of the recession. The NBER has long been considered one of the strongest voices on matters such as widespread financial crises. According to AOL’s Daily Finance report in September of 2010, the NBER’s Business Cycle Dating Committee said it “determined that a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion. The recession lasted 18 months, which makes it the longest of any recession since World War II.”

Well it’s great that economists have data showing that our recession ended over a year ago. But what does everyone else think? Is the economy really is recovering?

There are several indicators that the U.S. recovery has indeed started and will continue. According to articles by Rick Newman in U.S. News & World Report (December 15, 2010 and December 28, 2010) there are lots of positives: 80 percent of U.S. corporations had higher-than-expected earnings in 2010; the S&P 500 index rose by about 13 percent in 2010 and that came after a 23 percent gain in 2009; the private sector added 1.2 million jobs in 2010; and U.S. exports are increasing which are helping to prop up jobs and revenue.

And there has been even more good news recently. As reported by Alex Kinsbury in the March 11, 2011 U.S. News Weekly: “The latest data from the Bureau of Labor Statistics show that the country’s unemployment rate has fallen below 9 percent for the first time since April 2009.”

But not everyone is optimistic. Even Kinsbury goes on to remind us that: “There are currently some 14 million unemployed and more than 11 million who either are underemployed or have ceased their search for gainful employment.” And those critical of calling the financial crisis over say there still could be a “double-dip” recession looming on the horizon.

In a Dec. 1 2010 piece in Bloomberg Businessweek, Bill Varner reported on the United Nations analysis of the global economy. This report called the U.S. recovery fragile and suggested that without more Federal stimulus money geared to job creation, the U.S. economy could still fall victim to a growing unemployment rate and that, coupled with possible recessions in Europe and Japan, could stall an already weak recovery.

So what really determines whether or not people believe that the recession is over? The unemployment rate still is expected to hover around 9 percent for at least the next year, and housing prices are expected to continue to fall in most major U.S. cities for the next 12 months, according to David Streitfeld in the January 25 edition of The New York Times. So, while economists may consider the recession to be finished, unemployment and the housing market may be better indicators of how the average American answers the question: Is it over?

But regardless of whether the recession is officially over, it appears that consumers have adopted significant changes in their spending habits. One clear example of this was seen in the recent holiday shopping season when shoppers were more likely to make purchases with cash, rather than credit.

“Cash is the route I’m taking this year, from past experiences with credit cards and being in debt and trying to pay it off for so many years,” said Liz Gonzalez, a community-college employee in Signal Hill, Calif., in a December 9, 2010 report in The New York Times.  Gonzalez seems to be part of a growing norm, rather than an exception.

And what about the astronomical rise in gas prices at the pump due to the dramatic chain of events in the Arab world? How will consumers react to this unexpected burden? And just as important, how will businesses that are already struggling for stability cope? In the March 3, 2011 issue of the Economist it is stated explicitly that the price of oil is more of a threat to the world economy than investors seem to think.

As summarized in the article by Newman, “Every quarter without another collapse in the financial market, puts the U.S. economy further down the road toward recovery, and every month without a crisis means that Americans pay off a little more debt, companies get a little more efficient, and the recovery gathers a little more steam.”

So now we have a building global crisis revolving around oil.  And if that isn’t enough, there is the earthquake and tsunami disaster in Japan which clearly will have global economic impact. So is it over, or will our fragile recovery be stalled? In any case, business survival, stability, and growth will continue to be a challenge.

Categories: Disruptive Change

Business Tsunamis: Giant Wave of Destruction or of Opportunity?

October 23, 2010 Leave a comment

What do you drive? An SUV? A luxury sedan? Maybe a Smartcar?

The advent of the automobile in the 20th century provides a good example of when a disruptive invention is a fundamental building block but by itself is not enough to create a breakthrough business. It took the combination of a number of innovations to create the automobile industry that changed the world. What actually happened?

First, the gasoline-powered engine (a truly disruptive technology) was invented in Europe. Then Karl Benz invented and patented (1886) an automobile powered by this technology. He continued improving on his initial concept and eventually formed a company that sold his “motorwagens”. By the end of the 19th century, Benz was the largest automobile company in the world, having produced over 500 vehicles. However the market for these vehicles (and other similar vehicles sold by smaller companies) was small since they were expensive, and since the supply was limited due to their one-at-a-time production. Not anything world-changing yet.

However, the Ford Motor Company had a vision for how to combine the gasoline-powered engine with the then new innovation of “mass production” to rapidly produce automobiles that were inexpensive.  The additional  Ford innovations – automobiles made up of more common parts and assembly-line production. Ford designed a car and built a factory based on these concepts. And in 1908, the Ford factory produced the Model T Ford – a car much quicker and cheaper to build than any other, which made it the world’s first “affordable” car. Yes, Ford used disruptive technology (someone else’s), but it was the combination of manufacturing-based innovations that quickly led to the birth of the modern automobile industry, the death of the “horse and buggy” era, and the rise to industry leadership of the Ford Motor Company, at least for a number of years.

Automobiles are just one example of how disruptive innovations and/or disruptive changes in the business environment can have a dramatic impact that reaches far beyond one company or one industry. We call disruptions such as these Business Tsunamis.” Just like tsunamis in the ocean, Business Tsunamis are powerful waves that bring irreversible change. Whatever their causes, these giant disruptive waves can alter the business world as you know it. They can create new companies and industries, provide dramatic growth for existing companies, or lead to the demise of a company, a business segment, or an entire industry.

So why is understanding the concept of Business Tsunamis important? It’s all about managing change. Business Tsunamis are waves of corporate destruction for those who are caught unaware. But they also are waves of opportunity – for those who can successfully “ride” them through the uncharted waters of today’s chaotic world.

The next time you sip your Starbucks… think about how many business opportunities came with the mega-success of Starbucks. They didn’t require disruptive technology, but they did incorporate disruptive innovations of many kinds.

Categories: Disruptive Change

What’s So Bad About Change

October 8, 2010 Leave a comment

OK. So sometimes good today just isn’t good enough for a changed tomorrow.  For example, once, a sleek sailing ship called the “Cutty Sark” was the ruler of the seas.  But her dominance lasted only a short time. What happened?

The Cutty Sark was a three-masted clipper ship with the most advanced design of the times (1869). She was built to prove that sailing ships were superior in speed and reliability to the newly developed steam-powered ships. And indeed, the Cutty Sark did out-perform all steam ships of that time, at least for a while. But unfortunately for the Cutty Sark, the new technology continued to advance, leaving the Cutty Sark utterly outclassed in the wake of high-powered steam ships. Change was bad for the Cutty Sark. But the steam engine opened up a whole new world of opportunities for others – others who had a vision for the potential of this new technology.

But it’s not just about technology. Think about the opportunities “simple” changes can bring the next time you order a Big Mac and fries. The first McDonald’s wasn’t anything special. It was a drive-in restaurant opened during World War II (1940) by two brothers, Maurice and Richard McDonald. Typical of the time, people drove to this restaurant but stayed in their cars to order and eat food delivered to them by “carhops.” The brothers were successful with their drive-in but wanted more and were willing to change.

And they were successful, very successful with simple but game-changing innovations: assembly-line food preparation using unskilled workers instead of short-order cooks, a limited menu with items that could be prepared ahead of time, disposable “dinnerware” for serving food, and self-service. These concepts, put together, revolutionized how Americans… and later the world… thought about food. This change was definitely not bad for many of the businesses that followed – at least for a while.

But change keeps happening. Today, the business world has changed irreversibly as a result of the recession.  Yes that brings challenges, but it also presents opportunities for those leaders who have positioned their businesses to take advantage of the emerging environment. More about today’s changing business environment and the implications of those changes – a topic for another day.

Categories: Disruptive Change