A strategy expert vs. a CEO

A strategy expert vs. a CEO I'm going to end today's Strategy Insights by talking about a client and some of the challenges, successes and particularly one of the deep insights we developed for this client. This client is named Raka, and she’s of Indian origin. She has worked at a very big, elite consulting firm and rose up to associate principal. She’s now head of strategy at a large industrial concern in the Midwest. She’s a nice lady. She has kids. Her husband works in the tech sector, and because he works in the tech sector, they have to commute a lot because he's based on the West Coast, but they seem to make it work. Not being given any positions of authority to indicate she is in the running She views herself as a strategist’s strategist. She is a pure strategy player. Her CEO is about to retire and name a successor, and she's been positioning herself to run the company because she believes the company needs strong strategy and she's the best person to do that. She has been pursuing this for a few months, and during this time, she hasn't been working with us. I am…

Sanctions Are Like Punishing Your Spouse by Letting Them Date Other People

Sanctions Are Like Punishing Your Spouse by Letting Them Date Other People The next big theme is called, “Sanctions Are Like Punishing Your Spouse by Letting Them Date Other People.” That’s a funny sounding headline. What am I talking about? Imagine you had a spouse, and you don't think they appreciate you for some reason, so you tell them, “For the next year, I'm going to move in with my family, and you can’t write to me, talk to me, message me, or touch my hand. We’re going to have no interaction. I'm going to go away for a year so you learn to appreciate me.” What do you think will happen in that year? There’s a 95% chance that your spouse—who you applied a sanction to—is going to leave. They're going to find someone else and build a bond with them. They may even develop such a close relationship that they realize that the relationship they have with you is not unique. It's not the best relationship, and they leave you, or it damages your relationship forever. The impact of sanctions from a business perspective We don’t like to talk about politics, but we do want to talk about…

Three people that influence you the most

Three people that influence you the most The first big theme is titled, “The Three Most Influential People in the World: Roula Khalaf, Gwen Robinson, and Matt Murray.” This is a very deep insight. We have a lot of coaching clients, including very senior coaching clients. I’ve asked our coaching clients, “Who is influential to you? Who do you look to for advice? Who is the person you try to emulate when making decisions?” They give me names like Elon Musk, Jeff Bezos, Jamie Dimon, presidents, Christine Lagarde. They’re all very important people. When our coaching clients are making a decision, these are the people they’re thinking about and have tried to emulate. Conscious vs. subconscious There are people who influence us that we’re consciously aware of, and there are people who we don't know are influencing us. This is an important insight. You may know Elon Musk because he's all over the news, and he's doing amazing things—and I hope he continues to do amazing things—but that doesn't mean he has the biggest influence on you. You have to know how you make decisions. Let’s assume you read a lot of newspaper articles about how Germany is a bad country.…

Coal, Oil and Gas Need the Best Minds

Coal, Oil and Gas Need the Best Minds This week's theme is called, “Coal, Oil and Gas Need the Best Minds.” If you read any major news publication, you’re going to see two big trends. One is due to activist pressure, major banks like the Japanese company Mitsui—which is a trading house that owns banks—are withdrawing their funding of coal-fired plants and their funding of coal mines. The other trend you're seeing is big mining companies are divesting coal, oil and gas. Well, not so much oil, but they're trying to push out quite a lot of coal. They’re bundling them up into separate companies, selling them to people and so on. You're one of the smartest people in the world, obviously. You’re someone who actually takes the time to listen to new insights. I want you to think through what we’re doing. And I want you to think about the opportunities that come up because of this and the problems we’re creating. We know that coal is going to be phased out over time, but it will take a long time Let’s assume that I'm a good parent, and I want my children to have a bright future in the world. I don't want them to…

Understanding Negative Interest Rates

CVC Capital Partners, Toshiba and What’s Really Happening There

The next big theme is titled, “CVC, Toshiba and What’s Really Happening There.” CVC Capital Partners, a private equity firm, is using their Asian fund to make something in the range of a $20 billion dollar bid to take Toshiba. I’m not going to talk too much about the mechanics of the deal because it’s been covered very well by good publications like the Wall Street Journal, The New York Times and Nikkei Asia. I want to explain the insight of why deals happen. A CEO has many different ways to manage a company. They can do a merger, break apart the company, do an asset optimization program, roll out a new strategy, undertake an operations review of the company, or do a share buyback. A CEO can do many different things. We shouldn't be looking at the mechanics of the private equity deal. We should ask ourselves, why did this CEO pick this option? What is it telling us? Let’s look at what we know about the deal. But before we do that, we need to remember one thing. In any MBA program, they teach us that the number one goal of a company, the CEO’s number one goal, is to protect…

Insights and Implications of Declining Birth Rates

The first theme is called, “COVID-19 Is the World's Best Contraceptive.” It’s been assumed for a long time that if you get two people to talk to each other and stare into each other’s eyes for long enough, they will eventually develop a bond. This connection starts with awareness and leads to empathy, friendship, and then a deep emotional connection—you could call it love if you wanted to—and then eventually a romantic relationship. I've read this in so many different places that it's almost like conventional wisdom. But this isn’t true. Look at the numbers from global data on birth rates in the last nine months. Any major news outlet will have these numbers. They may be slightly different, but the range is approximately the same. Basically, births are declining in major economies by 10-20%. That means 10-20% fewer babies were born as a result of COVID in some of the biggest economies in the world—like Japan, France and Spain. The numbers are pretty similar across the world. Taiwan has seen a drop. Hong Kong has seen a drop. I read that Hong Kong saw a decline of over 50%. That means the year-on-year change from January to January was…

How To Make People Follow You?

LG Exits the Smartphone Business

The next big topic is “LG Exits the Smartphone Business.” This has just been announced, and of course, there's a lot of hand-wringing in South Korea and so on—wherever LG has their production facilities because it's not a small business. It’s a multibillion-dollar business. Even though it's losing money and hasn’t made money for a long time because it’s been squeezed out by Samsung and Apple at the top end and by Chinese manufacturers at the low end, it's still a multibillion-dollar business with a multibillion-dollar supply chain. Careers are made and probably ended in this business. People have maybe worked here for most of their lives. Families have built their futures on a salary that would come from this business to send their children to university. Political leaders have staked their careers on ensuring that LG keeps the plants open because massive unemployment makes them look like poor political leaders. There are a lot of entrenched interests doing everything that they can right now to tell LG, “Yeah, you're losing money. It's not good for you, but it's good for me, so why don't you keep it open?” In a sense, they're asking LG’s profitable business lines to subsidize…