The New Arms Race

The New Arms Race The next big trend we're reading about is how Korean tech companies like Samsung are working overtime to protect their corporate secrets as Asian rivals try to poach their employees. This made me think about arms races over the years. An arms race is basically where two nations compete to build superior armies. For a long time, building a superior army was the way nations excelled and thrived. You had a big army and you went into a village, plundered it, pillaged it, stole all the women and children, enslaved half the population that you didn't kill, and that's how you created wealth. Over time, as commerce took hold, people realized that trading was better than stealing. They realized they needed a big army but didn't really need a big local army. You just needed to join an alliance like NATO and get the United States to pay for everything to protect you and everything worked out. But there is a new arms race. Now, a nation's future, productivity, wealth and reason for being are, by and large, driven by access to talented employees, talented citizens, the educational level of its citizenry, and access to best…

Strategic Flexibility Is a Myth

Strategic Flexibility Is a Myth The first theme is what I call “strategic flexibility is a myth.” In business—and for anything in life—you need to go all in. COVID-19 is obviously a big topic that’s driving news and corporate strategy around the world. One of the big things we’re seeing is that banks that made a big investment in going digital before COVID-19 are reaping the benefits. These banks looked at the volume of foot traffic across their branches and decided early that they would reduce the number of branches and reduce the size of the branches they kept open. The goal was to have superior digital offerings so that customers could do the majority of their banking online, without having to go into the bank. I would say, to some degree, that’s an example of luck. If COVID-19 hadn’t come along, they would have eventually reaped the benefits of going digital. But COVID-19 did come along, and it forced a massive acceleration towards banks that had the infrastructure in place to serve their customers online. Many companies talk about strategic flexibility. When you have strategic flexibility, it means that you can pursue two or more valid strategies at any given time. The…

Don’t Hold Yourself Back

Don't Hold Yourself Back My final note is based on many of the discussions I have with clients in our executive coaching programs. We train clients from all over the world. Some have no business background, but they’re in senior positions in major multinational companies. Others lead multibillion-dollar family-owned businesses in Asia and Latin America. Some are more mid-level. Others have worked their way up. They may not have an MBA, but they know what they're doing. I'm going to tell you a story that's going to articulate a very important insight. When I lived in Toronto, I used to go to the Chinese markets, and I always went to the same store because I like to be familiar with the layout and know where things are. I like to know that the food I want will arrive on a certain day, so that I don't make a trip on the wrong day and have to visit many different markets. So, I always went to the same place. It wasn’t the biggest, but it was very clean, and it was run by a little old lady, probably in her 70s. Unlike most markets, there wasn’t a lot of pricing on…

Are Coal, Oil and Gas Dead?

Are Coal, Oil and Gas Dead? Almost any pundit or forecaster will tell you that oil, coal and gas are dead. But the reality is that they're probably not dead, and they're probably far from dead. There's a reason for this. The balance of power in the world has shifted. Growth today comes from Asia. We may not see it, and we may not know about this while sitting in a nice office in Boston, New York, London, or Los Angeles, but the balance of power has shifted. In the West, if we say that coal is dead and we need to get our institutional investors to withdraw their equity holdings in coal, oil and gas companies, we could probably do that. Although, it would be better to continue investing in oil, coal and gas companies and force them to become carbon neutral because that’s the goal of climate change policy. But it's not going to matter as much because if Indonesia, Vietnam, China, India and other major growth markets of the world today need energy, they know that having a clean, carbon-neutral environment makes sense, and they're making good decisions in that direction. But of course, they need energy,…

Defense Is Not a Strategy

Defense Is Not a Strategy The next big story we’re reading about is linked to China. This is themed defense is not a strategy. A recent decision was made by Panasonic to exit certain parts of the renewables value chain—the manufacturing of solar panels and solar cells—because it cannot compete with low-cost Chinese providers. I've been in consulting my entire career, all the way from business analyst to senior partner, I worked with many companies. And it’s very common. I've seen this with many Western companies. Normally, when a low-cost provider arrives with great fanfare, the company announces that they've made a decision to create value by exiting the low-end part of the value chain and focusing on the high-end part of the value chain. Of course, the share price goes up and everyone gets happy about it, but there are some important things to consider. For one, they didn't make the decision—it was made for them. In almost all cases, they didn’t have a choice. It’s not as if they did something so philanthropic and made a charitable donation to the low-cost provider and they can have a tax write-off. They were bleeding money because they could not compete.…

The Rise of Reddit Traders

The Rise of Reddit Traders The other big topic that everyone's talking about is the rise of Reddit traders. Through a sequence of collective actions, they forced a number of hedge funds—a large number of them are short sellers—to lose a ton of money, and in many cases receive a bailout from other hedge funds. If you were to think of this purely in financial terms of what's happening in the financial services industry, you would probably miss some of the deeper implications. What we're seeing here is simply the next evolution in democracy. If you go back to the signing of the Magna Carta—which is regarded as the single most important document in advancing democracy in the world—if you go back to the original Magna Carta that was signed by the English lords and kings, it is not a very impressive document. Symbolically, it's impressive because of what it led to, but at the time it's not as if every peasant and every farmer in England had the right to vote. The ability for the average person to vote in the UK only came about somewhere in the mid-1800s. Women only got the right to vote in the 1900s.…

Corporate Strategy Is About Trends

Corporate Strategy Is About Trends With the rise of COVID, we've seen huge trends take over, galvanize and basically capture the entire world within a short period of time. Corporate strategy is about how one identifies and responds to trends. It's about knowing when your business should find a trend, knowing when to jump in, knowing when to ride that trend through the release of products, services, etc., and knowing when to jump out. History is littered with examples of companies that saw a big trend—like social media, over-the-top streaming, virtual reality and electric cars. Some companies saw those trends and went in early, but ultimately, they were unable to ride the trend, or they went in before the trend reached mainstream status. Therefore, the investment never really panned out. Other times, they went in early and waited it out until the trend gained momentum, but someone else came along and benefited from the trend to a greater extent. In surfing, the first surfer is not always the one who is able to ride that big wave. So the question becomes, how do you identify trends? If you extend this to pure strategy and look at the work of Clayton…

How to Create a Career Strategy for an Executive

How to Create a Career Strategy for an Executive I'm going to leave you with some thoughts on developing a career strategy for an executive. Most of our clients are fairly successful and senior, usually in their thirties, forties, some of them around fifties. They’re senior managers, executive managers, executive vice presidents and CEOs. Some feel trapped because they know they're not as successful as they could be—even though looking in from the outside, people see them as successful. These men and women have the resources and time to plot out a new career strategy, but they don't know what to do—as opposed to more younger people who have more room to grow. When you’re 30-50, many people get stuck at a certain point, but a lot of our clients are stuck at a good point in their careers. But the difference is it is good when people look from outside in. Our clients feel they are not where they need to be, they're not doing their life's work, not as successful as they could be, not leveraging the skills they have or feel they should eventually learn. For clients in our executive coaching program, we use the Career Strategy Journal, which…

Analyzing the Competition Is Hard

Analyzing the Competition Is Hard Competition is hard to understand because nobody knows what their competitors are thinking. Competitors usually send signals into the market to mislead their peers. Samsung recently announced that they're looking to make a $17 billion investment in chip fabrication in the United States. Clearly, Samsung is sending a message to competitors, saying, “We've got a $17 billion foundry coming online, so you need to decide: Do you feel confident enough that if you make a similar investment that floods the market with chips, a) it's not going to lead to a decrease in price, b) maybe it will cause competitors to leave us Samsung and go to you, or c) the market’s big enough to handle all of the supply coming online?” That's a pure competitive strategy. It doesn't get more challenging than that. Let's assume you're a rice company operating in the premium segment and you've exited the low-cost segment. But you noticed over the years a lot of new players have entered the low-cost segment, and a few have decided to consolidate the sector. Over the last few years, you’ve also noticed that the market shares have remained largely static in the value segment.…