Risk and Globalization

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Do You Play to Win or Not to Lose?

In what kinds of situations are you most effective? What factors strengthen—or undermine—your motivation? People answer these questions in very different ways, and that’s the challenge at the heart of good management—whether you’re managing your own performance or someone else’s. One-size-fits-all principles don’t work. The strategies that help you excel may not help your colleagues or your direct reports; what works for your boss or your mentor doesn’t always work for you. Personality matters.

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How to Build Risk Into Your Business Model
There’s a perennial problem with business model innovation: Managers often find it harder to determine what changes to the model will work than whether a new product or technology will catch on. So what’s the secret? How can companies systematically innovate their business models? How can executives identify and quantify the value of their changes?



Is the Business of America Still Business?

It was his only one-liner. In January 1925 President Calvin Coolidge—nicknamed “Silent Cal” for his taciturnity—declared, “The chief business of the American people is business.” Is that still true? When I moved from the United Kingdom to the United States, I certainly assumed so.Yet evidence to the contrary is accumulating. In 2012 Michael Porter and Jan Rivkin showed that graduates of Harvard Business School overwhelmingly favor foreign over U.S. locations for new investment. 

They asked HBS alumni about 607 decisions in which they’d been involved on whether or not to offshore operations. The U.S. retained the business in only 16% of those cases. Asked why they favored foreign locations, the respondents listed the areas in which they saw America falling behind the rest of the world. The top 10 included effectiveness of the political system, simplicity of the tax code, regulation, efficiency of the legal framework, and flexibility in hiring and firing.

Managing Risk in the New World

There has certainly been a strong pattern of risk-taking behavior in the financial sector, and in my view that is because we had three enabling conditions in place at once. First, the innovations in financial engineering that were developed over the past decade created an opportunity to take on more risk through new products. This is not new, of course. Breakthroughs in transportation, telecommunications, and computing all created similar opportunities for risk taking.

The New Dynamics of Competition

In his book Innovation and Entrepreneurship, Peter Drucker made this observation about industries that rely on knowledge-based innovation: “For a long time, there is awareness of an innovation about to happen....Then suddenly there is a near-explosion, followed by a few short years of tremendous excitement, tremendous start-up activity, tremendous publicity....Later comes a ‘shakeout,’ which few survive.

The problem, Drucker argues, is that knowledge-driven innovations are “almost never based on one factor but on the convergence of several different kinds of knowledge.” The initial breakthrough generates a spate of activity, but meaningful progress occurs only after all the pieces are in place

source: HBR