IN THIS ISSUE
» MUTUALITY LAB
• BlackRock CEO: Short-term thinking means important long-range goals get pushed to the sidelines
• MIT study finds microcredit doesn't lift people out of property, other research suggests cash does
» CULTURE LAB
• Cross-team diversity greater driver of workplace innovation: Study
• Productivity consultant says employees should be encouraged to adopt 'What's in it for me?' attitude about business meetings
» DEMAND LAB
• Lego-funded childhood play studies building blocks of company success
BlackRock CEO: Short-term thinking means important long-range goals get pushed to the sidelines
April 6, 2015
In an excerpt from the book Perspectives on the Long Term: Building a Stronger Foundation for Tomorrow, Laurence Fink, chairman and CEO of BlackRock, said to eschew short-term thinking in favor of a longer view takes communication, education and leadership. In Fink’s opinion, although there’s nearly unanimous agreement that investments in education, healthcare, retirement and the environment are necessary, he noted that these long-term issues tend to get overlooked in the rush for power and wealth.
Fink cited a number of examples where short-term thinking pervades in our society. The tax code rewards the quick hit, with significantly lower taxes for capital gains predicated on one-year holding periods, as well as treating dividends as capital gains rather than income. He suggested increasing the holding period to three years and introducing a sliding scale on capital gains, whereby the tax hit for investors is reduced the longer they hold on to stock. On the retirement side, Fink noted the trend of replacing defined-benefit pension plans with defined-contribution. Most consumers, he stated, aren’t savvy enough investors to make wise choices regarding their retirement plan and government and business must do more to educate workers and provide incentives to save. Crumbling infrastructure, Fink said, requires leadership from several layers of government, making investment complex and onerous.
Fink added that while most of his company’s holdings are long-dated, 80% of its equity ownership is in index products, which means that sometimes they own shares in a company that makes decisions based on short-term strategies. Despite that, BlackRock he said constantly communicates with business partners to ensure long-range thinking is at least part of the conversation that goes into strategic decisions.
source: McKinsey & Company
MIT study finds microcredit doesn't lift people out of property, other research suggests cash does
March 31, 2015
Even though the Nobel Committee saw fit to award its 2006 Economics prize to purveyors of microcredit, a study has found there’s no evidence that lending small amounts of money at low rates to boost entrepreneurship in impoverished countries is actually helping. The Poverty Action Lab at MIT published a policy paper in which it found that access to microcredit had no direct effect on income. One reason could be that once micro-finance moved to a for-profit basis, it became less interested in subsidizing the poor. Following up on that, Columbia University professor Chris Blattman wrote in the Washington Post that when it comes to pulling people out of poverty, cash is king.
Cash transfer programs, including Mexico’s Opportunidades and Bolsa Familia in Brazil, provides regular cash infusions to poor families with the condition that their children get regular health checks and attend school. However, newer models remove even those conditions, trusting that the poor will put the cash to good use. One such program in Kenya finds wastage of unconditional grants to be minimal. Most recipients invest in necessities and/or put some of the cash aside, both of which are metrics of improved economic standing.
source: Financial Times
Cross-team diversity greater driver of workplace innovation: Study
March 30, 2015
An assistant professor of Entrepreneurship and Family Enterprise at INSEAD, Vikas Aggarwal, says as more and more companies leverage diversity within teams to fuel innovation, the next step in the evolution of knowledge recombination is a focus on diversity across teams. What he means by this is pulling together teams which may not be diverse with respect to their compositions but are very different when compared to other units in the firm.
Aggarwal explains that firms must minimise the costs of coordination, those frictions and communication difficulties that occur because of the different backgrounds and experiences of the players. This becomes even more crucial in companies with multiple innovations occurring simultaneously. He adds that an INSEAD study found that biotech startups that employed higher levels of cross-team diversity had a greater positive impact on company innovation. Aggarwal sums up by saying firms relying on innovation need to take advantage of every human resource in their arsenal, examine the trade-offs between knowledge recombination and coordination costs, and keep an eye on the bigger picture of cross-team diversity.
Productivity consultant says employees should be encouraged to adopt 'What's in it for me?' attitude about business meetings
April 6, 2015
With 11 million business meetings every day in America, not all of them result in a new idea or an actionable decision, according to Carson Tate, the founder of productivity consultancy Working Simply. There are three core principles in deciding whether or not a meeting is important. Fundamentally, an employee should only attend workplace meetings that will have a direct impact on them, Tate says. In determining the ROI of a meeting, employees should ask themselves if it will assist them in achieving their goals, if it aligns with the company’s priorities and whether they can make a meaningful contribution to the session.
Tate goes on to say that a meeting’s success or effectiveness usually comes down to planning. Details to be considered include:
- Expectations; and,
- Length of meeting.
Picking up on the point of attendees, Tate notes that more scrutiny is required when deciding who to invite to a meeting. There are four type of people at meetings: the decision maker, the influencer, the resource person and the executer. Anyone outside those roles needs to be circumspect as to whether their presence is necessary. Tate concludes that communication amongst colleagues is key in questioning the value of each meeting a person attends.
Lego-funded childhood play studies building blocks of company success
March 26, 2015
In a blog post, Mikkel Rasmussen, a senior partner at strategy and innovation consulting firm ReD Associates, says Lego’s rise to the number-one global toy manufacturer with 2014 profits of $829 million, is partly a product of the company’s intensive market research. In the case of Lego, he notes, that requires a knowledge of the fundamentals and motivations of play. Rather than relying solely on surveys and focus groups, the Lego Foundation funds global play research.
Rasmussen notes that 10 years ago, Lego researchers discovered a prime motivator for play among children is skill mastery. However, its current studies explore children’s cultures, the interplay between kids and their parents, and the social dynamics that shape people’s aspirations. These are designed to provide insights into consumer behavior, including a child’s penchant for pride of creation and sense of fun, both hallmarks Rasmussen contends, of Lego’s products.