G100 Network Notebook | September 2013

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The G100 September Network Notebook is a monthly memo of news and noteworthy reading for G100 Network members from Daniel Casse, G100 President. In this issue we talk about the lessons from 2008 financial crisis, what’s really going on in China, marketing and the next economy, the science of leadership, skepticism about India, Roger Aile’s vision of television’s future, and the Greatest Economic Bet ever made.

What are the Right Lessons from 2008?

There has been a torrent of material on the fifth anniversary of Lehman’s collapse. The Economist is running a multi-part series on the sources of the financial crisis. Their first article examines whether there are other bubbles or weak spots that could be the source of the next crisis.

If there is one part of the world that could still bring about another global meltdown, it is the euro area. Though less Lehman-like than a year ago, it remains a worry. Its debt problems are growing, not shrinking: European banks have thinner equity buffers than their American counterparts, and have written down far fewer debts.

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What is Really Going on in China – and What Does it Mean for Global Growth?

Ian Bremmer of the Eurasia Group is one of the most thoughtful observers of geopolitics and the US-China relationship; Susan Schwab, former trade rep, now sits on the boards of FedEx and Boeing; and Michael Pettis, the most widely-cited expert on China’s economic growth. This summer, Pettis made news by arguing that China can rebalance its accounts and accept a lower growth rate, all without causing huge social disruption:

[Three-to-four percent] average GDP growth for a decade is likely to be the upper limit once Beijing seriously begins to rebalance the Chinese economy, and if the administration of President Xi and Premier Li is able to pull this off, it would be a huge accomplishment. China would rebalance substantially, the problem of debt would have been managed relatively well, and the income of average Chinese households will have nearly doubled over the decade.

“Engage Now, Sell Later”

Cutler Dawson, G100 member and CEO of Navy Federal Credit Union, the largest credit union in the country, has figured out how successful social media campaigns can be. In fact, Facebook used Navy Federal as a fascinating case study on how much impact a social marketing campaign can have. According to Forbes, Facebook is driving topline growth, including “millions of new deposits and 60,000 new members in well developed drives that leveraged the membership nature of a credit union.”

Does Start-Up Culture Kill Innovation?

Wired offers a much-needed reminder that good companies require real research, not just focus group results. The author argues that the Silicon Valley culture that celebrates failure as a good experience is undermining the real research that long-term growth companies need:

Many people don’t actually understand what research is, and have somehow conflated concepts like “rapid prototyping,” “lean startup,” “minimal viable product,” and “[insert] other smart-sounding thing to do” with avoiding research.

Worth reading.

Why Marketing Will Matter More in the Next Economy

Who will grow in the “machine economy?” Those who best align human skills with technological capabilities, economist Tyler Cowen says in this enlightening essay adapted from his forthcoming book, Average is Over. An optimist on this new economy, Cowen argues that marketing will become even more important in an age when machines do more:

There will be a lot more wealth in this brave new world, but it won’t be very evenly distributed because a lot of human labor won’t seem like a special or scarce resource. Capturing the attention of customers with just the right human touch will command an increasing premium. Don’t forget that Mark Zuckerberg was a psychology major in addition to being a tech genius. Sheer technical skill can be done by the machines, but integrating the tech side with an attention-grabbing innovation is a lot harder.

The Science of Leadership

Can management learn from neuroscience? This brain science study in Harvard Business Review questions the conventional wisdom managers have about creative thinking, decision making, multitasking, and incentives:

The neuroscience of emotion shows us that although hunches are fallible, it’s worth exploring them more than we do. Particularly in situations involving risk, negative gut feelings can prevent leaders from making overconfident or overly optimistic decisions. In a world of markets and numbers and data, leaders have so much information that instinct seems immaterial and abstract and therefore hard to use. But hunches are indispensable.

The Growing Skepticism About India

P.M.S. Prasad, board member of Reliance, writes openly about his skepticism regarding India’s business climate, criticizing the government’s unstable pricing regime in the energy sector as a deterrent to foreign investment. Also worth reading is this extremely detailed and unvarnished look at the real Indian economy. Here is an excerpt:

[India] clings to the ways of a thousand years ago, and to the multifarious customs it has adopted in the centuries since. … That is also, famously, the exasperation of India, especially for those (in business, say) who want reality to keep pace with possibility. … India is drawing from some of the global order’s latest fads, but only by superimposing them upon what still, poignantly, remains one of the most uncared-for and impoverished populations on earth.

Roger Ailes on the Future of Television

An interesting interview with Fox News leader Roger Ailes focuses on the future of broadcast networks in the age of digital media. Ailes offers this funny response on Jon Stewart:

I have a running dialogue with Jon Stewart. He once told me he’s a socialist and would have voted for Norman Thomas, who was the greatest socialist of the 1950s. I told him: “I’ll tell when you are a capitalist, Jon. On the day you have to renegotiate your own contract.”

Fall Reading: The Greatest Economic Bet Ever Made

The story of the famous bet between economist Julian Simon and doomsayer Paul Ehrlich has finally been told in book form. Simon believed that continued global growth was inevitable. Ehrlich, a best-selling author, saw Malthusian scarcity just around the corner. This is one of the great stories where optimism beats pessimism. From the review in The Wall Street Journal:

Mr. Sabin’s portrait of Mr. Ehrlich suggests that he is among the more pernicious figures in the last century of American public life. As Mr. Sabin shows, he pushed an authoritarian vision of America, proposing “luxury taxes” on items such as diapers and bottles and refusing to rule out the use of coercive force in order to prevent Americans from having children.

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