Ten interesting things we read this week

Some of the most fascinating topics covered this week are: Business (Management lessons from Honeywell's former CEO; Niche consumer firms grab investor eyeballs), Productivity (All highly intelligent people share this trait; A psychologist explains why these 5 habits will help you stay focused all day), and History (East India Company: The original corporate raiders)

Published: Sep 19, 2020 10:00:00 AM IST
Updated: Sep 18, 2020 07:41:21 PM IST

reading_18th september_bgImage: Shutterstock

At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, ranging from zeitgeist to futuristic, and encapsulate them in our weekly ‘Ten Interesting Things’ product. Some of the most fascinating topics covered this week are: Business (Management lessons from Honeywell’s former CEO; Niche consumer firms grab investor eyeballs), Productivity (All highly intelligent people share this trait; A psychologist explains why these 5 habits will help you stay focused all day), and History (East India Company: The original corporate raiders).

Here are the ten most interesting pieces that we read this week, ended September 18, 2020: 

1)  Management lessons from Honeywell’s former CEO [Source: The Economist]

David Cote, the former CEO of Honeywell, an industrial conglomerate, has produced an excellent effort with “Winning Now, Winning Later”. When a team failed to come up with suggestions to cut costs, he ordered them to cancel all other meetings and keep talking until they produced the results. “The idea that as a leader you can focus on strategy and delegate its implementation to great people is a fallacy,” he writes. But his approach paid off and the book is a detailed guide to the tricky task of managing a big business. He thinks the idea that corporate leaders have no choice but to embrace short-termism in the face of pressure from investors is “one of the most pernicious beliefs circulating in business today”.

When Mr. Cote took over at Honeywell in February 2002, he says the company was “a train wreck and on the verge of failure”. Remarkably, the board and outgoing boss refused him any access to the company’s financials until July 2002, when he also became chairman. What he eventually found was that the group had pursued short-term profits through aggressive accounting practices. During the previous decade, for every dollar in earnings Honeywell generated only 69 cents in cash. He changed the accounting approach, put a greater focus on investment and aimed to expand the business while keeping fixed costs constant.

When it came to improving the business, Mr. Cote spent a lot of time focusing on Honeywell’s processes. Collectively, these changes were known as the Honeywell Operating System and they included steps, such as reducing the use of toxic cleaning chemicals, which cut costs, shortened production time and improved worker safety. Reforming a business is a never-ending task. One suspects Mr. Cote’s focus on detail was more important for the company’s success than some of the more standard corporate pronouncements he reveals. Honeywell developed five “initiatives” and 12 “behaviours”, which seems way too many for an employee to keep track. 

2)  Niche consumer firms grab investor eyeballs [Source: Livemint]

The current ongoing pandemic has been tough for most of the businesses. Be it small or big, each and every company in India has been affected in some way or the other due to the extended periods of lockdown. The consumer brand start-ups are doing especially well with focus on digital first. Companies like BoAT, Yogabar, and Mamaearth have gained the most as the cities began to reopen. Even many other start-up brands that haven’t made full recoveries like Sugar Cosmetics, food ingredient maker Veeba Food, cloud kitchen Rebel Foods and mattress brand Wakefit are gaining market share in their respective categories.

“Consumer brand start-ups have certainly proved to be very resilient," said Kanwaljit Singh, managing partner, Fireside Ventures, a specialist consumer fund. “Earlier, some investors were worried about whether these digital-first brands can scale. But because of the efficiency of the digital channel in terms of customer acquisition and distribution costs, we are seeing consumer brand founders build high-growth companies with attractive unit economics." Sectors like education, content and software are witnessing a boom because of lockdowns. Last year, consumer brand start-ups received $295 million in capital, up from $158 million in 2018, according to data with Venture Intelligence.

At personal care brand Mamaearth, monthly revenues and orders are up three times from pre-Covid levels. As millions continue to work from home, they are spending big on quality headphones, laptops, sound systems and home entertainment products. This new demand has helped lift monthly revenues at BoAT Lifestyle, a digital-first brand that sells headphones, speakers, soundbars and power banks, by 20% from pre-covid levels. Because of surging demand and improving unit economics, consumer brand start-ups are attracting investors including private equity firms. Investor interest in consumer brands is the highest in the last five years, said Manu Chandra, managing partner, Sauce.vc, an early stage consumer fund.

3)  The best business book ever written, according to Bill Gates and Warren Buffett [Source: entrepreneur.com]

Stories capture and hold our attention, and with the attention economy only growing in size, storytelling is a wise messaging vehicle. The Nielsen media consumption metrics for the first quarter of 2020 found American consumers now clock over 12 hours of media each day, a record high. Whether the media type be television, social media, podcasts or other apps, the one thing these vehicles for content have in common is that they tell stories. Stories tap into our innate curiosity for human behavior. So when Bill Gates met Warren Buffett for the first time in 1991 and asked him what his favorite book was, it shouldn’t come as a surprise that Buffett’s recommendation was a collection of stories.

“I’ll lend you my copy,” Buffett said. In a blog post written 20 years later, Gates joked that he still has the book in case Buffett wants it back. The book that enthralled two titans in the business space above all others was a collection of stories from longtime New Yorker contributor John Brooks entitled Business Adventures: Twelve Classic Tales from the World of Wall Street. Business Adventures tells a dozen stories from mid-20th-century commerce in a prosaic, character-driven style; it’s actually a collection of stories from past issues of The New Yorker.

Of course Gates and Buffett love this book — it’s about business, but told through story. As Gates describes in a blog post, many of the particulars of business have changed, but the fundamentals have not. Sharpening your business acumen doesn’t have to be a boring affair. Look at what past organizations have encountered, and you’ll find stories of the human condition to be a common denominator — and information you can use to achieve your own competitive advantage.

4)  All highly intelligent people share this trait, according to Steve Jobs [Source: inc.com

How can you gauge a person’s real intelligence? Jeff Bezos looks for the ability to change your mind frequently. Elon Musk is all about examining skills over credentials. Steve Jobs, however, took another approach. According to Jobs, the key to being truly smart isn't deep expertise in one field, but instead the ability to make unexpected connections between fields.

Breadth beats depth: "A lot of [what it means to be smart] is the ability to zoom out, like you're in a city and you could look at the whole thing from the 80th floor down at the city. And while other people are trying to figure out how to get from point A to point B reading these stupid little maps, you could just see it in front of you. You can see the whole thing," Jobs says in a talk to the Academy of Achievement way back in 1982. Exploring the world in unique and unexpected ways is the key.

Science agrees with Jobs: You're unlikely to bring fresh perspectives to your work if you have the same interests as everyone else around you. But many of us miss this truth in practice, fretting so much about building up our abilities in our primary area of expertise that we tell ourselves we have no time for "pointless" exploration or random detours. Science agrees with Jobs that such single-mindedness can limit your intelligence and your creativity. If you want to be smart enough to come up with a good idea in the first place, it's essential to cultivate intellectual openness and diverse interests.

5) The coming age of disorder will favour commodities [Source: Bloomberg]

Ever since the double shock of collapsing oil prices and the advent of the pandemic six months ago, it has looked as though the existing order cannot hold. So what comes next? And what are the implications for long-term asset management? Is it time for a New World Order? For anyone involved in managing very long-term money, the latest Long-Term Asset Return Study by Deutsche Bank AG’s veteran financial historian Jim Reid should be useful. He suggests we have seen five distinct global economic eras since 1860, and are now entering a sixth, labeled the Age of Disorder: 1) The first era of globalization (1860-1914); 2) The Great Wars and the Depression (1914-1945); 3) Bretton Woods and the return to a gold-based monetary system (1945-1971); 4) The start of fiat money and the high-inflation era of the 1970s (1971-1980); 5) The second era of globalization (1980-2020?); 6) The Age of Disorder (2020?-????).

The problem, as Reid makes clear, is that for the last two decades, the current order has required ever greater reliance on debt. If you include the Covid impact, debt as a proportion of GDP could move to levels only previously seen to fight the Second World War. What does all this imply for asset returns? Betting on a return to inflation might be a good idea. And indeed, the only period in which commodities outperformed was the stagflationary 1970s. As commodities (excluding precious metals) have been mired in a bear market for more than a decade, and have a historical tendency to move in long waves, maybe that is one asset class to look at.

Long-term financial histories are often dismissed as meaningless comparisons of eras that can't be compared. The author of this article thinks that is a mistake. A new trade is under way in markets, based on the belief that “herd immunity” has already been achieved in many large countries, so a return to full normality doesn't need to await a vaccine. Money is already being allocated on this basis. Look at the recent turbulence in tech stocks. Optimism about the pandemic does play into the problems for big tech names, which are viewed as benefiting from lockdown conditions. The strongest argument in favor of herd immunity is that every serious breakout has followed a similar pattern. The virus spreads quickly, plateaus for about a week, and then steadily declines.

6)  A psychologist explains why these 5 habits will help you stay focused all day [Source: inc.com]     

Psychologist Traci Stein gives five techniques that you can use to improve focus and build them into daily habits to keep that benefit going into the future.

1) Take care of your physical needs: "Of course, the most basic foundation for focusing is to take good care of yourself," Stein writes. This means getting regular exercise, which has been shown to help you increase focus later on, as well as other cognitive benefits. A few minutes a day of meditation, which Bill Gates does, will also enhance your ability to stay focused.

2) Plan for your “escape behaviours”: Stein defines them as "those things you do to alleviate the stress or boredom that crops up whenever you have to work on a specific task or assignment." They vary from person to person but can include things like mindless snacking (I do that), getting sleepy, checking your email (guilty!), checking social media, or suddenly getting very sleepy.

3) Plan regular breaks: One popular approach is to use the Pomodoro Technique, which calls for 25 minutes of focused work followed by a 5-minute break, with at least a 15-minute break every two hours. Or, work for 52 minutes and then take a 17-minute break, which one experiment showed is the ideal rhythm for maximum productivity.

4) Give binaural beats a try: "Binaural beat technology is a type of brainwave entrainment that uses auditory tones to shift one's predominant brainwave state into something more appropriate or relevant to the task at hand," Stein explains. It works by playing different frequency tones in each ear. "The brain will hear the difference between these tones, rather than hearing each one separately," she explains.

5) Forgive yourself for losing focus: These are stressful times, as we are mostly working from home. And working from home with school-age children is sure to get you distracted. So you can't expect yourself to maintain the same level of focus and productivity that you would in a more normal era; it's unrealistic and it's unfair. So, be happy with whatever level of focus you have.

7) The East India Company: The original corporate raiders [Source: The Guardian]

This elaborative article takes you through the history of one of the biggest corporations in the history, the East India Company, and how they made their money through ”loot”. A visit to Powis castle will give you a gist. The last hereditary Welsh prince, Owain Gruffydd ap Gwenwynwyn, built Powis castle as a craggy fort in the 13th century; the estate was his reward for abandoning Wales to the rule of the English monarchy. But its most spectacular treasures date from a much later period of English conquest and appropriation: Powis is simply awash with loot from India, room after room of imperial plunder, extracted by the East India Company in the 18th century. There are more Mughal artefacts stacked in this private house in the Welsh countryside than are on display at any one place in India – even the National Museum in Delhi. There’s also a huge framed canvas that explains how they came to the castle.

The painting shows a scene from August 1765, when the young Mughal emperor Shah Alam, exiled from Delhi and defeated by East India Company troops, was forced into what we would now call an act of involuntary privatisation. The scroll is an order to dismiss his own Mughal revenue officials in Bengal, Bihar and Orissa, and replace them with a set of English traders appointed by Robert Clive – the new governor of Bengal – and the directors of the EIC, who the document describes as “the high and mighty, the noblest of exalted nobles, the chief of illustrious warriors, our faithful servants and sincere well-wishers, worthy of our royal favours, the English Company”. The collecting of Mughal taxes was henceforth subcontracted to a powerful multinational corporation – whose revenue-collecting operations were protected by its own private army.

It was at this moment that the East India Company (EIC) ceased to be a conventional corporation. Within a few years, 250 company clerks backed by the military force of 20,000 locally recruited Indian soldiers had become the effective rulers of Bengal. An international corporation was transforming itself into an aggressive colonial power. The first serious territorial conquests began in Bengal in 1756; 47 years later, the company’s reach extended as far north as the Mughal capital of Delhi, and almost all of India south of that city was by then effectively ruled from a boardroom in the City of London. It was not the British government that seized India at the end of the 18th century, but a dangerously unregulated private company headquartered in one small office, five windows wide, in London, and managed in India by an unstable sociopath – Robert Clive.

8) 6 ways to close a cold call every time [Source: Forbes]

For most people, cold calling is one of the worst parts of selling. The rejection can be harsh and no one likes to feel that way. But what if you knew that cold calling is amazing and profitable? Jennifer Gilbert, founder of Save the Date, an eight-figure, award winning hospitality agency loves to cold call and has figured out the secret formula to make them wildly successful. Here are Jennifer’s six tips for closing a cold call every time.

1) Do your research: There are many ways in which you can do your research. Go through Linkedin or other professional or personal networks.

2) Use humor: “When I get someone on the phone that asks me to call them back the next day, and then the day after, I will say “Did we break up?” or “Are you breaking up with me?” I generally get them laughing, then we talk business,” explains Gilbert.

3) Ask for what you want: “It's amazing what people will tell you if you ask them, nicely. If they are the right person and don't have time to speak to you, ask them if you can swing by, drop them a coffee or lunch and sit with them for 10 minutes. If they aren't the right person, ask them who makes the decision, and if they can transfer you,” suggests Gilbert.

4) Make it a conversation: Speak slowly and remember it is not a sale it is small talk. If you love and believe in the product or service that you are selling, you are enlightening someone about something they don’t have that they should.

5) Let them do the talking: Be sure to listen more than you speak. It’ll give you clues into how to add more value and be a resource for them right when they need it.

6) Have your next steps before you hang up: “Do not get off that phone without getting some sort of information,” notes Gilbert.

9) Remote work is here to stay. Three keys to building high-performing virtual teams [Source: Forbes]

Most of the companies would ask their employees to work from home even after the pandemic. Remote work is here to stay. But, what is required to have a high-performing virtual team? The research shows that successful virtual teams have mastered three areas of focus: 1) Trust: Before the coronavirus forced us to go virtual, we often heard leaders say they were concerned about trust. How will I know people are doing their work if I can’t see them at their desks? Research suggests that teams perform better when they trust the organization. We can build trust by sharing information freely and fairly and by resourcing teams and individuals equitably. 

2) Connection: Virtual teams start to feel disconnected when there’s a communication breakdown. One of the most important things you can do as a leader is to assess how knowledge is shared in your team: is it reaching the team members who are most at the periphery? Is it timely? Is it efficient, with the right medium (email vs. video conference, for example) for the task? If so, you’re establishing strong connections.

Performance standards: Finally, virtual team leaders need to put their focus on performance standards. Leading management scholar Edgar Schein says extraordinary teams have a sense of distinctiveness that is often driven by high performance standards. How do you set high standards for your virtual team? First, make sure every team member knows why they are there and how their work connects to the organization’s mission and the project’s purpose. Then connect each person to clear goals that are a stretch to deliver. If your goals can be reached just by working a little harder, you haven’t really stretched. Challenge your team to set goals that require thinking differently in order to succeed. That will push you and your team to innovate.

10) The fight over the future of the workplace [Source: The Economist]

Around the world workers, bosses, landlords and governments are trying to work out if the office is obsolete—and are coming to radically different conclusions. Some 84% of French office workers are back at their desks, but less than 40% of British ones are. Jack Dorsey, the head of Twitter, says the company’s staff can work from home “forever” but Reed Hastings, the founder of Netflix, says home-working is “a pure negative”. The disagreement reflects uncertainty about how effective social distancing will be and how long it will take before a covid-19 vaccine is widely available.

Before the pandemic only 3% of Americans worked from home regularly; now a huge number have tried it. Even Xerox, a firm synonymous with office printers spewing unread pages, has many of its staff working from home. As more people adopt remote-working technologies there is a powerful network effect, with each new customer making the service more useful. How much of this change will stick when a vaccine arrives? In Germany, for example, 74% of office workers now go to their place of work, but only half of them are there five days a week, according to surveys by Morgan Stanley. The exact balance will depend on the industry and city.

For governments, the temptation is to turn the clock back to limit the economic damage. Rather than resisting technological change, it is far better to anticipate its consequences. Two priorities stand out. 1) a vast corpus of employment law will need to be modernised. Already the gig economy has shown that it is out of date. Now new prickly questions about workers’ rights and responsibilities loom: can firms monitor remote workers to assess their productivity? Who is liable if employees injure themselves at home? 2) The second priority is city centres. For a century they have been dominated by towers filled with swivel chairs and tonnes of yellowing paper. Now complex urban-planning rules will need a systematic overhaul to allow buildings and districts to be redeveloped for new uses, including flats and recreation.

Click here to see Forbes India's comprehensive coverage on the Covid-19 situation and its impact on life, business and the economy‚Äč

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