Your business model is obsolete; Assume this: Everything you think you know about staying competitive doesn’t work anymore

Your business model is obsolete

February 25, 2013: 5:00 AM ET

Assume this: Everything you think you know about staying competitive doesn’t work anymore.

By Geoff Colvin, senior editor-at-large

FORTUNE — When Carlos Ghosn announced last year that Nissan, which he runs, will start making ultracheap cars for emerging markets under the revived Datsun brand — and will make a profit on them — the mainstream response was contemptuous. “A big mistake,” a Toyota (TM) executive told the Wall Street Journal; “another blunder,” said a Japanese professor. Make a profit on a $3,000 vehicle? Everyone knows the profits are in pickup trucks and luxury cars.

No one can predict if Ghosn’s new vision will work. His previous rethinking of the business, the all-electric Leaf, hasn’t amounted to much so far. But applaud Ghosn for this: He is trying to develop the most crucial competency for every company today, innovating the business model.

“Innovation” is the hottest word in business, but most of the discussion centers on products and services. The more profound challenge for most companies now is imagining a new business model, a new answer to the fundamental question, How do we make money? Read more of this post

Wombs for rent: Indian surrogate mothers tell their tales

Published: Monday February 25, 2013 MYT 1:51:00 PM

Wombs for rent: Indian surrogate mothers tell their tales

NEW DELHI: As baby Lili celebrates her first birthday in Australia, far away in India her surrogate mother recalls the day the child was born – and on whom she never laid eyes.

“I averted my gaze,” says Seita Thapa, recounting her experience of giving birth at the Surrogacy Centre India clinic in New Delhi last February on behalf of a gay male couple who used an egg donated from another woman.

“Why would I want to see the child? – I have my own children,” said the mother of two teenagers aged 16 and 18, adding that the clinic gives courses that “prepare us mentally for the fact it’s not our baby”.

Commercial surrogacy is a booming industry in India with legions of childless foreign couples looking for a low-cost, legally simple route to parenthood.

While the Indian government has been pushing the country as a medical tourism destination, the issue of wealthy foreigners paying poor Indians to have babies has raised ethical concerns in many Indian minds about “baby factories”.

The Confederation of Indian Industry, a leading business association, estimates the industry now generates more than $2 billion in revenues annually. Read more of this post

Do Managers Tacitly Collude to Withhold Industry-Wide Bad News?

Do Managers Tacitly Collude to Withhold Industry-Wide Bad News?

Jonathan L. Rogers 

University of Chicago – Booth School of Business

Catherine M. Schrand 

University of Pennsylvania – Accounting Department

Sarah L. C. Zechman 

University of Chicago – Booth School of Business
February 1, 2013
Chicago Booth Research Paper No. 13-12

That managers would choose to withhold firm-specific bad news is not only intuitive, but supported by theory, observed disclosure patterns, and survey responses. When the bad news is industry-wide, however, explaining withholding as a sustainable equilibrium is more complicated. If any one firm chooses to disclose, the news effectively becomes public, creating incentives for other firms to disclose. Withholding is only sustainable if all firms cooperate (“tacitly collude”), which depends on their own incentives, and their conjectures about the incentives of other firms in the industry to cooperate. We document cases of increased intra-industry opacity in the annual 1’2K, controlling for changes in fundamentals, consistent with tacit collusion to hide news. Tacit collusion is more likely in industries with more significant equity incentives and more concentrated industries, and less likely in industries in which observable/public macro-economic data relevant to firm valuation is available. The collusion episodes are followed by abnormally poor industry level accounting and market performance two to three years out. The results have implications for understanding when market forces are sufficient to generate voluntary disclosure of industry-wide news.

Wang Wei’s journey from deliveryman to logistics tycoon of SF Express with over US$2.4 billion in revenue

Wang Wei’s journey from deliveryman to logistics tycoon

Staff Reporter

wang wei-153655_copy1

A rare photo of SF Express founder Wang Wei. (Internet photo)

Wang Wei is the low-key founder of SF Express, one of China’s two leading express delivery companies.

The 41-year-old Wang started SF Express nearly 20 years ago and has since developed the company into an delivery giant that recorded 15 billion yuan (US$2.4 billion) in revenue in 2011. Despite the extraordinary success of his company, Wang has said SF Express does not advertise and that he does not intend to take the company public or use it to make strategic investments. It is an attitude that has made Wang well-respected among China’s leading entrepreneurs, including Alibaba founder and chairman Jack Ma. Read more of this post

The Ways Art Investors Blow It; Adding art to your portfolio can be a lot trickier than putting it on your wall.

February 25, 2013

The Ways Art Investors Blow It

Three common mistakes novices fall prey to—and how to avoid them


Adding art to your portfolio can be a lot trickier than putting it on your wall.

With regular investments looking uncertain these days, individuals and financial pros are snapping up artwork to diversify their holdings—and, with any luck, realize big returns.


But with more competition for desired pieces, prices are soaring ever higher and the chances of making a costly mistake are rising too. Here’s a look at some of the pitfalls of art investors face and how to avoid them. Read more of this post

Comic-book investing is a funny business—and sometimes a profitable one

February 25, 2013

Wham! Ka-Pow! Zounds!

Comic-book investing is a funny business—and sometimes a profitable one


In August 2008, comic-book dealer Metropolis Collectibles Inc. auctioned a copy of Action Comics No. 1—which introduced the character of Superman in 1939—for $317,200. At the time, it was the largest sum ever paid for a comic book.

When the real estate and stock markets tanked in 2008, some savvy investors turned to the so-called “golden age” comic books, and the market has continued to boom. WSJ’s Steve Rosenbush talks to Vincent Zurzolo, COO of Metropolis Collectibles.

Last November, Metropolis sold another copy of Action Comics No. 1. The price this time: $2.2 million.

While some other asset classes withered in the wake of the recent financial crisis, comic books have emerged triumphant. They’re not all investment superheroes, but overall demand has risen steadily in recent years, says Ed Jaster, a senior vice president and comic-book specialist at Heritage Auctioneers & Galleries Inc. in New York. Read more of this post

Chief Taste Tester, Innovator and Boss Behind the Tabasco Brand

Updated February 24, 2013, 7:24 p.m. ET

PAUL MCILHENNY | 1944-2013

Chief Taste Tester, Innovator and Boss Behind the Tabasco Brand


One of Paul McIlhenny’s favorite roles as leader of the Louisiana-based family company that makes Tabasco was taste tester.

The chairman and chief executive of McIlhenny Co., who died Saturday at the age of 68, was heavily involved in recent years with the development of new products that went beyond the company’s iconic pepper sauce. It was part of Mr. McIlhenny’s love of the food business that also included befriending celebrity chefs and cooking Louisiana Creole dishes, said Tony Simmons, president of McIlhenny Co. and Mr. McIlhenny’s cousin. Read more of this post

1 Corinthians 13:4: Love is patient, love is Kind

This verse from the Bible is shared to me by a kind friend and investment veteran this morning after reading my “Bamboo Innovator” article, saying he particularly “like the statement : ‘To trust is to be kind to others – & making ourselves vulnerable’.” Thank you for your kind encouragement.

1 Corinthian 13:4: “Love is patient, love is kind. It does not envy, it does not boast, it is not proud. it does not dishonor others, it is not self-seeking, it is not easily angered, it keeps no record of wrongs. Love does not delight in evil but rejoices with the truth. It always protects, always trusts, always hopes, always perseveres.”


President Park: The Republic of Korea as we know it today has been built on the blood, toil, and sweat of the people. I have faith in the Korean people. I believe in their resilience and the potential of our dynamic nation.

2013-02-25 11:25

“Opening a New Era of Hope”

My fellow Koreans and seven million fellow compatriots overseas,

As I take office as the 18th-term President of the Republic of Korea, I stand before you today determined to open a new era of hope.

I am profoundly grateful to the Korean people for entrusting this historic mission to me. I also thank President Lee Myung-bak, former Presidents, dignitaries who have come from abroad to celebrate this occasion, and other distinguished guests for their presence.

As President of the Republic of Korea, I will live up to the will of the people by achieving economic rejuvenation, the happiness of the people, and the flourishing of our culture.

I will do my utmost to building a Republic of Korea that is prosperous and where happiness is felt by all Koreans.

Fellow citizens,

The Republic of Korea as we know it today has been built on the blood, toil, and sweat of the people. Read more of this post

Mobile Revolution Buffets Taiwan PC Rivals; Two computer-making neighbors in the technologically inclined economy of Taiwan seem headed in opposite directions.

February 24, 2013

Mobile Revolution Buffets Taiwan PC Rivals


TAIPEI — Two computer-making neighbors in the technologically inclined economy of Taiwan seem headed in opposite directions.

Personal computer sales have slumped worldwide as smartphones and tablets have proliferated and gained in popularity. One Taiwan heavyweight, Acer, has shared in the suffering: It is expected to report a second straight annual loss in 2012 after losing 6.6 billion Taiwan dollars, or $223 million at the current exchange rate, in 2011.

But another Taiwan-based PC company, Asustek, which sells computers under the Asus name, grew 43 percent in the quarter that ended in September, to 6.7 billion dollars in net income. The company’s PC sales rose 6.4 percent even as industrywide PC shipments declined 4.9 percent in the last three months of 2012, according to the research firm Gartner.

The companies’ divergent fortunes expose both the mistakes and the opportunities for PC makers in an epic shift in the way consumers use technology. Read more of this post

‘Bloodless’ Lung Transplants Offer Hint at Surgery’s Future

February 24, 2013

‘Bloodless’ Lung Transplants Offer Hint at Surgery’s Future


HOUSTON — Last April, after being told that only a transplant could save her from a fatal lung condition, Rebecca S. Tomczak began calling some of the top-ranked hospitals in the country.

She started with Emory University Hospital in Atlanta, just hours from her home near Augusta, Ga. Then she tried Duke and the University of Arkansas and Johns Hopkins. Each advised Ms. Tomczak, then 69, to look somewhere else.

The reason: Ms. Tomczak, who was baptized at age 12 as a Jehovah’s Witness, insisted for religious reasons that her transplant be performed without a blood transfusion. The Witnesses believe that Scripture prohibits the transfusion of blood, even one’s own, at the risk of forfeiting eternal life.

Given the complexities of lung transplantation, in which transfusions are routine, some doctors felt the procedure posed unacceptable dangers. Others could not get past the ethics of it all. With more than 1,600 desperately ill people waiting for a donated lung, was it appropriate to give one to a woman who might needlessly sacrifice her life and the organ along with it? Read more of this post

Edmund Phelps: Less Innovation, More Inequality; America’s peak years of indigenous innovation ran from the 1820s to the 1960s. A slowdown in dynamism since then has contributed to soaring inequality

FEBRUARY 24, 2013, 9:13 PM

Less Innovation, More Inequality


ONE source of the outsize inequalities in America is the dynamism that made economic activity so rewarding. An economy open to new concepts and novel ventures is bound to generate unequal gains. To tax all of those gains would close off the prospects for success that many entrepreneurs need if they are to undertake ambitious ventures — a big mistake. But it would also be a mistake to misunderstand the relation of inequality and innovation. It is less innovation — not more — that has widened inequality in the United States in recent decades.

America’s peak years of indigenous innovation ran from the 1820s to the 1960s. There were a few financial panics and two depressions, to be sure. But in this period, a frenzy of creative activity, economic competition and rapid growth in national income provided widening economic inclusion, rising wages for all and engaging careers for most. Innovations gave workers better tools to work with and better products to make, thus lifting their wages. Then this innovation began to retreat, most of it to an area of land along the West Coast. In the early 1970s the rate of indigenous innovation (as measured by its estimated contribution to the rate of growth in labor productivity) dropped by about half — to around 1 percent since then, from about 2 percent before then.

The economist Robert J. Gordon has noted this slowdown in innovation, which he lays to the end of big breakthroughs. My view is that innovation has declined in the everyday processes that businesses tinker with incrementally as they try to become more productive over time. This decline of innovation across many fields — with notable exceptions like Silicon Valley, biotechnology and clean energy — has set back much of the earlier gains in productivity in American history. Read more of this post

Barnes & Noble Weighs Its E-Reader Investment; The company’s underperforming Nook Media division might signal that its substantial investment in its digital future has essentially run its course

February 24, 2013

Barnes & Noble Weighs Its E-Reader Investment


Even for a company with a lot of bad news lately, the bulletin from Barnes & Noble this month had an ominous feel.

Barnes & Noble, the nation’s largest book chain, warned that when it reports fiscal 2013 third-quarter results on Thursday, losses in its Nook Media division — which includes sales of e-books and devices — will be greater than the year before and that the unit’s revenue for all of fiscal 2013 would be far below projections it gave of $3 billion.

The problem was not so much the extent of the losses, but what the losses might signal: that the digital approach that Barnes & Nobles has been heavily investing in as its future for the last several years has essentially run its course.

A person familiar with Barnes & Nobles’s strategy acknowledged that this quarter, which includes holiday sales, has caused executives to realize the company must move away from its program to engineer and build its own devices and focus more on licensing its content to other device makers. Read more of this post

Five Star Billionaire by Tash Aw – review; Tash Aw’s tale of five migrant workers carving out lives in a modernising Shanghai is the stuff of a hit TV miniseries

Five Star Billionaire by Tash Aw – review

Tash Aw’s tale of five migrant workers carving out lives in a modernising Shanghai is the stuff of a hit TV miniseries

Adam Mars-Jones

The Observer, Sunday 24 February 2013

Shanghai, a city ‘with a heart as deep and unknown as the forests of the Amazon’. Photograph: Alamy

At one point in Tash Aw’s fine new novel about what people call “the newChina” a young woman is trying to photograph herself on her mobile phone in a park in Guangzhou, hoping to enliven her internet dating profile with an image that doesn’t make her look like an immigrant factory worker (which she is). An old man who sells tickets for the rowing boats on the lake offers to take the picture for her. He looks uncertainly at her phone. She wonders if he understands how to work it. Then he says: “This phone is so old. My grandson had one just like this three years ago when he was still in middle school.” This is the world of the book, where traditional societies seem to have leapfrogged their way into a modernity without signposts, where the past isn’t solid enough to build on but too substantial to be ignored.

The five main characters, three men and two women, all come to Shanghai (by some definitions the world’s largest city) from Malaysia, though their backgrounds range from old money to rural deprivation. As a title, Five Star Billionaire is close to brash, and the book’s storyline could persuasively be pitched to a producer in search of a blockbuster miniseries, but the reading experience it offers is coolly engrossing – with elements of frustrating evasion – rather than propulsive. Tash Aw doesn’t exactly kill plot momentum or the emotional impact of the situations he creates, but he certainly keeps them in check. Narrative hints are often indirect, like clues in a detective story, as when a passing reference to a character having written an article deploring the architecture of Gaudí suggests that a conversation almost a hundred pages earlier wasn’t in fact spontaneous. Read more of this post

Selloff Rattles Asia’s Bond Market; Plunge in Riskier Corporate Debt Has Left Many Investors with Large Losses, and Stoked Broad Fears

February 20, 2013, 6:47 p.m. ET

Selloff Rattles Asia’s Bond Market

Plunge in Riskier Corporate Debt Has Left Many Investors with Large Losses, and Stoked Broad Fears


Fund managers worried about the end of an extended bull market in bonds might look to Asia, where a sudden selloff in a certain class of risky bonds has left many investors with large losses.

The plunge in so-called perpetual bonds is viewed as a cautionary example of an asset that had gotten too frothy and, some skeptics say, could be a sign of things to come in other corners of the bond market. Read more of this post

China will never match US in innovation: Lee Kuan Yew; “America’s creativity, resilience and innovative spirit will allow it to confront its core problems, overcome them, and regain competitiveness,”

China will never match US in innovation: Lee Kuan Yew

Staff Reporter


In a new book about the relationship between China and the United States, Singapore’s former prime minister Lee Kuan Yew says China will never be able to compete with the United States in terms of creativity, reports the Australian.

In The Grand Master’s Insights on China, the United States and the World written by Graham Allison, Robert Blackwill and Ali Wyne, Lee says Beijing is trying to restore China’s historical position as the Middle Kingdom while the United States is also trying its best to maintain its superiority. Countries in Southeast Asia are still wary of what China may be like if the country becomes the dominant power in the Western Pacific.

“They are uneasy that China may want to resume the imperial status it had in earlier centuries, and have misgivings as being treated as vassal states.” While Beijing tells its neighbors that countries big or small are equal, Lee points out that China also tells them that they have made 1.3 billion people unhappy when they do things it doesn’t like. For this reason, Lee pointed out that a rising China is likewise concerned and insecure about the actions of small Asian nations.

Lee said it would be extremely unwise for China to enter an arms race with the United States. “The Chinese must avoid the mistakes made by Germany and Japan. Their competition for power, influence and resources led in the last century to two terrible wars.” Beijing must likewise avoid the fate of the Soviet Union. “The Russian mistake was that they put so much into military expenditure and so little into civilian technology that their economy collapsed.” For this reason, Lee says he believes China will keep its head down for at least another 40 or 50 years rather than risk asserting dominance too soon.

Conceding that China is set to replace the United States to become world’s largest economy, Lee said however that China will never overtake the United States in innovation. “America’s creativity, resilience and innovative spirit will allow it to confront its core problems, overcome them, and regain competitiveness,” he said, while suggesting on the other hand that China’s creative development will be stifled by a traditional culture which does not permit a free exchange and contest of ideas.

China is also unlikely to become a liberal democracy, Singapore’s founding father suggested. “To achieve modernization, China’s Communist leaders are prepared to try every method except for democracy with one person and one vote in a multi-party system.” The party needs a monopoly on power to maintain the stability of the nation. If it launched liberal democratic reforms, the central government may lose its power over different provinces. “If it did, it would collapse,” said Lee, “If you believe there is going to be a revolution of some sort in China for democracy, you are wrong.”

U.S. Banks Bigger Than GDP as Accounting Rift Masks Risk

U.S. Banks Bigger Than GDP as Accounting Rift Masks Risk

Warning: Banks in the U.S. are bigger than they appear.

That label, like a similar one on automobile side-view mirrors, might be required of the four largest U.S. lenders if Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corp., has his way. Applying stricter accounting standards for derivatives and off-balance-sheet assets would make the banks twice as big as they say they are — or about the size of the U.S. economy — according to data compiled by Bloomberg.

“Derivatives, like loans, carry risk,” Hoenig said in an interview. “To recognize those bets on the balance sheet would give a better picture of the risk exposures that are there.”

U.S. accounting rules allow banks to record a smaller portion of their derivatives than European peers and keep most mortgage-linked bonds off their books. That can underestimate the risks firms face and affect how much capital they need.

Using international standards for derivatives and consolidating mortgage securitizations, JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. would double in assets, while Citigroup Inc. would jump 60 percent, third- quarter data show. JPMorgan would swell to $4.5 trillion from $2.3 trillion, leapfrogging London-based HSBC Holdings Plc and Deutsche Bank AG, each with about $2.7 trillion. Read more of this post

CITI: There’s A Crisis Lurking In The Bond Market And No One Is Talking About It

CITI: There’s A Crisis Lurking In The Bond Market And No One Is Talking About It

Matthew Boesler | Feb. 20, 2013, 1:24 PM | 6,214 | 10

The Federal Reserve has revealed that it is considering scaling down and possibly even completely halting quantitative easing by the end of this year.

Whether or not the central bank will actually be in a position to do that in 2013 is one of the hottest debates in the market right now – but the 10-year U.S. Treasury yield has risen from an all-time low below 1.5 percent in July to its current levels, slightly above 2 percent, and that has people talking.

“It’s the $64,000 question: What ends up bringing this down?” Citi strategist Michael H. Anderson told Business Insider.

As several members of the Federal Reserve ramp up the public dialogue surrounding financial stability, Anderson thinks they’re looking in the wrong place.

In a recent note to clients, he wrote, “It’s more likely the excess that ultimately brings this cycle to an end is one that few are mentioning.”

In aggregate, investors have poured a staggering amount of money – hundreds of billions of dollars – into bond funds over the past five years. They have been largely deterred from stocks as memories of the crash in 2008 continue to haunt the market.

That may all be changing as investors in mutual funds begin to open up their monthly statements and realize that their bond investments are starting to lose money.

What happens when investors start pulling money from these mutual funds, and the fund managers have to turn around and get rid of their holdings of corporate bonds? Read more of this post

The Coming Atlantic Century; the pervasive narrative of western decline and Asia rising is quickly reversing itself

Anne-Marie Slaughter

Anne-Marie Slaughter, a former director of policy planning in the US State Department (2009-2011) and a former dean of the Woodrow Wilson School of Public and International Affairs, is Professor of Politics and International Affairs at Princeton University. She is the author of The Idea That Is America: Keeping Faith with Our Values in a Dangerous World.

The Coming Atlantic Century

21 February 2013

PRINCETON – The United States is rising; Europe is stabilizing; and both are moving closer together. That was the principal message earlier this month at the annual Munich Security Conference (MSC), a high-powered gathering of defense ministers, foreign ministers, senior military officials, parliamentarians, journalists, and national-security experts of every variety. The participants come primarily from Europe and the US; indeed, when the conference began in 1963, it was focused entirely on NATO members. This year, however, senior government officials from Brazil, China, India, Nigeria, Singapore, Qatar, and Saudi Arabia also joined, an important sign of the times. John McCain, the US senator and 2008 presidential candidate, always leads a large congressional delegation to Munich. The US administration also typically sends the Secretary of Defense or the Secretary of State to deliver a ritual speech reassuring the Europeans of the strength of the transatlantic alliance. This year, Vice President Joe Biden did the honors, bumping the US representation up a notch.

The conference also featured a panel on an unusual subject – “The American Oil and Gas Bonanza: The Changing Geopolitics of Energy.” Read more of this post

Andy Kessler: When Interest Rates Rise, Watch Out; The Fed’s inevitable Sword of Damocles could be brutal for bonds and stocks. Some of us recall the massacre of 1994

February 21, 2013, 7:09 p.m. ET

Andy Kessler: When Interest Rates Rise, Watch Out

The Fed’s inevitable Sword of Damocles could be brutal for bonds and stocks. Some of us recall the massacre of 1994.


Can Ben Bernanke fly us through a needle’s eye? Minutes released this week from the last Federal Reserve policy meeting suggest evaluations are taking place that “might well lead the Committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred.” It’s about time. The experiment to kick-start the economy with near-zero interest rates has failed. Maybe our central bankers have figured out that low rates are what is holding back lending and hiring and growth.

Meanwhile, even as the stock market hits highs not seen since 2007, everyone on Wall Street knows interest rates will go up—although no one except Mr. Bernanke knows when. Investors are playing a game of chicken with rates, enjoying the ride but bracing for a downturn when the rates turn up. When rates go up, bonds become more attractive than stocks because you get returns with less risk.

Those of us on Wall Street in 1994 witnessed something very similar. After several years of essentially flat short-term rates, the Fed raised rates by 25 basis points (or 0.25%) on Feb. 4, 1994. The Fed raised short-term rates a total of six times and 2.5% over the next 10 months.

In what became known as a bond-market massacre, the price of long bonds dropped almost 9%. The stock market dropped 9% in three months, killing a then-vibrant market for initial public offerings.

Today we are at the bitter end of a three-decade-long interest rate cycle, culminating in Mr. Bernanke’s near-zero rates. You can’t fall off the floor. And the prospect of higher interest rates is like the Sword of Damocles hanging over the stock market. Read more of this post

Why the Euro Crisis Isn’t Over; The economist who dared to predict Europe’s mess, and was fired for it, says there is much more pain to come

Updated February 22, 2013, 6:27 p.m. ET

Why the Euro Crisis Isn’t Over

The economist who dared to predict Europe’s mess, and was fired for it, says there is much more pain to come



Seventeen years ago, Bernard Connolly foretold the misery that awaited the European Union. Given that he was an instrumental figure in the EU bureaucracy and publicly expressed his doubts in a book called “The Rotten Heart of Europe,” he was promptly fired. Mr. Connolly takes no pleasure now in having seen his prediction come true. And he takes no comfort in the view, prevalent in many quarters, that the EU has passed through the worst of its crisis and is on the cusp of revival.

As far as Mr. Connolly is concerned, Europe’s heart is still rotting away.

The European political class, he says, believes that the crisis “hit its high point” last summer, “because that was when there was an imminent danger, from their point of view, that their wonderful dream would disappear.” But from the perspective “of real live people, and families and firms and economies,” he says, the situation “is just getting worse and worse.” Last week, the EU reported that the euro-zone economy shrank by 0.9% in the fourth quarter of 2012. For the full year, gross domestic product fell 0.5% in the euro zone.

Two immediate solutions present themselves, Mr. Connolly says, neither appetizing. Either Germany pays “something like 10% of German GDP a year, every year, forever” to the crisis-hit countries to keep them in the euro. Or the economy gets so bad in Greece or Spain or elsewhere that voters finally say, ” ‘Well, we’ll chuck the whole lot of you out.’ Now, that’s not a very pleasant prospect.” He’s thinking specifically, in the chuck-’em-out scenario, about the rise of neo-fascists like the Golden Dawn faction in Greece.

Mr. Connolly isn’t just any Cassandra. When he predicted disaster, he was running the European Commission’s Monetary Affairs Committee, the Brussels bureaucracy charged with ushering the euro into being. His public confession of fear that the monetary union would inevitably produce an economic crisis not only cost him his job, he says, it also cost him his pension, and he was barred from his office even before his dismissal was official. In the introduction to the paperback edition of “The Rotten Heart of Europe,” Mr. Connolly describes how his photograph was posted at entrances to the commission’s offices, as if he were a wanted criminal. Read more of this post

Schools think too narrowly on entrepreneurship; Identifying new business opportunities should be core to management education

February 24, 2013 11:46 pm

Schools think too narrowly on entrepreneurship

By Tim Faley and Peter Adriaens

Identifying new business opportunities should be core to management education

Growth is the top concern of corporate executives, economic developers and government officials desperately trying to reduce unemployment. That growth will be driven by entrepreneurs creating new businesses and new lines of business within existing companies.

Institutes of higher learning are responding with courses and dedicated entrepreneurial centres. In the US alone, the number of schools offering courses in entrepreneurship has grown from fewer than 100 in 1977 to more than 2,000 today. These institutions hold the promise of teaching those skills necessary to forge a new generation of successful serial entrepreneurs. But that dream has been derailed.

In fact, the promise of entrepreneurship is being corrupted by false mythologies. A false mythology about entrepreneurship, particularly prevalent at today’s universities and business schools, is stifling entrepreneurship.

Entrepreneurs need more than an idea, a pitch and some cash to build great companies. Graduate management schools, which should be the beacon of sanity in this debate, while consistently communicating that it takes two years to learn how to manage an ongoing concern, often treat the creation of such a concern as trivial – a topic that can be mastered in a weekend exercise or week-long immersion class. What is the message in that?

Many business schools think about entrepreneurship far too narrowly. They believe that it is only about students creating cute little businesses and lump the subject in with other student services and club activities.

In fact the very opposite is true; identifying new business opportunities and managing their growth should be core to what business schools teach in the 21st century. Entrepreneurial skills – the ability to identify opportunities and threats, to formulate and assess businesses around those opportunities, to put them into operation, to fund them and grow those nascent ventures – are critical for any organisation concerned with growth. Business schools have a very different role to that of incubators. Business schools have a knowledge and skill-building mission. The focus should be on the fishing, not the fish. Read more of this post

South Korea’s New President Faces Choices on Economy

February 24, 2013, 6:37 p.m. ET

South Korea’s New President Faces Choices on Economy


SEOUL—When Park Geun-hye, the daughter of the man who led South Korea’s rise out of poverty, is sworn in as president on Monday, she will take control of an economy that is far larger and more important in the world—but that remains shaped by some of the institutions and regulations her father created in the 1960s.

One of the fundamental choices Ms. Park faces is whether to maintain the South Korean government’s enormous influence on the economy, which ranges from running dozens of regulatory agencies to owning about 400 companies, including several of the nation’s biggest banks.

Ms. Park is set to be sworn-in Monday morning before an invited crowd of 70,000 people on the grounds of the National Assembly, where she has been a member and leader of the ruling conservative party since the late 1990s.

Ms. Park, 61 years old, is the first woman to become president of South Korea. Thai Prime Minister Yingluck Shinawatra, the only other woman now leading an Asian nation, will attend Monday’s ceremony.

Since her election in December, Ms. Park has said little about the economy. The most substantial policy proposals announced by aides have been to expand welfare benefits for the elderly. Read more of this post

Righteous Republic: The Political Foundations of Modern India

February 24, 2013, 4:07 p.m. ET

India’s Founding Fathers


Britain dominated India for almost two centuries—initially through the East India Co. and later directly as the Raj—finally granting it independence in 1947. The Indian anti-colonial struggle was unique in that it reached its goal without violent overthrow. This was one of the great achievements of the nationalist movement’s enlightened leadership.

In “Righteous Republic: The Political Foundations of Modern India,” the historian Ananya Vajpeyi shows how these leaders looked to ancient Indian texts and traditions as they led the nation toward swaraj, or self-rule. The author profiles five prominent anti-colonial leaders and examines how each of them contributed to the nation’s successful “search for the self”: Mahatma Gandhi and Jawaharlal Nehru, who need no introduction; the Bengali poet and Nobel laureate Rabindranath Tagore; his nephew, the artist Abanindranath Tagore; and B.R. Ambedkar, the architect of the Indian constitution.

India had a glorious past, with millennia of learning, literature, science and art, culture and tradition. Yet by the time the country became the jewel in the crown of Queen Victoria, who was proclaimed Empress of India in 1877, knowledge of the ancient Indic political tradition—the ideas and practices by which “the precolonial kingdoms of the Mughals, the Deccani Sultans, the Nayakas, the Marathas, the Rajputs, and the Sikhs” ruled the subcontinent—had been all but erased thanks to a combination of colonial rule and internal decay. When Indians were told that democracy was a gift of the West, for example, very few questioned the assumption, even though panchayats, or self-governing village bodies, had existed for thousands of years on the subcontinent. Read more of this post

Unpredictable Policies Thwart Investment in Southeast Asia

Unpredictable Policies Thwart Investment in Southeast Asia
Karl Lester M. Yap | February 23, 2013

An unpredictable legal environment in Southeast Asia is the top concern of investors, according to an Economist Corporate Network survey, highlighting the challenge the region faces as it seeks to integrate by 2015 in an effort to boost growth and attract more investments.

Governments change their minds about important legislation with little warning, according to a report based on a survey of 147 companies including Unilever and General Electric released on Friday. “Even when laws remain unchanged, court decisions and interpretations of the laws can be highly arbitrary,” the report said.

While China remains the manufacturing capital of the world, companies including Nissan Motor and Google are expanding in Southeast Asia, lured by the prospect of a $2.2 trillion market. Nations including the Philippines are stepping up efforts to regain investor confidence after regulatory reversals and contract disputes in the past prompted Frankfurt, Germany-based Fraport to leave the country.

“The region’s diversity and uncertain legal environment remain major challenges for many multinationals,” said Clive Cook, a senior consultant at law firm Baker & McKenzie that commissioned the report. Companies are looking for legal advisers with expertise across different Association of Southeast Asian Nations markets, he said in a statement. Read more of this post

The most widespread margin squeeze in at least 10 years pushing some S’pore companies out of the city

Updated: Monday February 25, 2013 MYT 8:08:55 AM

The most widespread margin squeeze in at least 10 years pushing some S’pore companies out of the city

SINGAPORE: The most widespread margin squeeze in at least a decade is pushing some Singapore companies out of the city state as rising costs and slow growth sap profitability.

A Reuters study of 268 listed Singapore companies showed that 57 percent reported a year-on-year drop in operating profit margin for the first three quarters of 2012. That was the biggest percentage for the nine-month period on record, according to Thomson Reuters data going back to 2002. Full-year data for 2012 was not yet available.

A severe labour shortage is hobbling businesses in Singapore as the government tightens its immigration policies, while growth has been hard to come by as exports languish in a dull global economy.

Across Southeast Asia, 54 percent of companies reported shrinking margins, equalling the percentage recorded in 2009, when the global economy had tipped into a recession following the Lehman Brothers bankruptcy.

In all, Reuters examined the balance sheets of nearly 1,000 companies in Singapore, Malaysia, Indonesia, Thailand and the Philippines with a market value of at least S$100 million ($80.8 million).

The pain is particularly acute in Singapore, a smaller and more mature market lacking the burgeoning consumer classes of its emerging market neighbours. Inflation has heated up, with the consumer price index, due on Monday, expected to show a 4.0 percent rise in January, according to a Reuters poll.

The head of a Singapore business association is among those moving their corporate headquarters elsewhere, in search of lower costs and a larger market. Read more of this post

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