Germany’s Model Stresses Execution Over Innovation

March 13, 2013, 4:48 p.m. ET

Germany’s Model Stresses Execution Over Innovation


BERLIN—Henning Wehn has carved a niche for himself as Germany’s comedy ambassador to the U.K. On a recent TV program when asked what was the worst thing to overhear about yourself, playing to the German stereotype he replied “he isn’t all that efficient.”

The Wall Street Journal Deutschland recently held a tech cafe event in the heart of the capital’s startup district, Mitte, and much of the talk around the tables of the Kaffeemitte was on German entrepreneurship. The general consensus was that while Germany may not culturally be the most entrepreneurial country, the emphasis on execution was a national strength.

It should come as no surprise, then, that a particularly German way of building startups is emerging from the capital city; companies that are less focused on product innovation, and instead hone their execution.

Stepping away from the accelerator model (find existing exciting startups that are doing innovative things, provide them with mentors and a working space in return for equity), Berlin appears to be favoring the incubator (create companies that target specific and identified markets, hire smart people to run with the idea and provide them with the tools to execute).

Leading the way is the powerhouse of the German online economy, Rocket Internet. Founded by the media-shy Samwer brothers, it takes a proven business model, clones it and then just out-executes its competitors. According to the company’s youthful managing director, Alexander Kudlich, “We are able to launch within 3 1/2 weeks—from decision to launching.”

“It’s only about operationally doing every little thing right and faster and better than the others.” Read more of this post

SAP as Most Valuable German Company Validates Deals Spree: Tech

SAP as Most Valuable German Company Validates Deals Spree: Tech

When SAP AG (SAP) changed leadership in 2010, the software maker had just been through its first major job cuts in 38 years, clients were upset with price increases, and analysts considered the company a takeover target.

There’s little chance of a takeover now. SAP’s stock has gained 92 percent since Bill McDermott and Jim Hagemann Snabe took over as co-chief executive officers. SAP has vaulted past Siemens AG (SIE) and Volkswagen AG (VOW) to become Germany’s most valuable company despite revenue that’s 10 percent of Volkswagen’s and one-fifth that of Siemens.

McDermott, 51, and Snabe, 47, have made key acquisitions in cloud-computing and mobile applications, invested in a database that can analyze mountains of numbers in seconds, and hastened the development of new products. That has helped SAP increase sales to clients ranging from automakers to central banks to the National Football League.

SAP “oils the engine of the economy and lends it better momentum,” said Stephan Thomas, a portfolio manager at Frankfurt Trust, which oversees about $21 billion in assets and has recently increased its holding in SAP.

With a market capitalization of $102 billion, SAP is the world’s ninth-most-valuable technology company and the only European in the top 10. SAP’s price-to-earnings ratio, a gauge of how much investors are willing pay for the stock relative to profit, is the highest of the top 10. At 27 times earnings, SAP’s P/E exceeds Google Inc. (GOOG)’s 24.5 and 16.7 for archrival Oracle Corp. (ORCL), according to data compiled by Bloomberg. Read more of this post

Samsung Needs No Steve Jobs as Low-Profile Mobile Chief JK Shin Showcases Galaxy

Samsung Needs No Steve Jobs as Low-Profile Shin Showcases Galaxy

Samsung Electronics Co. will hold a very Apple-like event to unveil its latest smartphone in New York today. The Korean company will take the wraps off the Galaxy 4S at Radio City Music Hall and stream the event live on video screens in Times Square.

Samsung has no Steve Jobs, however. Instead, the person hosting the festivities will be J.K. Shin, the company’s low- profile head of mobile.

Shin can’t compare with Jobs, the Apple Inc. (AAPL) chief executive who set the standard for product introductions, dazzling audiences with crisp presentations honed over weeks of rehearsals. The Samsung executive, who favors blue blazers and tan slacks in contrast to Jobs’s jeans and black mock turtlenecks, tends to let devices take the spotlight. Still, any lack of charisma on Shin’s part isn’t hurting Samsung, which has surged past Apple in the global smartphone market.

“Over the last four or five years, Samsung has done a great job in stealth mode without a Jobs-like figure to help them,” said Tim Bajarin, president of technology consulting firm Creative Strategies. “Without a lot of fanfare, they’ve just made great advances and taken a strong position in the market.”

Shin introduced the previous version of the flagship phone, the Galaxy S3, in London last year during a press event that featured the London Metropolitan Orchestra and soaring floor-to- ceiling video displays. Read more of this post

Turkey’s $580,000 Taxi Plates Drive Free-Wheeling Market

Turkey’s $580,000 Taxi Plates Drive Free-Wheeling Market

Beyond the polished Fiats and Fords parked at the Oto Center in a remote working class district of Istanbul, traders tout an investment vehicle that has tripled in value over the last nine years: license plates for taxis that fetch about 1.05 million liras ($580,000).

Prices quoted inside stores that act as a private bourse have risen about 10 percent from 885,000 liras a year ago, with the number of permits issued by Istanbul’s government unchanged for two decades even as the population in Turkey’s commercial capital grew, according to the website. The 4,600 liras a month paid by drivers to rent plates add another 5 percentage points of investment income, the website shows.

Slices of permits called plates, wheels and nuts trade like bonds and lure investors wishing to comply with Islam’s ban on earning interest in a country where almost all of the 80 million population is Muslim. The licenses are an alternative to real estate and resemble investments created by bankers in Islamic finance, such as rent certificates.

The market has become so liquid that “one can sell in half an hour and get the cash in less than a week, not much different from the Istanbul Stock Exchange,” Gursoy Atli, sales manager at Kale Ticaret, one of a handful of closely-held companies that trade licenses, said in a phone interview Feb. 19. There is little regulation and no guarantees. Read more of this post

Mayo Prostate Cancer Test Gives Hope When Tumors Return

Mayo Prostate Cancer Test Gives Hope When Tumors Return

Mike Hawker travels 3,200 miles from his home in Anchorage to the Mayo Clinic every six months to get a test for microscopic signs that a rare form of prostate cancer he beat three years ago may have returned.

For Hawker, a Republican state representative in Alaska, the trips are a matter of life and death. About 200,000 men who had been treated for prostate cancer learn each year, sometimes too late, that their malignancies have returned. The Mayo Clinic test offers the promise of catching recurring tumors early, before they can kill.

Mayo’s medical center in Rochester, Minnesota, is the only facility in the Western Hemisphere to offer the 20-minute scan, enhanced by an injected radioactive drug that lets doctors see rapidly dividing cancer cells. Demand is surging, though scans are limited to eight patients a day, three days a week.

Hawker, who survived an aggressive form of prostate cancer in 2010 that invaded everything from his knees to his eye sockets, sees the twice-yearly visits as his best hope.

“No one can figure out quite why I am alive,” said Hawker in an interview. “That machine is one of the diagnostic tools that is keeping me alive.”

Prostate cancer is the most commonly diagnosed malignancy, killing about 28,000 men last year. Lung cancer, the second-most common cancer is more deadly and claimed the lives of about 88,000 men. For at least one-quarter of the men whose prostate cancer recurs, the reappearance of the disease is life- threatening, said Eugene Kwon, a urologist and cancer researcher at the Mayo Clinic. Read more of this post

Networking Battles to Run the World: Cisco and VMware talked about ambitious strategies to create powerful data centers and networks, tied to millions of sensors and devices, with an eye on everything we do

MARCH 13, 2013, 6:38 PM

Networking Battles to Run the World


Cisco has a simple message: the world has bought so much of its equipment, why stop now?

Both Cisco Systems and one of its biggest competitors, VMware, talked about ambitious strategies Wednesday. The powerful data centers and networks they want to build, tied to millions of sensors and devices, promise to create all kinds of efficient systems with an eye on everything we do. Just as much, they talked about competing with each other.

Even before Cisco spoke, VMware was making its claim to a world where billions of devices were sensing the world and suggesting efficient actions. Rather than depending on legacy customers, VMware is counting on inspiring thousands of software developers, who will use computer networks as a platform for new business.

It is similar to the way Microsoft used outside developers to give it an edge on the personal computer, and Google used them on the Web. Networks are more specialized technologies, however, so it’s not clear they can attract a mass of outside talent. Cisco is hoping big companies will be better allies.

Speaking at a gathering of journalists and networking industry analysts, several Cisco executives outlined what they called a “$14 trillion opportunity” in bringing sensors, communications and data analysis to all the world’s traffic systems, hospitals, refineries, and other civil and business infrastructure.

“The first 10 years (of the commercial Internet) were really about transactions, and the last 10 were about interactions,” said Padmasree Warrior, Cisco’s chief technology and strategy officer. “The next 10 is about processes being more efficient.” Read more of this post

Private Equity Squeezes Out Cash Long After Its Exit

MARCH 13, 2013, 6:26 PM

Private Equity Squeezes Out Cash Long After Its Exit


When the Berry Plastics Group, a container and packaging company, went public last October, it generated up to $350 million in tax savings. But the company won’t collect the bulk of the benefits. Rather, Berry Plastics will hand over 85 percent of the savings, in cash, to its former private equity owners.

The obscure tax strategy is the latest technique that private equity firms are using to extract money from their companies, in this case long after the initial public offering.

In a typical buyout, the owners make money by sprucing up the operations and selling the business to another company or public investors. Private equity firms have also found ways to profit before the so-called exit with special one-time dividends and annual management fees.

Now, buyout specialists are increasingly collecting continuing payouts from their former portfolio companies. The strategy, known as an income tax receivable agreement, has been quietly employed in dozens of recent private equity-backed offerings, including those involving PBF Energy, Vantiv and Dynavox. Read more of this post

Why the ‘most innovative companies’ aren’t; Leaders of complex organizations tend to surround themselves with likeminded people, which reinforces conventional approaches. At every stage in the life of a new idea or initiative, compliance crushes dissent.

Why the ‘most innovative companies’ aren’t

March 13, 2013: 3:32 PM ET

You may recognize their brands, but these admired companies have few practices in common that would distinguish them from the rest of the rabble.

By Jeff DeGraff

(TheMIX) — Pull out the list of the “most innovative companies” from your favorite business magazine. With the exception of their brand recognition, which is the entry fee for these beauty pageants, they have few innovation practices in common that would distinguish them from the rest of the rabble, whether it’s unique strategies, unusual financing, or novel ways of hiring and staffing.

The fact is that one size never fits all. What makes innovation companies unique is, well, unique. They are highly adapted for their specific situation.

Corporations spend billions of dollars on innovation training every year. Take a close look at popular leading innovation programs and you are likely to find a wide array of distinct subjects and approaches. Read more of this post

Teenager Dies of Food Poisoning After Jakarta Hospitals Deny Treatment — the latest in a series of deaths after hospitals rejected sick poor people.

Teenager Dies of Food Poisoning After Jakarta Hospitals Deny Treatment
Lenny Tristia Tambun & SP/Deti Mega | March 12, 2013


Indonesian baby girl Dara Nur Anggraini, whose twin sister, Dera, died on Feb. 16. Jakarta’s hospitals were ill-prepared for governor Joko Widodo’s granting of free medical care to a larger number of the city’s poor. (AFP Photo).

A teenager on Saturday died of a severe intestinal infection after several Jakarta hospitals denied her treatment — the latest in a series of deaths after hospitals rejected sick people.  Read more of this post

Angry Birds Cartoons Head for Indonesian TV Screen

Angry Birds Cartoons Head for Indonesian TV Screen
March 13, 2013


Helsinki, Finland. The makers of Angry Birds are launching a cartoon series this weekend, expanding further beyond its highly addictive games in a bid to expand entertainment and merchandising. Rovio, the company behind the popular mobile app game Angry Birds, said the cartoons will feature adventures of birds that appear in its games. Angry Birds Toons can be downloaded through on-demand services, and will also air on television channels such as FOX8 in Australia, ANTV in Indonesia, Cartoon Network in India, and MTV3 Juniori and MTV3 in Finland, it said. Rovio has expanded into merchandising and licensing in the past few years and its colorful, round bird characters are sold as stuffed animals and appear on everything from T-shirts to soda cans. It announced in December that it hired Hollywood executive David Maisel as executive producer of a 3D animated film planned for release in 2016.


Indonesia: Buyers and Sellers Blame Govt for Skyrocketing Price of Garlic and Shallots

Buyers and Sellers Blame Govt for Skyrocketing Price of Garlic and Shallots
Jakarta Globe | March 13, 2013

The cost of shallots and garlic has skyrocketed in the past week, causing complaints from buyers and sellers who blame government policy for the increased prices. reported on Wednesday the price of garlic has hit Rp 75,000 per kilogram in some places — more than five times the usual price of Rp 13,000 per kilogram— while the current price of shallots has hit Rp 48,000 per kilogram from the usual Rp 12,000 per kilogram.

In an effort to bring the price down, the Trade Ministry on Thursday announced it would import 29,136 tons of garlic from China and India. Srie Agustina, director general of domestic trade at the Trade Ministry, told Investor Daily over the weekend that the imported garlic would arrive in Jakarta in the next two weeks.

A housewife named Agnes said she’s going to avoid buying shallots and garlic until the price returns to normal.

“Shallot and garlic prices are so high. I usually buy them for Rp 14,000 per kilogram but now it’s Rp 40,000 per kilogram. It’s better if we don’t consume it for a while,” she told at the Kramat Jati Market on Tuesday. Read more of this post

Former World’s Biggest Solar Panel Maker Suntech Seen Not Getting Bailout From Chinese Government; Wall Street May Lose in $541 Million Suntech Bond Default

Suntech Seen Not Getting Bailout From Chinese Government

China won’t rescue Suntech Power Holdings Co. (STP) from its creditors because the former biggest solar-panel maker needs to retrench along with the rest of the industry, two advisers to government agencies said. Officials in Beijing want to pare excess manufacturing capacity and consolidate the $25 billion global industry that’s led by China, said Li Junfeng, director of the climate-change strategic research division at the government’s National Development and Reform Commission. “The government won’t intervene and shouldn’t,” Li said in an interview. Meng Xiangan, vice chairman of the China Renewable Energy Society, a liaison between the industry and the state, said Suntech should “not rely on government assistance.”

The comments from advisers with knowledge of the Chinese government’s thinking cast doubt on whether Suntech, the largest solar panel manufacturer in 2011, can avoid bankruptcy. The company March 11 said it obtained an agreement from more than 60 percent of bond holders to delay repayment for two months on $541 million of notes due tomorrow. The national government wants to avoid a default, which would be the first for a bond issued by a company based in mainland China. Restructuring the solar industry is one of the first issues confronting Premier Li Keqiang as his administration takes over from Wen Jiabao this month. Read more of this post

Chinese Guanxi/ Social Networking: An Integrative Review and New Directions for Future Research 中国人的关系: 综合文献回顾及未来研究方向

Chinese Guanxi: An Integrative Review and New Directions for Future Research 中国人的关系: 综合文献回顾及未来研究方向

Chao C. Chen the State University of New Jersey

Xiao‐Ping Chen University of Washington

Shengsheng Huang University of Houston‐Victoria

March 2013
Management and Organization Review, Vol. 9, Issue 1, pp. 167-207, 2013 

In this article we review research on Chinese guanxi and social networking in the past twenty years and identify the major perspectives, theories, and methodologies used in guanxi research at micro and macro levels. We summarize the main findings of over 200 journal articles on guanxi research in terms of its conceptual definitions and measurements, its antecedents and consequences, and its dynamics and processes. Furthermore, we identify the gaps between different levels of guanxi research and discuss future directions to advance our understanding of the complex and intricate guanxi phenomenon. 摘要. 本文综合回顾了过去二十年来中外文献中有关中国人关系和社会网络的研究,对微观及宏观层次上关系研究的主要视角、理论、及研究方法进行了区分,并对关系研究在概念定义、测量、前因后果、动态变化和过程等方面的主要实证研究结果进行了总结。此外,本文论述了不同层次关系研究之间的空白并指出了未来研究方向, 以便更深入全面地探讨和了解关系现象的错综复杂性。

How Benjamin Franklin Invented the Mail-Order Business

How Benjamin Franklin Invented the Mail-Order Business

In her 1996 autobiography “An Eye for Winners,” the catalog pioneer Lillian Vernon credited Benjamin Franklin with introducing the “American institution” of mail-order retailing.

Undeniably, Franklin is responsible for many innovations (the first successful circulating library, bifocals and the lightning rod, to name a few). But mail order?

In 1744, Franklin published “A Catalogue of Choice and Valuable Books, Consisting of Near 600 Volumes, in most Faculties and Sciences,” whose title page laid out the terms of sale for the titles he offered, which ranged from treatises on law and philosophy to works of poetry. His sale was to start at 9 a.m. sharp on April 11, and would last for three weeks “and no longer.” Terms were cash only. Notably, the printer, publisher and postmaster allowed people outside of town the opportunity to purchase the books, as well: “Those Persons that live remote, by sending their Orders and Money to said B. Franklin, may depend on the same Justice as if present.”

Franklin didn’t specify how, precisely, his remote customers were to receive their books, and according to James N. Green, an expert on Franklin and the librarian of the Library Company of Philadelphia — the subscription library founded by Franklin — there is no evidence of bound books being sent by post riders during this era, which would have qualified the shipments as “real” mail order. According to Green, “they probably would have been sent by whatever wagon was going that way, like other freight.” Read more of this post

Lego Builds New Billionaires as Toymaker Topples Mattel; Lego is valued at $14.6 billion vs Mattel’s $14.4bn and Hasbro’s $5.4bn

Lego Builds New Billionaires as Toymaker Topples Mattel

Lego A/S, the Billund, Denmark- based toymaker famous for its colorful building bricks, has minted three new billionaires as the company’s revenue soared 25 percent last year.

The children of Kjeld Kirk Kristiansen, Denmark’s richest man — Sofie Kirk Kiaer Kristiansen, Thomas Kirk Kristiansen, and Agnete Kirk Thinggaard — hold a combined 37 percent economic interest in the company valued at more than $5.3 billion, according to the Bloomberg Billionaires Index. None have appeared individually on an international wealth ranking.

The closely held company’s sales climbed to 23.4 billion Danish kroner ($4.04 billion) in 2012, according to the company’s annual report, helping the 81-year-old operation pass Mattel Inc. to become the world’s most-valuable toy manufacturer.

“Lego is on fire,” Gerrick Johnson, an analyst with BMO Capital Markets in New York, said in an e-mail. “It’s the world’s biggest toymaker in terms of net income, operating income and Ebitda. It had a 71 percent gross margin in its latest results and is posting strong sales growth.”

Lego is valued at $14.6 billion, based on the average enterprise value-to-earnings before interest, tax, depreciation and amortization, enterprise value-to-sales and price-to- earnings multiples of competitors Mattel (MAT) and Hasbro Inc. (HAS), according to data compiled by Bloomberg. Enterprise value is defined as market capitalization plus total debt minus cash. Read more of this post

Daewoo Shipbuilding to Construct Jackup Rigs to Challenge Keppel

Daewoo Shipbuilding to Construct Jackup Rigs to Challenge Keppel

Daewoo Shipbuilding & Marine Engineering Co. (042660), the world’s second-largest shipbuilder, is bidding to build jackup rigs for the first time in three decades to tap more orders from offshore oil discoveries.

Demand for bigger, more sophisticated rigs that can work under harsher conditions is increasing in the North Sea and other regions, Lee Jae Ha, chief marketing officer at the Seoul- based company, said in an interview. Each unit could be worth as much as $600 million, he said.

Oil discoveries, including in the North Sea, have boosted spending by companies for exploration and production. Daewoo is making a comeback since its last delivery in 1983 into a segment that has been dominated by Keppel Corp. (KEP) and Sembcorp Marine Ltd. (SMM)

“We expect demand for these high-specification heavy-duty rigs to increase this year,” Lee said on March 12. “We have a lot of experience building complex drilling units and that will give us a competitive edge over the Singapore yards.”

Keppel and Sembcorp Marine have a combined 70 percent share of the global market for jackup rigs, which are used in shallow waters with extendable legs that allow them to stand on the ocean floor. Read more of this post

Taiwan Shrinks Wealth Gap as Xi’s Communists Struggle in China; “It’s a wonderful system. Without it, we’d probably have to sell our apartment or get a loan.”

Taiwan Shrinks Wealth Gap as Xi’s Communists Struggle in China

More than six decades after Mao Zedong’s Communists chased Chiang Kai Shek’s Kuomintang off the mainland pledging an egalitarian society, it’s the KMT on Taiwan that has crafted a more balanced wealth distribution.

As incoming Chinese President Xi Jinping completes his nation’s leadership succession this week, Taiwan may offer a model for his campaign to bridge a wealth gap that threatens to undermine Communist Party legitimacy. Taiwan’s Gini coefficient, a measure of inequality, was 0.342 in 2011 compared with China’s 0.477 and the 0.4 level used as a predictor for social unrest.

Taiwan moved to introduce a national health-insurance program and greater political accountability as growth slowed to less than 10 percent two decades ago. China, which has similar gross domestic product per person to Taiwan in the late 1980s, is seeking to address grievances over land grabs and access to public services in a nation where 90 legislators have wealth of at least 1.8 billion yuan ($290 million).

“In Taiwan you had the slow and steady development of a wider social security system,” said Rana Mitter, a professor of modern Chinese history at Oxford University. “Taiwan and the mainland of China have gone in two different directions.”

Low-income households in Taiwan, an island of 23 million people, have had access to free or subsidized health care since the country enacted the National Health Insurance act in 1995. The program provides care financed via a payroll premium paid by companies and employees as well as by government subsidies.

‘Wonderful System’

“It’s a wonderful system,” said Peggy Lo, 34, as she left Taipei’s Cathay General Hospital after giving birth to her daughter prematurely 10 days before. Lo was carrying a receipt that showed she had paid the equivalent of $152 for 10 days of treatment in the neonatal intensive-care unit for her daughter. “Without it, we’d probably have to sell our apartment or get a loan,” Lo said. Read more of this post

China to Free Currency in 5 Years, Says Hong Kong Exchanges’ Li; central bank Governor Zhou Xiaochuan said yesterday in Beijing that the nation should be on “high alert” over inflation and reiterated gradual reform for the yuan’s convertibility

China to Free Currency in 5 Years, Says Hong Kong Exchanges’ Li

China, the world’s second-largest economy, will open its markets and allow its currency to float within five years, said Charles Li, chief executive officer of Hong Kong Exchanges & Clearing Ltd.

“China has to reform its interest-rate system,” Li said yesterday during a panel discussion at the Futures Industry Association conference in Boca Raton, Florida. The value of the Chinese currency is limited by the government and is only allowed to rise or fall within a narrow range. Li said that system can’t last forever.

Yuan forwards advanced for a seventh day on optimism China will embark on further currency reforms. The yuan traded near a 19-year high against the dollar as central bank Governor Zhou Xiaochuan said yesterday in Beijing that the nation should be on “high alert” over inflation and reiterated gradual reform for the yuan’s convertibility. Read more of this post

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