Tag Archives: Super regions

Updates from McKinsey

What start-ups need to scale and succeed
Statistically, the odds against a start-up are formidable. Companies that emphasize talent, customer-centricity, and core principles are the ones most likely to succeed.
By James Bilefield – Most start-ups have one thing in common: they usually fail. But the minority who beat the odds and survive share a number of traits. From the outset, they work incredibly hard and move extraordinarily fast to attract early customers, great talent, and additional funding. Once they begin to scale, successful start-ups maintain their momentum, respond quickly to market changes, and remain focused on outcomes and delivering value to customers. Digital entrepreneur James Bilefield shares his start-up insights with McKinsey’s Philipp Hillenbrand.

Philipp Hillenbrand: We always hear that start-ups need to operate at an incredible pace, that speed is everything, and if they slow down, they die. Is this just a cliché, simply a function of entrepreneurial impatience, or actually true?

James Bilefield: The data show that the overwhelming majority of start-ups fail. Some fail fast, while some fail over a longer period of time in markets where funding is usually finite.

To overcome those extraordinary odds, an unusual amount of speed, hard work, and agility is required by the founders and first employees to rapidly develop the business and achieve enough momentum to delight initial customers, attract great talent, and secure further funding. The impatience you highlight is more about ambition, competitive instincts, and, ultimately, survival.

Philipp Hillenbrand: It’s much easier to get off to a running start when you’re small. How did you manage to sustain or even accelerate the velocity while Skype was expanding?

James Bilefield: At Skype, we were on a simple but extraordinary mission—to let the world talk for free and change the face of global communications. Initially, we hired a diverse set of mavericks who really shared our excitement and energy. As we scaled, we strove to ensure that our unique culture and values stayed strong. And thanks to our flat and nimble management style, we maintained a clear focus on outcomes and an obsession on delivering for customers. more>

Manufacturing Predictions for the Next Decade

By Rob Spiegel – Digitalization in automation has been getting a lot of attention in the manufacturing industry over the past year. The popularity of emerging technology is partly due to the pandemic. COVID-19 unexpectedly accelerated the progress of digitalization in automation as factories worked to catch up on the production of essential supplies and run their operations with fewer workers.

2020 was just a peek into the coming technology deployment for manufacturers. Over the next 10 years, new technology will become common in plants. “The form of automation that will be coming in the next 10 years will be a transfer from looking at robotics as automation to looking at true collaborative learning systems,” Matthew Putman, CEO and co-founder of Nanotronics, told Design News. “This will involve robotics improving through artificial intelligence, and that artificial intelligence will improve through collaboration with people.”

Putman predicts that we’ll see the robot market produce equipment this is increasingly intelligent and connected across the network. “There will be more robotics, but more importantly, the robots will be working differently and intelligently. Rather than following human strategies and tactics, robotics will follow artificial intelligence (AI) tactics.” more>

EU credibility as a people’s union rests on the social pillar

Buffeted by the pandemic and by populism, the EU needs the European Pillar of Social Rights to become a solid anchor of security for all.
By Liina Carr – Next week, the European Commission is set to unveil its Action Plan for putting the European Pillar of Social Rights into practice. The European Trade Union Confederation is pressing hard for an ambitious plan, which provides the means to achieve and monitor tangible social progress.

The EPSR was adopted by member states in 2017 but—partly due to the social and economic damage inflicted by the pandemic—European citizens might be forgiven for wondering what difference it has made to their lives. It was the former commission president, Jean-Claude Juncker, who announced the initiative in his 2015 State of the Union address. The text was finally proclaimed by European Union leaders at the Social Summit in Gothenburg.

The ETUC played a major role in developing its 20 principles, which we see as crucial to strengthening the EU’s social dimension—ensuring that the welfare of workers and their families is not subordinated to the economic interests of the single market.

Despite its legalistic language, the pillar however lacks legal force: the principles do not give direct rights to any individual. It has been described as an agenda, ‘a compass for a renewed process of upward convergence towards better working and living conditions in Europe’.

The ETUC sees it as a guiding strategic framework, enabling the commission to bring forward legislation and other initiatives to strengthen social wellbeing. But at a time when the EU is under intense scrutiny for its handling of the Covid-19 crisis, implementing the pillar in a way that touches people’s lives is a question of credibility for European institutions and member-state governments in the eyes of their citizens. There is no time to waste. more>

Updates from McKinsey

America 2021: Renewing the nation’s commitment to climate action
To America’s leaders, innovators, and changemakers; here’s how you can help build a low-carbon economy that is resilient, competitive, prosperous, and fair.
By Dickon Pinner and Matt Rogers – The new federal administration has arrived in Washington with ambitious plans to address the climate crisis—and in so doing, revitalize the US economy and reclaim a leadership position on the international stage. During their campaign, President Joe Biden and Vice President Kamala Harris highlighted “the opportunity to build a more resilient, sustainable economy—one that will put the United States on an irreversible path to achieve net-zero emissions, economy-wide by no later than 2050 […] and, in the process, create millions of good-paying jobs.”

Their vision recognizes that the global transition to a low-carbon economy is well under way. The cost of many clean-energy technologies fell significantly during the past decade—as much as 90 percent for some renewable-energy projects. The capital markets are funding the use of these technologies at historically low costs of capital, thereby accelerating scale-up investments. A climate-friendly policy tilt is taking hold in many places. With China, Japan, and the European Union having announced targets to achieve net-zero emissions, more than 110 countries, accounting for more than 70 percent of global GDP, have made net-zero pledges. Of the US states, 23 have established emissions-reduction goals and 12 have instituted carbon-pricing policies. Groups representing prominent American companies have endorsed the use of market-based mechanisms to promote emissions reductions. Some large businesses, along with four former Federal Reserve chairs (including the new treasury secretary), have voiced support for a nationwide carbon tax. These trends are creating possibilities for American leadership, innovation, entrepreneurship, competitive advantage, and economic growth.

With the wind at their backs, government agencies and private-sector organizations can continue advancing the new national climate agenda that’s been set in motion already. The stimulus and government appropriations bill of December 2020, which received bipartisan support, set out tax incentives and funding for energy innovation and climate-related programs. And within days of his inauguration, President Biden signed executive orders initiating the process to reenter the Paris Agreement, positioning climate as a foreign-policy and national-security issue and calling on federal agencies to coordinate an all-government push to cut greenhouse-gas emissions, purchase clean-energy technologies, support innovation, conserve nature, and create economic opportunities across America. 1 Making good on these intentions will require new information, products, operations, and market innovations from public officials and business leaders. To inform their work, this memo highlights four sets of practices with notable potential to deliver the prosperity, security, and social-justice outcomes that the administration has prioritized. more>

EU vows to work with international partners to be climate neutral by 2050

New Europe Online/KG – The Europe Union can be a powerful promoter of climate ambitions also because it can offer a model of a socially just Green Deal transition, which leaves no one behind. “We can share our experience of tools such as the Coal Regions in Transition Initiative, and the Just Transition Mechanism. We can show that economic and energy diversification is possible and can create better jobs and growth for societies,” Energy Commissioner Kadri Simson said on February 1 at the EsadeGeo Annual Energy Meeting “Geopolitics of the Green Deal Month”.

Europe accounts for around 8% of global emission. “So, to address global climate change, we need others to follow the same path – to become our partners in the clean energy transition,” Simson noted.

“Europe has two assets to advocate here: our high climate ambition and our just transition policy model. The European Union showed leadership announcing its climate neutrality goal for 2050. Last December EU leaders also agreed to step up commitment to reduce emissions by 2030. This is now the EU’s nationally determined contribution under the Paris Agreement,” the Commissioner said, adding that several other major international partners have announced as well net zero commitments. “We can look at 2021 with optimism. As a year of global climate action. Thanks to the COP 26 but also the actions of G20 and G7 led by the UK and Italy, Europe will be a driving force of this collective effort,” she said.

“So, as I said, we want to be leaders, but we have important work to do as partners. The Green Deal is not just an agenda to transform Europe’s economy and society. It has an impact beyond our borders, and most of all, on our closest partners and in our neighborhood. That’s why this must be a focus of our external energy action,” Simson stressed. more>

Monopoly Was Invented to Reveal the Toxic Greed of Capitalism

It was a rags-to-riches fabrication that ironically exemplified Monopoly’s implicit values.
By Kate Raworth – ‘Buy land – they aren’t making it any more,’ quipped Mark Twain. It’s a maxim that would certainly serve you well in a game of Monopoly, the bestselling board game that has taught generations of children to buy up property, stack it with hotels, and charge fellow players sky-high rents for the privilege of accidentally landing there.

The game’s little-known inventor, Elizabeth Magie, would no doubt have made herself go directly to jail if she’d lived to know just how influential today’s twisted version of her game has turned out to be. Why? Because it encourages its players to celebrate exactly the opposite values to those she intended to champion.

Born in 1866, Magie was an outspoken rebel against the norms and politics of her times. She was unmarried into her 40s, independent and proud of it, and made her point with a publicity stunt. Taking out a newspaper advertisement, she offered herself as a ‘young woman American slave’ for sale to the highest bidder. Her aim, she told shocked readers, was to highlight the subordinate position of women in society. ‘We are not machines,’ she said. ‘Girls have minds, desires, hopes and ambition.’

In addition to confronting gender politics, Magie decided to take on the capitalist system of property ownership – this time not through a publicity stunt but in the form of a board game. The inspiration began with a book that her father, the anti-monopolist politician James Magie, had handed to her. In the pages of Henry George’s classic, Progress and Poverty (1879), she encountered his conviction that ‘the equal right of all men to use the land is as clear as their equal right to breathe the air – it is a right proclaimed by the fact of their existence’.

Traveling around America in the 1870s, George had witnessed persistent destitution amid growing wealth, and he believed it was largely the inequity of land ownership that bound these two forces – poverty and progress – together. So instead of following Twain by encouraging his fellow citizens to buy land, he called on the state to tax it. On what grounds? Because much of land’s value comes not from what is built on the plot but from nature’s gift of water or minerals that might lie beneath its surface, or from the communally created value of its surroundings: nearby roads and railways; a thriving economy, a safe neighborhood; good local schools and hospitals. And he argued that the tax receipts should be invested on behalf of all.

Determined to prove the merit of George’s proposal, Magie invented and in 1904 patented what she called the Landlord’s Game. more>

Why Immigration Drives Innovation

Economic history reveals one unmistakable psychological pattern.
By Joseph Henrich – When President Coolidge signed the Johnson-Reed Act into law in 1924, he drained the well-spring of American ingenuity. The new policy sought to restore the ethnic homogeneity of 1890 America by tightening the 1921 immigration quotas. As a result, immigration from eastern Europe and Italy plummeted, and Asian immigrants were banned. Assessing the law’s impact, the economists Petra Moser and Shmuel San show how this steep and selective cut in immigration stymied U.S. innovation across a swath of scientific fields, including radio waves, radiation and polymers—all fields in which Eastern European immigrants had made contributions prior to 1924. Not only did patenting drop by two-thirds across 36 scientific domains, but U.S-born researchers became less creative as well, experiencing a 62% decline in their own patenting. American scientists lost the insights, ideas and fresh perspectives that inevitably flow in with immigrants.

Before this, from 1850 to 1920, American innovation and economic growth had been fueled by immigration. The 1899 inflow included a large fraction of groups that were later deemed “undesirable”: e.g., 26% Italians, 12% “Hebrews,” and 9% “Poles.” Taking advantage of the randomness provided by expanding railroad networks and changing circumstances in Europe, a trio of economists—Sandra Sequeira, Nathan Nunn and Nancy Qian–demonstrate that counties that ended up with more immigrants subsequently innovated more rapidly and earned higher incomes, both in the short-term and today. The telephone, hot blast furnace, screw propeller, flashlight and ironclad ship were all pioneered by immigrants. The analysis also suggests that immigrants made native-born Americans more creative. Nikola Tesla, a Serbian who grew up in the Austrian Empire, provided George Westinghouse, a New Yorker whose parents had migrated from Westphalia, with a key missing component for his system of electrification based on AC current (Tesla also patented 100s of other inventions).

In ending the quotas imposed under the Harding-Coolidge administration, President Johnson remarked in 1964 that “Today, with my signature, this system is abolished…Men of needed skill and talent were denied entrance because they came from southern or eastern Europe or from one of the developing continents…” By the mid-1970s, U.S innovation was again powerfully fueled by immigrants, now coming from places like Mexico, China, India, Philippines and Vietnam. From 1975 to 2010, an additional 10,000 immigrants generated 22% more patents every five years. Again, not only did immigrants innovate, they also stoked the creative energies of the locals. more>

The rule of law: a simple phrase with exacting demands

If the finger is to be pointed—rightly—at Hungary and Poland, then the EU must insist on compliance by all with universal norms.
By Albena Azmanova and Kalypso Nicolaidis – That the European Union, in its moment of public healthcare emergency and acute economic plight, should find itself paralysed over such a seemingly abstract matter as the rule of law is one of the great paradoxes of our times. And yet this is exactly the conundrum plaguing approval of the EU’s seven-year budget and recovery fund, totaling €1.81 trillion, which Poland and Hungary have been blocking over rule-of-law conditionality for the funds’ disbursement.

Respect for the rule of law is one of those self-evident truths—the absolute minimum requirement of decent political rule—which should be unproblematic in the family of liberal democracies that is the EU. It is equally beyond doubt that the prompt approval of the pandemic recovery fund is in everyone’s interest.

Many commentators assert that the EU should stand up to the defiant governments, in the name of its fundamental values. We do too. But our hope is that we, in Europe, can use this moment as an opportunity to question ourselves further.

Most of us may believe that the arguments put forward to resist rule-of-law conditionality are disingenuous. And they are. But we must still take them seriously when they are presented in line with … the rule of law.

Hungary and Poland are claiming that, by being poorly defined, the rule-of-law principle opens the door to discretionary decisions and thus to the abuse of power.

The rule of law as a political principle and legal norm was indeed born of the ambition to constrain the arbitrary power of central authority. This was why the English barons forced King John to adopt the royal charter of rights, the Magna Carta, on June 15th 1215. The specification of basic freedoms, codified not as privileges for a handful of aristocrats but as abstract and unconditional rights, was meant to ensure that no authority could place itself above these rights in pursuit of its political ends

It is true that the EU should make no compromises with the very foundation of the liberal political order. But the EU itself has complied with these principles erratically and selectively, thus violating the spirit of the rule of law.

This has been evident in several instances—from lack of concern with the Silvio Berlusconi media monopoly in Italy to France’s semi-permanent state of emergency, Malta’s and Slovakia’s complacency with political murder and the Spanish government’s response to the 2017 independence referendum in Catalonia. Often, the EU is content with narrowly reducing the remit of the rule of law to a simple matter of legality—ignoring routine violations of core values, such as the right to peaceful assembly, freedom of speech or even the right to liberty and life itself.

Has the EU not thereby set itself up for the current crisis, supplying the ammunition for autocrats to try to absolve themselves from compliance with the rule of law? more>

2021 Global Economic Outlook: The Next Phase of the V

Morgan Stanley projects strong global GDP growth of 6.4% for 2021—led first by emerging markets, followed by reopening economies in the U.S. and Europe—in a macro outlook that diverges from the consensus.
Morgan Stanley – Rising COVID-19 case numbers in the U.S. and Europe make it difficult right now to envision a return to normal. Yet, even as the pandemic drags on, the global economy has proven remarkably resilient.

Following a steep decline in early 2020, the world economy rode a rebound that began in May and remains on track to surpass prepandemic GDP levels by the end of this year—setting the stage for strong post-recovery growth in 2021.

In their 2021 outlook, the economics team at Morgan Stanley Research says the V-shaped recovery that the team forecast in their 2020 midyear outlook is now entering a new self-sustaining phase and is on track to deliver 6.4% GDP growth in the coming year.

“This projection stands in stark contrast to the consensus, which forecasts 5.4% global growth and worries that the pandemic will have a bigger impact on private-sector risk appetite and, hence, global growth,” says Chetan Ahya, Morgan Stanley’s Chief Economist. “We maintain that consumers have driven the recovery, and investment growth—a reflection of the private corporate sector’s risk tolerance and a key feature of any self-sustaining recovery—is bouncing back as well.”

Three key factors will characterize the next stage of the V-shaped recovery, says Ahya: synchronized global growth, an emerging-market rebound and the return of inflation. Against this macro outlook, Morgan Stanley strategists urge investors to trust the recovery and overweight equities and credit vs. government bonds and cash (see the 2021 Strategy Outlook for more). more>

The EU’s credibility is at stake

By Otmar Lahodynsky – In July, after a four-day marathon summit in Brussels, there was agreement on the EU budget for 2021-2027 and a recovery fund for the EU’s 27 members following the COVID-19 crisis.

Together, almost €2 trillion have been reserved for this purpose. The €750 billion corona aid package is intended to help those countries that have been the most affected by the disease, including as Italy, Spain and France, but also the other Member States as they will need to rebuild their economies.

At the EU summit, a typical Brussels-style compromise was reached – each head of government presented themself as a winner at home if they will receive a lot of money for economic recovery. It was then that the so-called “frugal four” – Denmark, the Netherlands, Austria and Sweden (plus Finland) – forced a reduction in the number of grants in exchange for an increase in the share of loans and a cut in their membership fees. The heads of Poland and Hungary also celebrated at home after the successfully de-linked their access to EU funding from their records on the rule of law.

Subsequently, however, the other EU states introduced this clause by a clear majority.

The Poles and Hungarians felt pressured and they vetoed the seven-year EU budget, which requires unanimity despite the fact that they were not bothered that they had previously approved it.

In his explanatory statement, Polish Prime Minister Mateusz Morawiecki railed against an “attack on Polish sovereignty” and adding that the EU was no longer the same as when Poland had joined the bloc in 2004, a generation after the end of Communism. Morawiecki said the Polish economy was so strong that it no longer needed any subsidies from Brussels (more than €12 billion each year). Morawiecki said that Poles were even considering an EU withdrawal along the lines of Brexit.

Hungarian Prime Minister Viktor Orban, Brussels’ bête noire, went even further. In his view, the EU is acting like the Soviet Union once did. It wants to blackmail Hungary and force it to accept Middle Eastern refugees. In the future, Orban added, the European Commission would have the power to meddle in the internal politics of all of the Member States, as it sees fit. Orban also emphasized that the EU’s previous accusations against Hungary were all unfounded and that the concept of the rule of law was not precisely or universally defined.

The reality is that these core concepts of the bloc were long-ago enshrined in the EU treaties and in Europe’s charter of fundamental rights. Conditions for EU accession were already laid down in the 1993 Copenhagen criteria and include the stability of institutions, democracy, the rule of law, respect for human rights and respect and protection of minorities.

The Commission has, for too long, turned a blind eye to the transgressions of the nationalistic populists in Poland, Hungary and other Eastern European countries. The isolated attempts to bring about punitive proceedings under Article 7 of the EU Treaty did not act as a deterrent, because sanctions were not imposed. For this reason, the governments of Hungary and Poland mutually helped each other.

But now the basic principles of the EU, above all the rule of law, are being put to the test. more>