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Showing posts from May 10, 2015

China: Kevin Rudd's framework in the context of on-the-ground business reality

"For decades Western companies have invested capital and endured red tape," but now China is using bullying tactics to make life hard for Western multinationals (Fortune Oct 27, 2014). Of course, the intellectual property issue has always been there. For example, Microsoft sells only about one out of 10 of its products being used in China because of piracy. The new assaults are in terms of multi-million dollar fines and being forced to confess guilt without due process. "Foreign business is being targeted, and so the multinationals are the most negative on China that I've seen in 25 years," says Jim McGregor, who has worked for WSJ and Dow Jones in China.

Talking at TED about the possibility of a US-China conflict, Australia's former prime minister Kevin Rudd offers a framework of constructive realism for a common purpose. He explains, "Be realistic about the things that we disagree on, and a management approach that doesn't enable any one of those …

Would execs forgo innovation-spend if it meant missing earnings figures?

Facebook had a humble IPO and yet earned about $3 billion in profits last year. Twitter had a great start with shares rising 282% from its offering price and yet shares are back where they started. Here's another example. Apple's stock price fell roughly 25% the year it introduced iPod, and yet it was iPod that started "the greatest corporate turnaround in the history of capitalism" with 9 Apple iDevices sold every second today.

Why is it that stock prices of innovative firms do not always reflect company value? Wall Street analysts typically help set stock prices based on a firm's one-year cash-flow projections, whereas making money from innovations takes time (perhaps 3 or more years). Generally, there is such short-term focus that a study by National Bureau of Economic Research found that "80% of executives would forgo innovation-generating spending if it meant missing their quarterly earnings figures."

Sources: Fortune March1, 2015 and Time April 6, …