Note: some of the linked articles below require an FT subscription to read
Who gets the blame?
When scandals explode, responsible corporate leaders must quickly ascertain whether the cause is the rogue individual or a problem with the entire company or sector. Kweku Adoboli, the former UBS trader whose unauthorised trading led to losses of $US 2.3bn, explains the pressure to generate profit in an increasingly complex, fast-paced, and automated industry. It’s about behavioural change not catching ‘rogue traders’ he says. Things go wrong because of the system.
Another scandal that may require systemic investigation is emissions testing in the automotive sector. The FT investigates a test centre in Coventry, UK, that emulates a variety of real world driving conditions, from icy mountain roads to the Mediterranean coastline. Finally, all companies with an online presence must re-appraise their readiness to deal with cyber-attacks; this special report explains what to do.
Need ideas to appeal to a new generation of shoppers? US cosmetics company Estee Lauder is turning to millennials to help the company survive in the digital age. It notes that millennials will have the greatest purchasing power of any demographic. The company has therefore created “millennial advisory boards” and a formal reverse-mentoring programme, in which young employees were paired with senior Estée Lauder managers.
Why the sky isn’t the limit
As emerging markets go, it doesn’t get more pioneering than this: space. In this FT interview former Nasa astronaut Mike Massimino discusses an ambitious goal of private sector space travel by 2024, and its similarities with an early age of air travel.
Judgement day in China
Investors in Asia might do well to stay abreast of China’s shifting legal environment, following a patent case against Sony. In the past, foreign investors in China insisted on overseas arbitration, or hoped to avoid arbitration altogether given problems with enforcing decisions. Now, however, they may be entering a new era in which Chinese judges wield considerable power and are not afraid to rule against foreign companies, even if that means disrupting their local operations or even their global supply chains.
Eastern Europe’s new generation
Russia may have welcomed the Trump presidency with an eye to wielding more influence in Eastern Europe. But business moves on as a new generation of disrupters and influencers emerges. Who you know is useful, if not essential. Here is the list of New Europe 100 changemakers in central and eastern Europe.
President Trump's new world order
Although too early to know what business can expect from a Trump presidency, several FT commentators give a sense of the key risks, both in the US and globally. According to Lionel Barber, the FT editor, we can expect a profound repudiation of the status quo as the US walks away from the global order it helped create. Gideon Rachman writes that the 'first avowed protectionist to be elected US president since before the Second World War' appears to have forgotten the anti-trade lessons of the 1930s. Trump’s promise to walk away from Trans-Pacific Partnership and EU trade talks, and possibly even NAFTA is not mere electioneering. He has long held isolationist views. US engagement with the world—which has underpinned everything from climate change talks to NATO’s security alliance—is now in question. Trade-dependent emerging markets may be the biggest victim. East European markets are also vulnerable to unchecked Russian ambitions.
'Mr Trump’s economic vision represents a big departure from Republican orthodoxy,” says Edward Luce. Nevertheless, the Republican-controlled Congress is likely to back huge personal and corporate tax cuts and substantial infrastructure spending even though this could add an estimated $10 trillion to US public debt, widen the fiscal deficit and trigger a short-term boom followed by recession. But debt-funded infrastructure investment plans (border walls notwithstanding) 'is something that the country needs', argues Martin Sandbu. 'What is more, unfunded public spending on infrastructure would amount to a fiscal stimulus that could do the US and global economy a lot of good.'
Markets expect higher inflation. But a move to curb the Fed’s independence, or an exit by its chair, Janet Yellen, could create alarm, warns John Authers. She had been expected to raise interest rates in December but market volatility may change these calculations.
Trump will also find Congressional support to overhaul, if not scrap, the Dodd-Frank reforms aimed at curbing Wall Street excess. That will please the banks.
Islamic finance students
One trend in business education is the growing demand for instruction in Islamic finance, according to the FT’s Jonathan Moules. As banking becomes more prominent in Muslim majority countries, knowledge of Islamic finance is proving to be a useful skill for executives in these countries. In fact, the majority of students on many courses are non-Muslim. But some people question whether business schools are the right places to teach a subject that is principally designed to meet religious beliefs on debt and interest.
Engage and improve the world
Can sustainable investing improve the world and make a profit? In this video, John Authers, FT’s senior investment commentator, looks at the reinvention of ethical investing. Investors are asking whether there is an extra return to be made from selecting the most virtuous companies. But from a CSR perspective, the age-old dilemma about whether to boycott or engage with authoritarian regimes is as pertinent as ever. For many, ethical investing is now about improving local standards and practices through greater commercial engagement.
A business message to EU staff: ‘Don’t go’
With Brexit discussions mired in legalities, it is worth reflecting on its impact on EU professionals and manual workers in the UK. Shockingly, some 40% of those surveyed by the FT worry about their jobs in the wake of the Brexit vote. Their insecurity is particularly acute in the construction, retail and hospitality sectors. This FT article presents a stark reminder of the potential impact on towns such as Corby, in the East Midlands of England, that rely on low-wage, low-skilled EU workers to fill jobs that locals shun.
And the worsening mood is not limited to manual workers. There are plenty of worried East European EU professionals, especially in London, whose post-Brexit future is now uncertain. As the FT | IE Corporate Learning Alliance’s recent Brexit HR Foresight event pointed out, many EU professionals are ready to pack up and leave the UK if anti-foreign attitudes harden. So companies need to go out of their way to reassure their EU staff that they are fully supported.
Leaders under pressure
Andrew Hill, FT management editor, interviews four corporate leaders on their different perspectives on pressure and how well they managed it. The ill-fated Dennis Kozlowski, who ran the rapidly expanding US industrial group Tyco in the 1990s, describes his ‘all-consuming, 365, 24/7 job’ before his downfall. Marcela Sapone, co-founder of Hello Alfred, a start-up that offers concierge services for busy professionals, says pressure is based on a perception ‘that you are on a path to greatness and that you have to keep it up’. Pascal Soriot, chief executive of AstraZeneca, barely slept for the first 48 hours of Pfizer’s 2014 hostile bid. And Stephen Hester, who took over collapsing Royal Bank of Scotland during the financial crisis in 2008, recalls that it was ‘impossible to have a starting plan, although you very quickly had to figure one out’.
Pressure at the top does not, however, appear to have deterred high-flyers from wanting to be on company boards. The problem is knowing when to step down. Indeed, according to Andrew Hill more than a third of US board directors believe someone on their board should step down, and describes the types who should probably be removed.