Note: some of the linked articles below require an FT subscription to read
Betting on political outcomes
The US presidential elections will have taught investors a lot about the risks of calling the outcome of a two-way political contest. Binary votes can have big impacts but markets are not well equipped to deal with them. Betting around a specific event, especially those based on public voting sentiments, is notoriously hard, as demonstrated by the Brexit vote, and the UK general election the previous year. This FT piece explains why it’s so difficult to make money from playing the political risks.
The 'problem with democracy'
Political risk is now a key factor for investors in western markets, most notably the protectionist implications in the USA of Trumponomics. Meanwhile, in the UK, Brexit continues to baffle as new dilemmas emerge, such as what transitional arrangements might be agreed. Brexit’s business implications are ubiquitous. For example, was the recent supply spat between Tesco and Unilever caused by sterling’s 'Brexit' depreciation. Indeed, UK consumers now look set to face wide-ranging price rises, and firms will have to consider how to handle these new cost, marketing and production pressures.
No country for old men
Emerging market risks have not diminished either, especially in China. If President Xi Jinping waives convention and allows his Politburo allies to avoid early retirement, this will further concentrate political and economic power. The immediate beneficiary would be 69-year old Wang Qishan who leads Mr Xi’s counter-productive anti-corruption campaign. The FT also explains the debt and property risk behind China’s 6.7% third-quarter GDP growth rate, with a video summary here.
Demography and social responsibility
Demographic trends are a reliable long-term economic indicator that support FDI strategy. But as this FT analysis of Nigeria’s demographic outlook explains, population growth must be accompanied by employment, otherwise an economic boon can all-too easily turn into social crisis. Business opportunities can clash with social needs in other ways, for example the recent alcohol prohibition imposed in Bihar, India. The new law will reduce state tax revenues, encourage smuggling, and harm the beverage and retail sectors. Yet the move has eliminated much alcohol-fuelled violence—largely against women—a sign for companies not to forget their corporate social responsibilities that can underpin their brand.
Two FT articles contrast approaches to career stress. The struggle to balance study, work and family during an EMBA (the so-called ‘divorce course’) is described here. Meanwhile, this review of Business for Bohemians quotes advice for dealing with the tough times: "Do as little as possible. Be lazy. Take long walks. Nap. Sleep a lot. Read books.” Alternatively, they could get a tattoo (if the office allows). Millennials may also be adopting a simpler approach to technology. FT’s Jonathan Margolis, explains how Facebook fatigue and Twitter oversharing is driving millennials to more traditional communication devices and channels. How might this affect marketing strategies?
Technological change at the speed of life
Many executives urgently need better cyber security, specifically password protection. Asymmetric information means that an individual may think his password is impossible to guess, but viewed in aggregate by the millions (the hacker’s perspective) reveals ominously predictable patterns.
Pattern recognition techniques threaten more than your bank account; they are revolutionising white collar professions such as the law. The FT’s special report on Innovative Lawyers describes how Artificial Intelligence is automating their services, and forces us all to ask: can a computer do my job too? Equally disruptive may be the impact of smaller batteries and electric cars on the oil and gas industry, as explored in this video though this still appears some years away.
Indeed, technology can only progress at the “speed of life”. Samsung’s struggles with its combustible Note 7, described here, shows the costs of ignoring this premise.
And finally, another video setting out the different business approaches to virtual reality taken by Sony's PlayStation VR, Facebook's Oculus and Google's Daydream.
Corporate decision makers are more focused than ever on global political and economic developments. As the FT’s Chris Giles explains, a faltering global economy may lead to a vicious circle of low growth, popular discontent and a backlash against trade and openness, resulting in more economic weakness. Martin Wolf, the FT’s Chief Economics commentator, argues here that a Trump victory might not only undermine confidence in the US-created trade order by threatening to tear up past agreements, it could mark “the end of a US-led west as the central force in global affairs”.
Business strategists in the UK are digesting the implications of Prime Minister Theresa May’s announcement to start formal Brexit talks by end-March 2017. Companies may now have more clarity, but Brexit is likely to happen sooner than many had hoped. If the UK government prioritises immigration control this would limit its single market access. But by holding out for both, an EU agreement becomes less likely, heralding a quicker but “hard Brexit”. That will particularly affect UK banks’ “passporting” rights, as James Blitz explains here, while Laura Noonan reports that US banks are already seeking more EU-based recruits.
Hard conversations about gender bias
While HR is preoccupied by Brexit, companies continue to fall short when it comes to supporting their female talent. Sarah Gordon, the FT’s Business Editor interviews Dame Helen Alexander about how to increase the number of women on boards, and Nicola Mendelsohn, Facebook’s vice-president, EMEA, about handling difficult conversations and overcoming workplace gender bias.
Present and correct
'Presenteeism'—the tendency for staff to go to work even when ill—impacts employees’ health, engagement, productivity and more. As this FT special report on health at work notes, the issue has many causes and potential solutions, and executives must handle it sensitively. Another delicate talent issue is the apparent disloyalty of millenials always on the lookout for their next job. The FT’s Michael Skapinker argues that employers should be proud to give talented workers their first opportunities and wave them on. In fact, the FT is ready with advice on creating an online CV.