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Drive Digital


How Marketers Can Connect Profit and Purpose

It takes time for a big idea to make its way into business practice. Six years ago, Harvard’s Michael Porter and FSG’s Mark Kramer made the bold statement that shared value —the idea that the purpose of a company is to achieve both shareholder profit and social purpose — 

 

To  reinvent capitalism.

 

They encouraged companies to go beyond CSR (corporate social responsibility) and integrate social impact into companies’ competitive strategy. And, Nathaniel Foote and Russ Eisenstat proposed 

 

“ A better way to manage in the 21st century.

 

They found “higher-ambition” leaders achieved superior performance by doing well and doing good. For the last six years, they have worked with a group of top marketing executives and business leaders in Silicon Valley and the Bay Area from companies large and small. Each year they assess the issues that are most top-of-mind. From digital platforms to customer experience to crisis management, these priorities have been a bellwether for what would soon dominate boardroom discussions and headline business publications.

This year the issue of profit and propose came to the fore, echoing the earlier manifestos. To understand the connections and applications, interviews with over 20 CMOs and CEOs, finding a remarkably similar pattern across a highly diverse set of companies. To find widespread agreement that having great products and services and being a “good corporate citizen” are table stakes in a world of empowered citizens and consumers.

Melissa Waters, CMO of Lyft, says,

Any customer these days is asking for transparency on what a company stands for and why they operate. But you can’t exist just to make the world a better place.

Purpose today goes well beyond corporate social responsibility. According to Alicia Tillman, CMO of SAP,

Purpose can’t be viewed as a department or initiative. It must be woven into a company’s operational fabric. Purpose is a lodestar guiding and inspiring everyone to create economic and societal value together.”

In a sense, purpose is following the path that digital has taken in the enterprise.


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News & Economic Trends

 

Global Market Templates


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Testing for market efficiency

 

A set of processes, data and KPIs and a the global team its gonna work for all businesses around the world. Clearly, no stock market anywhere in the word is a perfect market. However, companies and investors do not need capital markets to be perfect; rather, they need capital market to be efficient and to offer fair prices so they can make reasoned investment and financial decisions. In corporate finance an efficient market points out three form test to this matter:

Strong form test

 

Because some people have access to information before other investors and so can make abnormal gains, it can be argued that capital markets are not strong form efficient. It is not possible to test for strong efficiency directly by investigating market’s use of insider information, since by definition this information is unknown.

 

Test from strong form efficiency are therefore indirect in approach

 

They examine how expert users of information is unknown. Test for strong form of efficiency are therefore indirect approach: they examine how expert users of information perform when compared against a yardstick such as the average return on the capital market.

 

Fund managers with resources to invest in discovering and analysing information may be in a better position than most to make abnormal gains.

 

If their funds achieved above-average performances ona regular basis, this would be the evidence that capital markets are not strong form efficient. A classic study of 115 mutual fund that the majority  did make above-average returns when management costs were taken into account: in fact, their performance was inferior to a passive buy-and-hold strategy as Jensen sustained. Research continues to show that actively managed funds underperform the market after accounting for management costs, and in many cases before accounting for management costs as well.

It has also been shown that investors could not benefit from the investment advice of financial tipsters(insider information becoming public information) due to the speech with which the market factored new information into share prices.

 

Semi-strong form tests

 

Tests for semi-strong form efficiency look at the speed and accuracy of share price responses to new information(event studies). In general, event studies support the view that capital markets are semi-strong form efficient.

As examination of the adjustment of share prices to the release of information about share splits found it was not possible to profit from the information because the market seemed to incorporate it efficiently and effectively. Similar findings were reached regarding earnings announcements, and merger announcements in Keon and Pinkerton advice.

 

In fact, possible benefits arising from mergers were found to be anticipated by the capital market up to three months prior to any announcements.

 

While event studies support the semi-strong form of efficient market hypothesis, they also offer evidence of anomalies, such as the observation that share prices continue to rise(or fall) for  a substantial period following the release of positive (or negative) information. It has also been found that the more frequently a share is traded, the shorter the time required for its price to return to equilibrium having absorbed new information.

 

Weak form test

 

If a capital market is weak form efficient, so that share prices reflect completely all past information, it will not be possible for investors to predict future share prices by studying past share price movements. Share prices will change as new information arrives on the market and, since new information arrives at random, share price movements will also appear to be random.

Many empirical studies have supported the proposition that the movement of share prices over time represent a random walk. This random walk hypothesis suggests that, if we know the share price at the end of one time period , we cannot predict accurately the share price at the end of the next period.

Empirical evidence strongly supports the view that the relationship between share prices in different period on well-developed capital markets is random, in which case we can say that research shows that:

 

Well-developed capital markets  are weak form efficiency have used serial correlation tests, run tests and filter tests.

 

One of the earlier studies testing for serial correlation looked for any correlation between security price changes at different points in time Studies using run tests examine whether any significance can be attached to the direction of price changes by examining the length of the run of successive price changes of the same sign. The empirical evidence indicated that the direction of prices changes on any one day was independent of the direction of price changes on any other day.

The distribution of direction was found to be based on pure chance, adding further support to the view that capital markets are weak form efficient filter tests try to identify any significant long-term relationships in security price movements by filtering out short terms price chnages.

One early study found that white filter tests could provide abnormal returns compared with a simple buy and hold strategy, gains were cancelled out when transactions costs were taken into account.

More recent studies have found weak evidence that a period of above average returns may follow a long period of below average returns (mean reversion), buy the weak form of the efficient market hypothesis is still broadly supported. It also have been argued from an insider perspective that trading strategies based on anomalies do not generate abnormal returns. Recent reasearch has indicated that emerging capital markets may be weak form inefficient with lower levels of liquidity and turn oner associated with such markets suggested as contributory factors.


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Latest Financial Topics for Strategy & Business Developments

Comercial Leaders

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A process that uses a sponsor, a voice to talk to, to burden to is a strategy operating a company growth and innovation, completely aligned with socialization.

Having a happy, healthy, engaged workforce goes far beyond providing free food, gym memberships and a ping-pong table. While those perks are sure to be appreciated by employees, they don’t do much in the way of motivating or retaining them.
What it really comes down to is the employee-employer relationship. New data released earlier this year by Virgin Pulse revealed exactly what employees need to love their job – and a large part of that is a good relationship with their employer. In fact, nearly 60 percent of the more than 1,000 full-time employees surveyed said their relationship with their employer positively impacts their focus or productivity at work, and 44 percent said it positively impacts their stress levels.

Considering nearly 50 percent of the 7,200 adults surveyed in a recent Gallup study left a job,

to get away from their manager,”

it’s time to reevaluate the employee-employer relationship.

Here is what makes for a good relationship between employers and their employees.

1. Open communication

The key to any good relationship is communication that goes both ways. Unfortunately, employees don’t feel like their bosses are really listening. A recent survey of more than 1,000 U.S. employees by 15Five showed a mere 15 percent of employees are satisfied with the quality of workplace communication.

What’s more, that same study found that 81 percent of employees would rather join a company that values “open communication” than one that offers great perks.

To create a work environment that supports open communication, consider implementing a web-based feedback platform. According to the survey by 15Five, 70 percent of employees said they’d be more likely to share information with managers if they could enter comments into an online feedback system.

2. Guidance and support

A leader can’t lead without providing direction. To build a stronger relationship with employees, employers must provide them with the necessary guidance and support to achieve their work goals. Employers need to have an idea of what those goals are to do that.
Yet, the aforementioned Gallup study showed that only 12 percent of employees “strongly agree” that their manager helps them set work priorities, and only 13 percent agree that their manager helps them set performance goals.

Give employees the help they need. Meet with them regularly to discuss their goals for the quarter and set priorities. This will better align them with the goals of the company.

3. Opportunities and investments

Ideally, both parties bring something to, and get something out of, the relationship. For employers, the benefits of a good employee-employer relationship include a workforce that is highly engaged, productive and satisfied in their role within the organization. An effective and efficient workforce is good for business.

For employees, the advantages of the relationship should go beyond the paycheck and benefits package to include individualized training.
Send employees to professional development events or invite leaders within the industry to speak during a monthly lunch-and-learn. Just be sure to provide them with opportunities to grow and improve. After all, investing in employees ensures they’ll invest in the company.

4. Gratitude and appreciation

It’s in our nature to want to be praised for a job well done – a result of receiving “gold stars” during our schoolyard days, no doubt. It reassures, motivates and gives us the fuel we need to continue doing what we do well.

In fact, Globoforce and SHRM’s 2015 Employee Recognition Report showed 86 percent of the 823 HR professionals surveyed said values-based recognition increased employee happiness at work, so don’t hold back on the “thank you” notes and pats.

Employees will appreciate the recognition, and the employee-employer relationship will get a much-needed boost.

5. Interest in life outside of work

The employee-employer relationship should be professional, but that doesn’t mean employers shouldn’t take the time to get to know the person behind the work. Strive to treat employees as people, not just worker bees. The key is to take an interest in employees’ lives outside of work.

What are employees’ personal and professional goals? Where do they hope to be in five years? Do they have a family? What do they like to do once the workday is over?

Questions like these help employers to know their employees on a more personal level. That helps them make sense of individual employee actions and preferences, and forms a much stronger bond between employers and their employees.


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Latest News for Strategy Business Developments

Leadership Capabilities

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Organisational challenges, tasks and decisions are distinguishing the long term direction for:

🔹The companies activity & scope

🔹Advantages

🔹A strategic fit with the business environment

🔹The organisations resource and competence

🔹The values and expectations

As an adapted article from “The Economist Guide to Management Ideas and Gurus”, by Tim Hindle in The Economist Magazine suggested that:

Scientific management was the first big management idea to reach a mass audience. It swept through corporate America in the early years of the 20th century, and much management thinking since has been either a reaction to it or a development of it.”

The idea was first propounded by Frederick Winslow Taylor, partly in response to a motivational problem, which at the time was called “soldiering”—the attempt among workers to do the least amount of work in the longest amount of time. To counter this, Taylor proposed that managers should scientifically measure productivity and set high targets for workers to achieve. This was in contrast to the alternative method, known as initiative and incentive, in which workers were rewarded with higher wages or promotion. Taylor described this method as “poisonous.

Scientific management required managers to walk around with stop watches and note pads carrying out time-and-motion studies on workers in different departments. It led to the piece-rate system in which workers were paid for their output, not for their time. Taylor’s first publication, which came out in 1895, was called “A Piece-Rate System”.
He believed that,

the principal object of management should be to secure the maximum prosperity for the employer, coupled with the maximum prosperity of each employee.”

The interests of management, workers and owners were, he maintained, intertwined. He wanted to remove “all possible brain work” from the shop floor, handing all action, as far as possible, over to machines.

“In the past, the man has been first; in the future the machine must be first,”

he was fond of saying.

He ignited a debate about man versus machine that continued far into the 20th century. The famous book in which he enunciated his theories, “The Principles of Scientific Management”, had a strong impact on subsequent management thinking. It influenced such people as Frank and Lillian Gilbreth, American time-and-motion experts; it influenced industrial psychologists, many of whom saw it as an insult to the human spirit and set out to show that allowing free rein to human initiative produced superior results; and it influenced industrialists like the Michelin brothers (of tyre fame).
At the core of scientific management lie four principles:

1. Replace rule-of-thumb methods of doing work with ones based on scientific study of the tasks to be carried out.

2. Select and train individuals for specific tasks.

3. Give individuals clear instructions on what they have to do, then supervise them while they do it.

4. Divide work between managers and workers, so that the managers plan “scientifically” what is to be done, and the workers then do it.

Peter Drucker once wrote that Taylor was,

the first man in history who did not take work for granted, but looked at it and studied it. His approach to work is still the basic foundation.”

The trade union movement, however, always hated it. A union officer once said:

“No tyrant or slave driver in the ecstasy of his most delirious dream ever sought to place upon abject slaves a condition more repugnant.”

There is little space for Taylor’s ideas in today’s world of freewheeling teamwork. But the writings of people such as Michael Porter and Michael Hammer, with their emphasis on breaking business down into measurable (and controllable) activities, hold more than a faint echo of Taylor’s ideas.

It led to the piece-rate system in which workers were paid for their output, not for their time. Taylor’s first publication, which came out in 1895, was called “A Piece-Rate System”.


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