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This week, United Technologies (UTX) announced that the company is breaking itself into three, separating out its Otis and Carrier divisions from the core business. In doing so, UTX is following other industrial companies — including DuPont, GE and Honeywell — in undoing the era of mega conglomerates.
This begs the question: What has changed, and what does it mean for businesses today? The short answer is that today’s market is more demanding and segmented than ever before, and that mega corporations can’t keep up.
Here’s what growing companies can learn from watching the big guys fall down on the job of creating top shareholder value.
1. It’s hard to be all things to all people.
Before this move, United Technologies was making everything from helicopters to elevators, airplane engines and HVAC systems. That’s a broad range of technology to keep track of. Splitting the company up will make it possible for each new business to focus on its core area, set appropriate priorities and ultimately make the best decisions for each unique set of customers.
This statement by the company’s chairman and chief executive, Gregory J. Hayes, says it all: “Our decision to separate United Technologies is a pivotal moment in our history and will best position each independent company to drive sustained growth.”
I know that in our own business, when we decided to scale back the number of services we offered and focus on a few core areas instead, our growth rate doubled within the next six months. We had underestimated the real costs and distractions of being in many different businesses.
2. Economies of scale are no longer paying off.
Historically, many mega conglomerates came into being to take advantage of bulk buying and shared resources. The rationale was cost savings and reduced overhead — but operational costs have come way down over time.
Cloud-based technology has reduced the need for companies to invest in servers and other hardware, which used to be a major expense. And many non-core functions can now be outsourced, including payroll, human resources, training, travel and information technology. In fact, the majority of our operational expenses at Acceleration Partners are on a per head or per seat basis today, there are very few fixed cost investments that we make.
Finally, marketing has moved away from big-budget print ads to online advertising, and sales are increasingly conducted online.
3. Specialization sells.
Customers — including business-to-business customers — increasingly use the internet to find exactly what they want at the price they want to pay. No longer blindly trusting of the biggest brands or best-known names, people today are looking for experts. They want more control and more choices than most giant companies are willing or able to provide.
Look at what has happened to television. More and more households today are cutting the cord on cable service, unwilling to pay for packages that include a lot of channels they don’t want. Instead, they are choosing to purchase only the apps and shows they want directly from content providers such as HBO and Hulu.
Similarly, in our industry, the agency of record (AOR) concept in which marketing agencies sell large integrated projects and then find other firms to deliver that work and mark up those services is quickly becoming obsolete.
4. Smaller organizations are more nimble.
The pace of business today is fast and getting faster. Large, bulky bureaucracies simply can’t keep up.
Look at how quickly Uber disrupted the entire U.S. taxi business. Markets evolve quickly, and companies need to be lean and nimble, not bogged down in the internal politics and exhaustive procedures so common to mega corporations.
It’s also way easier today to be small, since businesses can team up via a concept we at Acceleration Partners call “Performance Partnerships” — making deals with other companies to supply non-core functions, while collecting a commission or referral fee. A company can outsource marketing and sales, for example, or pass off the hassle of worrying about delivery and fulfillment — while keeping all its most critical functions in-house. As a study by Bain Capital has shown, companies benefit most when they divest themselves of non-core businesses and focus their time and capital on growth areas.
The bottom line is that today’s business landscape is no longer rewarding generalists — those companies that provided just-OK goods or services across a wide swath of areas. Companies today need to be best-in-class, responsive and 100 percent focused on the customer. That is the blueprint for success going forward.
Need a Cyber Monday jolt? Time published its best Inventions of 2018 last week. While this is not a gift list per say, you can draw inspiration from this collection of innovations, which I have organized into three categories for the office, relaxation and night riders (for all of you cyclists out there). Let’s start with the richest price tag and work our way down.
Open-office plans are all the rage today, but several studies have shown that they lead to distractions and sick days for workers. Help your employees find privacy with this soundproof phone booth by ROOM ($ 3,495). Zenbooth offers a slightly larger model with an even steeper price tag.
Want supplies in a flash? Zipline made history by launching the first commercial drone service in Rwanda, expediting the delivery of blood and medical supplies to remote areas. This year, the California startup unveiled a new version of its craft that carries up to 3.85 lb. at 80 m.p.h. for up to 100 miles per round-trip. They also streamlined their launch and recovery process, enabling Zips to make 500 deliveries per day. While Zipline will continue serving rural communities in Africa, the startup has broad ambitions. Zipline started testing emergency medical-supply delivery in the U.S. and will begin regular service in North Carolina in early 2019.
When it comes to safety, StrongArm Tech’s Fuse Risk Management Platform, helps employers protect vulnerable workers–and, by extension, their own bottom lines. On-the-job injuries and accidents cost U.S. companies some $ 59.9 billion per year. Since debuting in April, Fuse has been used by more than 10,000 workers, including those from 10 Fortune 100 companies.
With a cold Thanksgiving in the northeast, weighted blankets were a hot topic around our dinner table. Gravity has sold $ 18 million worth of it’s weighted blankets ($ 249 each), which are available in 15, 20 or 25 pound varieties. Many swear by the therapeutic benefits, and they are certainly a fad on Instagram.
Bose Sleepbuds ($ 250), are designed specifically to enhance your slumber. They are small enough to fit inside the ear without bothering your face or your pillow, and light enough to feel weightless. Their silicone tips are said to stay in place, even if you toss and turn. Users choose from a preset menu of 10 soothing sounds, such as ocean waves, warm static or rustling leaves.
When you are ready to wake up, Philips’ Somneo ($ 199) is designed to simulate a natural sunrise every morning–along with soothing audio that gently rises in volume–to provide a less jarring wakeup experience. If you can get this to work with the sleepbuds that would be brilliant. When it’s time for bed, the Somneo can simulate a sunset, as well, dimming the lights until you are fast asleep.
Nocturnal athletes can now glow in the dark with this Solar Charged Jacket ($ 350) from Vollebak. The jacket’s phosphorescent membrane absorbs light during the day and releases “kryptonite green energy” after sunset. Part of the jacket’s appeal, of course, is novelty: because it can absorb light from almost any source, but more importantly from a safety standpoint, it allows runners and bikers to be visible after dark. If you get stranded, rescuers can spot you.
Cyclists will also love the story of Eu-wen Ding, a business-school student living in Boston who was looking for a better way to ride. “All I wanted to do was get from point A to B without dying,” said Ding. Eventually, that goal led to the creation of Lumos Kickstart Helmet ($ 180), whose LED lights not only increase a cyclist’s visibility but also blink to indicate a left or right turn. Riders can trigger the signal by clicking a wireless remote mounted to their handlebars or by syncing the helmet with their Apple Watch and making a hand signal. The Lumos launched in 2017 after a Kickstarter raise, and became the first light-up helmet sold in the Apple Store.
Beyond these examples, the full list of inventions encompasses breakthrough products for fashionistas, new parents and even environmentalists. Enjoy.
A new video from the European Space Agency shows the spectacular launch of the Soyuz rocket.
The video was captured by ESA astronaut Alexander Gerst and shows the Russian Progress MS-10 cargo spacecraft taking off from the Soyuz rocket on Nov. 16. The spacecraft was carrying food and supplies for astronauts aboard the International Space Station and fuel to resupply the ISS. The spacecraft was carrying 5,653 lbs of supplies and fuel.
The time-lapsed footage condenses the 15-minute launch into a video of just a minute and a half. It shows the Soyuz-FG rocket booster separation, the core stage separation, the core beginning to burn in the atmosphere and go back to Earth after using up its fuel, and finally the Progress spacecraft separating from the rocket and entering orbit to catch up with the ISS.
The rocket flies at 17,900 miles per hour at 249 miles above Earth before it docked two days later.
SAN FRANCISCO (Reuters) – Twitter Inc (TWTR.N) made another attempt to make users’ tallies of followers more accurate on Friday, subtracting millions of suspicious followers which had reappeared on the social media service since a major purge in July.
Men are silhouetted against a video screen with a Twitter logo as he poses with a Samsung S4 smartphone in this photo illustration taken in the central Bosnian town of Zenica, August 14, 2013. REUTERS/Dado Ruvic (BOSNIA AND HERZEGOVINA – Tags: BUSINESS TELECOMS)
Twitter is under pressure to tackle its problem of fake users, which are a turn-off for investors and advertisers and have led to scrutiny from U.S. Congress.
The company made Friday’s move without an announcement. Pop star Katy Perry lost about 861,000 followers, according to social measurement firm Social Blade. Twitter’s own account lost 2.4 million followers.
In July, Twitter said it would stop counting accounts it “locked” as followers, in an effort to make its user data more accurate. At least seven celebrities lost as many as 2 million followers each.
By October, however, many of those accounts appeared to have been unlocked – which can happen after a password reset – and at least two dozen popular users had gained back a third or so of the lost followers, according to data from Russian ad fraud researcher Social Puncher.
Those followers disappeared once again on Friday, Social Puncher said.
Twitter said on Friday that it “discovered a bug where some of these accounts were briefly added back, which led to misleading follower counts” for “very few accounts.”
It said in July that follower counts might change “more regularly” as part of its efforts to “identify and challenge problematic accounts.” The ensuing volatility has caught the attention of prominent users, including U.S. President Donald Trump and Tesla Inc (TSLA.O) Chief Executive Elon Musk.
They and other users lost followers in recent days, but Friday’s cull was larger for most, according to several accounts Reuters reviewed on Social Blade.
Twitter’s own account fell by 7.8 million followers in July but gained back 2.36 million by mid-October. It lost 2.4 million on Friday, according to Social Blade.
Some users experienced a similar drop in early October, before the followers returned days later, Social Puncher said.
The firm told Reuters that it suspects the affected locked accounts are controlled by fraudsters who sell followers to artificially boost accounts’ popularity.
The accounts exhibit hallmarks of fakes, including few profile details, fans and posts, it said.
MarQuis Trill, a Los Angeles advertising producer, told Reuters that he bought 300,000 followers for $ 4,500 two years ago. He lost nearly 2.2 million followers in July, but had about 30 percent back until Friday’s purge.
“I didn’t buy that many to be losing like that,” he said.
Reporting by Paresh Dave; Editing by Bill Rigby
I love STEM. Without STEM students, there wouldn’t be doctors, or the engineers who put together the Inc.com site. Big data has revolutionized the way business is done, and it would be impossible without STEM skills. But when young people ask me what they should study, I always encourage them to consider liberal arts.
Businesses will need people to translate computer language into human language. When big data analytics uncovers a hidden pattern, someone needs to draw conclusions from the information and develop an action plan. If a robot breaks down, someone needs to explain to management why it happened – and why it won’t happen again.
Here are more reasons why you should hire someone from the arts:
1. Fresh Perspective
Hiring an artist is like getting an injection of creativity. Leaders can use this to better market to their customers, and to better connect with their employees. Artists aren’t afraid to be unconventional, but they have no time for inauthenticity. Having these elements as part of your company culture is a great way to attract high quality candidates, and will appeal to the right kind of customers.
2. Agility, with Mission Focus
3. Budget Management
The arts are chronically underfunded. If you’re looking for an employee who can stretch the value of a dollar, the arts are a great place to look. Artists use their creativity, open-mindedness, and pain tolerance to make it work. They’re able to stay on course no matter the budgetary constraints, and produce something that looks and feels like money was no object.
4. Personality Tolerance
The arts are full of people with personality – and the spectrum of personality is wide! Imagine putting together a theatre production. You have to work with an idealistic writer, a Method actor, a union stagehand, and a theatre director trying to keep donors happy. People in the arts are used to handling a variety of personalities and balancing competing interests while keeping everyone happy and working together. It’s a skill any office can benefit from, and can help keep your company humming.
5. Content Over Medium
This is perhaps the most important reason you should hire someone from the arts. With constantly changing technology and evolving tastes of customers, it can be difficult for business to find the right way to connect with employees and consumers. But here’s what many business leaders forget: the method of communication doesn’t matter if the content is garbage. To reach your desired audience, your content needs to make an impact. Artists are expressive, and know how to use humor, trauma, and beauty to make an emotional impact on the audience. No matter the medium, artists can effectively communicate your message, helping your culture blossom and your business grow.
A startup founded by the creator of Android has laid off about 30% of its staff, according to sources that spoke to Bloomberg News. Andy Rubin started Essential Products in 2015 with Brian Wallace, formerly of Magic Leap, to create a smartphone with high-end design features that wasn’t associated with a particular operating-system maker.
Cuts were particularly deep in hardware and marketing. The company’s Web site indicates it has about 120 employees. A company spokesperson didn’t confirm the extent of layoffs, but said that the decision was difficult for the firm to make and, “We are confident that our sharpened product focus will help us deliver a truly game changing consumer product.”
The firm was Rubin’s first startup after leaving Google in 2014, which had acquired his co-founded firm, Android, in 2005.
Essential’s first phone came out in August 2017, a few weeks later than initially promised. It received mixed reviews, with most critics citing its lower quality and missing features relative to competing smartphones, such as a lack of waterproofing and poor resiliency to damage. The company dropped the price from an initial $ 699 within weeks to $ 499, and offered it on Black Monday in November 2017 for $ 399.
Analyst reports showed the company sold just 5,000 units in the first two weeks of sales, and 88,000 in the first six months. By comparison, over 400 million other smartphones sold in just the last three months of 2017.
The company canceled production of its second smartphone model in May 2018, and shifted to work on other hardware, reportedly including smart speakers. At the time, Rubin said that his company had “multiple products in development,” including mobile and home hardware. The company had a valuation of nearly $ 1 billion in 2017, and was seeking additional financing earlier this year. It may have been or may remain up for sale. The company didn’t deny reports at the time, and hasn’t provided more detail on its plans since.
Rubin took a short leave of absence from Essential in late 2017 after the tech news site The Information reported on a complaint lodged against him at Google in 2014 that alleged he engaged in a relationship with a subordinate. Rubin said the relationship was consensual and didn’t involve someone who reported to him.
WASHINGTON (Reuters) – The Pentagon has been slow to protect major weapon systems from cyber attacks and routinely found critical vulnerabilities that hackers could potentially exploit in those systems, a federal government report said on Tuesday.
The U.S. Government Accountability Office (GAO), a watchdog unit of Congress, said in a 50-page report that the Pentagon found “mission-critical cyber vulnerabilities in systems” under development.
“Using relatively simple tools and techniques, testers were able to take control of systems and largely operate undetected, due in part to basic issues such as poor password management and unencrypted communications,” the report said.
Some program officials told GAO that the weapon systems were secure and discounted some test results as “unrealistic.”
While the Pentagon plans to spend about $ 1.66 trillion to develop major weapon systems, the report found, it had only recently taken steps to improve cyber security.
Cyber security has been receiving increasing attention among U.S military and intelligence officials.
Last week, Western countries issued coordinated denunciations of Russia for running what they described as a global hacking campaign, targeting institutions from sports anti-doping bodies to a nuclear power company and the chemical weapons watchdog.
In some of the strongest language aimed at Moscow since the Cold War, Britain said Russia had become a “pariah state.”
The United States said Moscow must be made to pay the price for its actions. Their allies around the world issued stark assessments of what they described as a campaign of hacking by Russia’s GRU military intelligence agency.
“Due to this lack of focus on weapon systems cybersecurity,
(Department of Defense) likely has an entire generation of systems that were designed and built without adequately considering cybersecurity,” the report said.
Reporting by Idrees Ali; Editing by David Gregorio
(Reuters) – Broadcom Inc (AVGO.O) on Thursday forecast current-quarter revenue largely above estimates on higher demand for components that power data centers, while the launch of Apple Inc’s new iPhones is expected to bolster its wireless business.
A sign to the campus offices of chip maker Broadcom Ltd is shown in Irvine, California, U.S., November 6, 2017. REUTERS/Mike Blake/File Photo
Shares of Broadcom rose 4 percent to $ 224.90 in extended trading after the chipmaker also reported third-quarter profit that topped analysts’ estimates.
Revenue from enterprise storage business jumped 70 percent in the reported quarter as the acquisition of Brocade helped drive sales gains at the unit.
Its wireless business, which makes chips for Wi-Fi, Bluetooth, and GPS connectivity, reported flat revenue, while its wired infrastructure unit, which makes components used in telecommunication networks, posted a 4 percent rise from a year earlier.
“More than half our consolidated revenue … is benefiting from strong cloud and enterprise data center spending,” Chief Executive Officer Hock Tan said on a post-earnings call with analysts.
“This, coupled with a seasonal uptick in wireless, will drive our forecast revenue in the fourth quarter.”
The company expects a ramp at its North American customer – which analysts identified as Apple – to drive a 25 percent rise in wireless revenue from the previous quarter, although it may be down in single-digit percentage compared with a year earlier.
Apple (AAPL.O) is set to unveil its new iPhones next week.
Tan, who has transformed Broadcom into a $ 100 billion behemoth through a series of acquisitions, surprised Wall Street in July with his move to acquire software maker CA Technologies for $ 19 billion.
Explaining his rationale behind the CA acquisition, Tan said he planned to target the company’s enterprise customers with Broadcom’s offerings including server and storage connectivity products.
The CA deal comes after U.S. President Donald Trump blocked Broadcom’s $ 117 billion offer to buy Qualcomm Inc (QCOM.O) on national security grounds.
Broadcom forecast current-quarter revenue of about $ 5.40 billion, plus or minus $ 75 million. Analysts on average were expecting revenue of $ 5.35 billion, according to Thomson Reuters I/B/E/S.
Net income attributable to common stock rose to $ 1.2 billion, or $ 2.71 per share, in the quarter ended Aug. 5 from $ 481 million, or $ 1.14 per share, a year earlier.
Excluding items, the company earned $ 4.98 per share.
Net revenue rose to $ 5.06 billion from $ 4.46 billion.
Analysts on average were expecting earnings of $ 4.83 per share on revenue of $ 5.07 billion.
Reporting by Sonam Rai and Sayanti Chakraborty in Bengaluru; Editing by Anil D’Silva
HONG KONG (Reuters) – ZTE Corp (000063.SZ) (0763.HK) reported a first-half net loss of 7.8 billion yuan ($ 1.1 billion) on Thursday, weighed down by a ban on U.S. firms selling parts to the Chinese telecom equipment maker that forced it to cease operations for three months.
FILE PHOTO: The company name of ZTE is seen outside the ZTE R&D building in Shenzhen, China April 27, 2016. REUTERS/Bobby Yip/File Photo
The result compared with the 7 billion to 9 billion yuan net loss estimate disclosed last month, and the 2.3 billion yuan profit booked in the same period a year earlier.
Operating revenue in the first half fell 27.0 percent to 39.4 billion yuan.
In June, the network equipment and smartphone maker paid the United States $ 1.4 billion in penalties in a deal to have the supplier ban lifted. The ban, imposed in April in relation to sanction violations, crippled ZTE and became a source of friction in Sino-U.S. trade talks.
($ 1 = 6.8300 Chinese yuan renminbi)
Reporting by Sijia Jiang and Twinnie Siu; Editing by Christopher Cushing and Edmund Blair
WEST CHESTER, Pa. (Reuters) – The Home Shopping Network is getting an image makeover.
A studio set is seen at the QVC Studio Park in West Chester, Pennsylvania, U.S., June 4, 2018. Picture taken June 4, 2018. REUTERS/Brendan McDermid.
A U.S. television network where shoppers can buy everything from electronics to kitchen gadgets, the Home Shopping Network is overhauling its lineup to offer more beauty products while adding streamed video content to win over shoppers without cable TV.
A division of Qurate Retail Group, the network is facing growing competition from Amazon Inc. and Evine Live Inc for consumers like 24-year old Erin Bounds, who regard buying products through TV shows a relic of the past.
“Someone who is 24 doesn’t have the time nor desire to watch an hour-long show about a piece of jewelry or a vacuum when they can get an answer and the product quicker and probably cheaper on Amazon,” said Bounds, a resident of Ellicott City, Maryland.
For decades, the main difference to shoppers between HSN and Qurate’s other shopping network, QVC, typically came down to variations in branding and merchandise, with HSN selling more electronics. Qurate acquired HSN in late 2017 for $ 2.1 billion so the two shopping networks could join forces to better compete against Amazon and its home-shopping-style online video promotions.
Qurate executives told Reuters they now are culling HSN’s core merchandise offerings to eliminate many higher-priced electronics and some home goods, such as vacuum cleaners and blenders.
Instead, they are adding more niche cosmetic and apparel brands to help draw some distinction with QVC. They are also pushing both QVC and HSN to pursue younger shoppers with click-to-buy links on Instagram and Facebook Live for items such as earrings, shoes and Vince Camuto jeans, in a bid to spark a rebound in demand.
Second-quarter revenue at HSN declined 12 percent to $ 473 million from $ 533 million a year later the company announced Wednesday. Stock in the company, which counts media mogul John Malone as one of its largest investors, is down about 8 percent year to date, compared with a 14 percent increase for the Nasdaq index, and 64 percent increase for Amazon.com year to date.
“You’re seeing the impact of them digesting a large organization that is clearly not growing if you look at the numbers,” said Ben Claremon, partner and research analyst at investment firm Cove Street Capital, one of Qurate’s shareholders.
“There’s just not the degree of demand for home shopping products, and the desire to spend hours of the day watching them diminishes as you go down in age,” he said.
BALANCING BLUE LIPSTICK WITH BRACELETS
The new strategy is aimed at creating more distinction with the two cable channels after the merger, according to Rob Robillard, the new VP of Beauty Integration at Qurate.
In beauty, for example, one of HSN’s top selling products is Too Faced “Unicorn Tears” blue lipstick, which sells for roughly $ 22. One of QVC’s best products is the Doll 10 Nude lipstick with a price tag of around $ 25, noted Robillard.
“We were sort of hoping there would be this real big difference between HSN and QVC,” he said. “But the two are actually very similar.”
Qurate will partner with Robin Burns-McNeill, chairman of Batallure Beauty, a company specializing in brand strategy, product and package development, sourcing and manufacturing in the fragrance, cosmetics and skincare categories, to create a collection of proprietary beauty brands, the company told Reuters exclusively.
The first manufactured beauty products from this partnership are slated to launch in fall 2019 on QVC.com, and, if all goes well, the company said they would likely tap on Burns-McNeill’s shoulder to create proprietary brands for HSN as well.
They have a tall order. Amazon is the top online destination for beauty and the fifth-most-popular retailer for skincare and cosmetics, according to Coresight Research, behind leaders Walmart, CVS Health, Target Corp and Walgreens. QVC and HSN do not rank on the list.
In March 2016, Amazon launched “Style Code Live,” a daily live fashion show which has since gone off-air.
This June, Amazon unveiled Prime Wardrobe in the United States, allowing Prime members to try on clothing, shoes, and accessories before purchase. Customers have up to seven days to try their clothes on at home, and are charged only for those items they choose to keep.
Celebrity-driven shows and videos on QVC still have their upside, according to vendors such as Xcel Brands Inc Chief Executive Robert D’Loren. A QVC apparel vendor for more than six years, D’Loren cites on-air appearances of fashion designer and QVC host Isaac Mizrahi – D’Loren’s largest, most successful brand on QVC – as strategic advantage for the home shopping network.
D’Loren thinks Qurate, which currently accounts for 60 percent of Xcel’s brand volume, is well-positioned to take on competitors Amazon.com and video retailer Evine, and that it’s “only a matter of time” before millennials like Bounds give Qurate’s QVC and HSN a shot.
“There is something to tuning in, watching, having product fully demonstrated to you that is unique and has great value, and I haven’t seen that anywhere else in the market,” he said.
Editing by Vanessa O’Connell and Edward Tobin