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G100 Network Notebook | November 2013

In this issue of the G100 Network Notebook we talk about the future of marketing with Twitter, why deregulation moves so slowly, how Edward Snowden damaged free trade & more.

Can Engineers Be Managers?

Google initially thought it could be a company without management. That has changed. Harvard Business Review offers an in-depth look at how Google created a system of incentives and training to turn independent-minded engineers into efficient managers:

Here’s the challenge Google faced: If you’re highly skilled, handpicked hires don’t value management, how can you run the place effectively? How do you turn doubters into believers, persuading them to spend time managing others? As it turns out, by applying the same analytical rigor and tools that you used to hire them in the first place. … You use data to test your assumptions about management’s merits and then make your case.

Is Twitter the Future of Marketing?

You get this sense from BusinessWeek’s superb assessment of Twitter. The article explains how the digital anatomy of a Tweet – embedded data such the time and location of a post – holds huge marketing potential.

With just the places and the times, you can do some database work and learn when people in every corner of the world are in the strange, receptive state of social media engagement. Could be valuable! This information might tell you the best time to update a blog post or communicate with the most human beings at once, or when to release an advertisement. Maybe we learn that certain people tweet most assiduously right before leaving for work, a fine time for an advertiser to pitch them some orange juice or a new car to ease their commute.

Are Teams More Important Than Stars?

Rich Karlgaard of Forbes offers some lessons from Amazon about the optimal size of teams:

When you look deeper into teams within companies, one factor stands out as a predictor of success: size. There’s a right size for every team, and it’s almost always smaller than you think. Jeff Bezos of Amazon likes to use the “two-pizza rule” for strategy and development teams. If it takes more than two pizzas to feed the team, the team is likely too

Larry Summers at the IMF

Interesting speech by former Treasury Secretary Larry Summers at the IMF earlier this month. He offers his explanation of why recovery from the economic crisis in 2008 was relatively quick, but employment growth has stalled. Worth 15 minutes of holiday viewing.

Why Deregulation Moves So Slowly

The cumulative regulatory costs for business function like “pebbles in a stream,” an apt metaphor drawn by economist Tyler Cowen. His recent New York Times commentary expands this point. For proof of “how hard it is to clear away the old, unnecessary regulations that are impeding the economy,” look no further than the FAA’s long overdue decision to allow the use of electronic devices during takeoff and landing, says Cowen. He adds:

The total number of federal regulatory restrictions is now more than one million. And they’re not all necessarily good ideas. For instance, the Food and Drug Administration has banned some useful asthma treatments because they have a slight negative impact on the ozone layer. The nation has medical-device regulations that take longer to satisfy than those of the European Union.

How Edward Snowden Damages Free Trade

Ian Bremmer talked about whether American allies were less likely to conclude trade talks in the wake of spying revelations from Edward Snowden leaks. Irwin Stelzer, writing in The Weekly Standard, makes the point more directly:

Snowden probably knew nothing about the delicate negotiations under way to create freer trade with the EU, a deal known as the Trans-Atlantic Trade and Investment Partnership (TTIP). But by setting in train the series of events that forced German chancellor Angela Merkel to express shock at the hacking of her cell phone by America’s spooks, and giving French protectionists an excuse to claim that they cannot negotiate with a country that spies on them, Snowden sharply reduced the chance of successful conclusion of these negotiations.

Business and Natural Disasters

Extreme weather takes a massive toll on business – insured losses from Superstorm Sandy range between $20 billion and $25 billion. Yet CEOs don’t pay enough attention to the business vulnerabilities exposed by natural disaster risk, particularly in the supply chain. A timely white paper from FM Global urges businesses to build resiliency now. Thomas Lawson writes:

Natural disaster risk can sneak up on you if you are not vigilant. … Quantification of supply chain exposures often is lacking. Many companies that rely on supply chains don’t know if they have a $10 million exposure with a supplier or a $100 million exposure.

New CEOs: Exploit the “Honeymoon” Period

A compelling McKinsey study of more than 1,500 public companies found that a CEO’s success often comes from acting early in their career. The study argues that CEOs generate stronger shareholder returns and keep their jobs longer when they reallocate capital across the business portfolio and change executive committee members earlier in their tenure. “Over time, markets will be less forgiving toward CEOs who adopt a prolonged ‘steady as she goes’ policy, as it produces lower long-term TRS,” says McKinsey.

How to Explain Health Care Reform

Sal Khan, founder of the revolutionary education website Khan Academy offers his take on ObamaCare. In under seven minutes, Khan, using his inimitable teaching style, explains the evolution of health care reform and the policy choices that lead to our current situation.