GIBS Review 

We trust that you will find the latest issue of GIBS Review an informative and enjoyable read. As always we welcome your feedback on any of the content or the format of the GIBS Review and encourage you to e-mail us with any comments or suggestions you may have at gibsreview@gibs.co.za. Kind regards, Professor Nick Binedell Director: Gordon Institute of Business Science Sasol Chair of Strategic Management

WHAT'S ON IN SEPTEMBER 6 | 14 | 16 22 | 27   UP NEXT IN OCTOBER 4 | 5 | 7 | 11 18 | 27

A WELL-TRODDEN PATH TO NEW SOLUTIONS

There is an immense global challenge to move from dirty energy sources, but the difficulty lies in harnessing unfolding and imperfect technologies to turn them into good technologies, writes WMG Media. Prof Rebecca Henderson of Harvard Business School argues that the solution to this “seemingly impossible task” of taking about 80% of the carbon out of the energy system in 40 years, lies in the path towards innovation taken in the past in fields like agriculture and biotechnology.

Interviewed in Harvard’s Working Knowledge, Henderson writes that despite the differences between these fields, “they're the best examples we have of innovation at the speed and order of magnitude that is needed in energy. So the trick is to try and learn from the other sectors while being very much aware of the degree to which what we learn does or does not translate to energy.”

Among her conclusions:`

• A price for carbon – Simply trying to improve rates of innovation without simultaneously creating demand for low-carbon energy is unlikely … to have much of an effect. We can pour money into nifty energy technologies, but if there's no demand that's not a sustainable solution,” says Henderson.
• The winning technology cannot be picked in advance – “The lovely thing about a price for low-carbon energy is that it's technology neutral. It tells innovators what we want and lets them explore the many different ways to get there,” says Henderson.

Working Knowledge: How to speed up energy innovation
Full HBS Working Paper: Accelerating innovation in energy: Insights from multiple sectors

Meanwhile China is fast becoming a clean technology leader, according to an interview in strategy+business. By 2008, it had become the world’s leading producer of solar panels and in 2009 it claimed the same title for wind turbines. Investment in clean tech in China in 2009 reached $34.6bn, compared with the US’s investment of $18.6bn.
strategy+business: China’s clean tech boom

The fact that Beijing is being much more aggressive than Washington when it comes to funding green technology does not mean that it is being more effective, points out Asia Times. The question is whether China, simply because of its political model, may have an easier time focusing resources and developing green technologies because they are state sponsored versus the more organic, entrepreneurial efforts that tend to characterise American efforts.

“In many ways, this conflict is at the root of many of the strains between the US and China, and it would do Washington well to remember that it may ultimately prove that the American emphasis on a public-private partnership may be more flexible and more pragmatically oriented, than the bureaucratically top heavy approach Beijing uses,” Asia Times writes.
Asia Times: Greening of China an affair of state

WHY ALL THE WORLD LOVES AN UNDERDOG

Consumers relate strongly to brands that they perceive to be underdogs, reports Science Daily. A team of US researchers has developed the concept of an underdog brand biography (UBB) to describe an emerging trend in branding in which firms exploit their humble origins, lack of resources and determined struggle against the odds. In a forthcoming paper in the Journal of Consumer Research, authors Neeru Paharia, Anat Keinan (both Harvard University), Jill Avery (Simmons School of Management) and Juliet Schor (Boston College), write: “Across contexts, cultures and time periods, underdog narratives have inspired people. Stories about underdogs are pervasive in sports, politics, religion, literature and film.”

Consumers identify with underdog stories because most people have felt disadvantaged at one time or another. The researchers examined the ways many contemporary brand narratives highlight companies' humble beginnings and struggles against powerful adversaries. Google, HP and Apple all emphasise that they started in garages.
Science Daily: Consumers love underdogs
Journal of Consumer Research: February 2011 forthcoming articles

In the world of sport there is a well-documented tendency for fans to root for the underdog, writes WMG Media. “We all share in the occasional joy – and more frequent misery – of rooting for the improbable,” as Daniel Engber puts it in Slate Magazine.

Drawing on research done in the 1990s, Engber explains that it is all a matter of “emotional economics”. The sports spectator is a hedonistic animal always out to maximise his or her excitement. If not beholden to any one team for sentimental reasons, the fan will choose to support a team based on a rational calculation of costs and benefits.

“In effect, the expected effect of a bet on an underdog – its average payoff in raw, chest-bumping excitement – will always be higher than the expected value of a bet on the favourite,” Engber writes.
Slate Magazine: The underdog effect: Why do we love a loser?

INDIA’S WINDOW OF OPPORTUNITY

Despite the economic woes of much of the world, India is growing at 9.4% a year, with the possibility of again hitting double figures in the near future. In The Sydney Morning Herald former cabinet minister Jaswant Singh argues that demographics has handed India “a nearly unique window of opportunity” – almost 60% of the population is under 30 – to sustain economic growth and “convert the country's vast promise into reality”.

“To seize this opportunity, India first must move decisively away from state capitalism, the remnants of which continue to retard the country's economic progress,” writes Singh. But this needs to be a uniquely Indian solution.

“Simply copying American, British, or other Western policies and institutions will not work”. Moreover, “India is not China … and should not hanker after any ersatz export-led or state-directed growth.”
The Sydney Morning Herald: India on the rise again

India is likely to overtake China as the world’s fastest growing major economy by 2015, as the South Asian nation doubles infrastructure investment and adds six-fold more workers than its northern neighbour, predicts a Morgan Stanley economist in a Bloomberg News report. Within two years, India will start matching China’s growth rate, said economist Chetan Ahya, after which “there will be a clear divergence of growth rates between the two countries.”

The Indian government plans to double spending on roads, ports and power plants to $1 trillion in the five years to 2017 to improve the quality of infrastructure that’s ranked below war-ravaged Ivory Coast and Sri Lanka. An increasing number of people joining the workforce and rising salaries will also help boost growth, said Ahya.
Bloomberg News: India to top China as fastest growing economy by 2015, Morgan Stanley says

WIKILEAKS COULD ACHIEVE MORE WITH TARGETED LEAKS

The inability of the most powerful government in the world to prevent WikiLeaks, the web-based whistleblower, from causing the US not only enormous international embarrassment but potential military setbacks, is a defining moment in how state “censorship” is becoming a redundant concept, writes WMG Media. Responding to WikiLeaks releasing 92000 classified documents relating to the Afghan war, Foreign Policy writes that the leaks have demonstrated two things: That there are today no clear standards for whistle-blower organisations and that there is an urgent need to fill the ethical vacuum if society is to benefit from the WikiLeaks model.

“[Justified] criticisms aside, WikiLeaks adds real value to the international regime governing the behaviour of soldiers in wartime by promoting precisely the sort of accountability that the Geneva Conventions require but military culture tends to discourage … WikiLeaks could provide a solution – a [targeted] reporting mechanism through which individual soldiers could report specific war crimes without fear of retribution. The organisation has servers in many countries and sophisticated encryption techniques, all of which are intended to disseminate incriminating secrets while protecting the anonymity of sources,” writes Foreign Policy.
Foreign Policy: How Wikileaks could use its power for good

GERMANY KICKSTARTS THE EUROZONE

Just a year ago Germany, Europe’s largest exporting country, was in the middle of its deepest recession in more than 60 years, reports the Financial Times. Now the country’s export engine has surged back to life with 2.2% growth in the second quarter and is leading the continent out of the financial crisis, although many are concerned that Germany’s “new economic miracle” could really be a Chinese economic miracle.

“What worries many industrialists is how lopsided the growth is towards Asia and other emerging economies such as Brazil, bringing a large part of corporate Germany into a dangerous dependence on the slowing Chinese market in particular,” reports the Financial Times.

Germany's economic bounce-back is testament to its respect for manufacturing and a backbone of small- and medium-sized firms, writes The Observer. It is a business culture that has respect for manufacturing, where exporters such as BMW or Bosch do not rely on a cheap currency to sell goods abroad but on the excellence of their products.

The New York Times notes that Germany sparred with its European partners over how to respond to the financial crisis, argued with the United States over the benefits of stimulus versus austerity and defiantly pursued its own vision of how to keep its economy strong.

But the roots of the recovery stretch back to the painful restructuring under the previous government, during which unemployment benefits were pared, hiring and firing made easier, and management and labour worked together to keep a lid on wages, reports The New York Times.

And Time writes that “only a few weeks ago, wherever you went in Europe, you heard the same complaint: Germany's obsession with fiscal austerity and its reluctance to throw a lifeline to ailing euro-zone members was going to pull Europe back into recession. But the naysayers have been proved wrong.”
Financial Times: Germany: On a roll
The Observer: German business culture should be a model for our own
The New York Times: Defying others, Germany finds economic success
Time: How Germany is helping pull Europe out of recession

NEW ATTITUDES TO WORKPLACE STRESS

Not only has the stigma of seeking counselling for workplace stress all but disappeared in the United Kingdom, but also most employees believe that their employer should provide a confidential counselling service to deal with such stress, writes WMG Media. And according to an SA expert, such employee assistance programmes are the “canaries” of organisations, which if heeded could add significantly to the bottom line.

The British Association for Counselling and Psychotherapy’s 2010 Attitudes to Counselling and Psychotherapy survey, revealed that 29% want their employer to provide them with more emotional support to enable them to deal with stress in the workplace, whether that is caused by work, personal problems imported into work, or a combination of both, reports the Chartered Management Institute. Some 78% of employees thought that workplace stress was a “legitimate reason” to seek psychological counselling, whereas just six years ago only 24% did.

In SA, occupational nurses and health practitioners pick up stress-related problems long before they are brought to the attention of the business, reports Workplace Alert. “Rather than see such programmes as luxury nice-to-haves, businesses would be well advised to use these services in their own interests. Addressing the mental health needs of their employees should not be a long-term goal – it should be an immediate goal, which could add significantly to the bottom line, writes employment consultant Marleen Potgieter.”

“Increasingly, the trend in the UK and other European countries is that employees are holding their employees responsible for stress related illnesses. SA is not as litigious as the UK and the US yet but ensuring employee wellbeing immediately raises productivity.”
Chartered Institute of Management: Employees need stress counselling service from their from their employer, survey finds
Workplace Alert: Marleen Potgieter’s view
Pressured or Stressed? Take the NHS Work Stress Test

IN DEPTH ...

Learn to read between the lies: Micro-facial expressions reveal the truth
The world is rife with fraudsters and corrupt government officials whose crimes go unnoticed, let alone unpunished, because most people, even trained professionals, have a hard time spotting lies. Read more …

	Now headlining
Win business from competitors by being a nuisance. Real world learning: Can business schools cure SA's social ills? The 10 Greatest Entrepreneurs