[YEDG] 27th Apr. The pope as a turnaround CEO The Francis effect & 2 more articles
박주하
Hi there,
Here is Serena, this week's facilitator.
I have chosen 3 articles for this week. I hope to see many of you turn up in the meeting!
Then, hopefully wrap up your work soon and have fun evening!!
Ciao from Serena,
The pope as a turnaround CEO
The Francis effect
About to take over a crisis-ridden company with a demoralised workforce? Turn to a Roman case study
Apr 19th 2014 | From the print edition
BUSINESS schools regularly teach their students about great “turnaround CEOs” who breathe new life into dying organisations: figures such as IBM’s Lou Gerstner, Fiat’s Sergio Marchionne and Apple’s Steve Jobs. Now Harvard Business School needs to add another case study: Jorge Bergoglio, the man who has rebranded RC Global in barely a year.
When Pope Francis celebrated his first Easter as CEO, just after being appointed, the world’s oldest multinational was in crisis. Pentecostal competitors were stealing market share in the emerging world, including in Latin America, where Francis ran the Argentine office. In its traditional markets, scandals were scaring off customers and demoralising the salesforce. Recruitment was difficult, despite the offer of lifetime employment in a tough economy. The firm’s finances were also a mess. Leaked documents revealed the Vatican bank as a vortex of corruption and incompetence. The board was divided and weak. Francis’s predecessor, Benedict XVI, was the first pope to resign for 600 years, amid dark rumours that the founder and chairman, a rarely seen elderly bearded figure whose portrait adorns the Sistine boardroom, had intervened.
Operating prophet
In just a year, the business has recovered a lot of its self-confidence. The CEO is popular: 85% of American Catholics—a tough audience—approve of him. Footfall in RC Global’s retail outlets is rising again. The salesforce now talks about a “Francis effect”. How has a septuagenarian Argentine succeeded in galvanising one of the world’s stodgiest outfits? Essentially by grasping three management principles.
The first is a classic lesson in core competences. Francis has refocused his organisation on one mission: helping the poor. One of his first decisions was to forsake the papal apartments in favour of a boarding house which he shares with 50 other priests and sundry visitors. He took the name of a saint who is famous for looking after the poor and animals. He washed and kissed the feet of 12 inmates of a juvenile-detention centre. He got rid of the fur-trimmed velvet capes that popes have worn since the Renaissance, swapped Benedict’s red shoes for plain black ones and ignored his fully loaded Mercedes in favour of a battered Ford.
This new focus has allowed the company to spend fewer resources on ancillary businesses, such as engaging in doctrinal disputes or staging elaborate ceremonies. The “poor-first strategy” is also aimed squarely at emerging markets, where the potential for growth is greatest but competition fiercest.
Along with the new strategic focus, the pope is employing two management tools to good effect. One is a brand repositioning. He clearly continues to support traditional teaching on abortion and gay marriage, but in a less censorious way than his predecessors (“Who am I to judge?” he asked of homosexuals). The other is a restructuring. He has appointed a group of eight cardinals (“the C8”) to review the church’s organisation and brought in McKinsey and KPMG (“God’s consultants”) to look at the church’s administrative machinery and overhaul the Vatican bank.
Will it work? Established critics, notably the corporate raider Lou Siffer, maintain it is all incense-smoke and mirrors. Others insist that more sweeping change, including a bigger role for women, is needed. The chairman’s attitude is unknown. Some analysts interpret the absence of plagues of boils and frogs as approbation; others point out that He moves in mysterious ways, his wonders to perform.
The economics of prostitution
Sex, lies and statistics
Laying bare supply and demand in the oldest profession
Mar 22nd 2014 | NEW YORK | From the print edition
Most men prefer real girlfriends
“IT’S hard out here for a pimp,” complains the Three 6 Mafia, a rap group. A new study by the Urban Institute, a think-tank, casts doubt on this assertion. After investigating the sex trade in eight big American cities, researchers concluded that pimps can do rather well for themselves. Some in Atlanta bring in $33,000 a week, the study estimates.
Tracking the sex trade is hard. It is legal only in parts of Nevada. Elsewhere there are no receipts; researchers relied instead on interviews with lawyers, police, prostitutes and pimps. Their fat report, commissioned by the Justice Department, brought squeals of pleasure from journalists everywhere, who tended to play up evidence that the oldest profession is booming.
But it doesn’t appear to be. In five out of seven cities, the underground sex industry shrank between 2003 and 2007, the study found. (In one place, Kansas City, Missouri, there was not enough evidence to decide.) In Washington, DC, takings fell by 34%. In Denver, with a population of 2.5m in 2007 if you include the suburbs, the sex trade grossed a mere $40m.
Most men prefer real girlfriends
The demand for sex probably does not change much over time, but other things do. A century ago, when sexual mores were stricter, prostitution was more common and better paid (see table). Men’s demand for commercial sex was higher because the non-commercial sort was harder to obtain—there was no premarital hook-up culture. Women were attracted to prostitution in part because their other job opportunities were so meagre. And they commanded high wages partly because the social stigma was so great—without high pay, it was not worth enduring it.
The price for a trick today ranges from miserable ($15) to ample ($1,000 or more). Prostitutes have many options besides street-walking. The internet makes it easier for them to set up “dates” and negotiate prices, and harder for the police to catch them. They feel less vulnerable using social-media sites than doing the “stroll”. But 36% nonetheless report that some clients were violent or abusive.
Pimps, who are often women, tend to follow a business plan. They impose rules, such as “no drugs” or “no young clients” (who are more likely than older men to be violent). They are flexible with pricing, offering special deals for loyal customers and swiftly adapting to economic downturns. A third of pimps delegate management, training and even recruitment to an experienced employee called a “bottom girl”. About 15% admitted to beating up their staff. Others, however, thought violence was bad for business. One pimp said: “One bad girl can knock your whole stable loose. Get rid of the bad apple. If I needed to hit them, I didn’t need them.”
Coal
The fuel of the future, unfortunately
A cheap, ubiquitous and flexible fuel, with just one problem
Apr 19th 2014 | From the print edition
WHAT more could one want? It is cheap and simple to extract, ship and burn. It is abundant: proven reserves amount to 109 years of current consumption, reckons BP, a British energy giant. They are mostly in politically stable places. There is a wide choice of dependable sellers, such as BHP Billiton (Anglo-Australian), Glencore (Anglo-Swiss), Peabody Energy and Arch Coal (both American).
Other fuels are beset by state interference and cartels, but in this industry consumers—in heating, power generation and metallurgy—are firmly in charge, keeping prices low. Just as this wonder-fuel once powered the industrial revolution, it now offers the best chance for poor countries wanting to get rich.
Such arguments are the basis of a new PR campaign launched by Peabody, the world’s largest private coal company (which unlike some rivals is profitable, thanks to its low-cost Australian mines). And coal would indeed be a boon, were it not for one small problem: it is devastatingly dirty. Mining, transport, storage and burning are fraught with mess, as well as danger. Deep mines put workers in intolerably filthy and dangerous conditions. But opencast mining, now the source of much of the world’s coal, rips away topsoil and gobbles water. Transporting coal brings a host of environmental problems.
The increased emissions of carbon dioxide from soaring coal consumption threaten to fry the planet, as the Intergovernmental Panel on Climate Change reminded everyone in a new report this week (see article). The CO2 makes the oceans acid; burning coal also produces sulphur dioxide, which makes buildings crumble and lungs sting, and other toxic chemicals. By some counts, coal-fired power stations emit more radioactivity than nuclear ones. They release tiny, lethal particulates. Per unit generated, coal-fired stations cause far more deaths than nuclear ones, and more even than oil-fired ones.
But poverty kills people too, and slow growth can cost politicians their jobs. Two decades of environmental worries are proving only a marginal constraint on the global coal industry. Some are trying to get out: in America Consol Energy is selling five mines in West Virginia to concentrate on shale gas. Big coal-burners such as American Electric Power and Duke Energy are shutting coal-fired plants. Yet despite America’s shale-gas boom, the federal Energy Information Administration reckons that by 2040 the country will still be generating 22% of its electricity from coal (compared with 26% now). The International Energy Agency has even predicted that, barring policy changes, coal may rival oil in importance by 2017. As countries get richer they tend to look for alternatives—China is scrambling to curb its rising consumption. But others, such as India and Africa, are set to take up the slack (see chart).
America’s gas boom has prompted its coal miners to seek new export markets, sending prices plunging on world markets. So long as consumers do not pay for coal’s horrible side-effects, that makes it irresistibly cheap. In Germany power from coal now costs half the price of watts from a gas-fired power station. It is a paradox that coal is booming in a country that in other respects is the greenest in Europe. Its production of power from cheap, dirty brown coal (lignite) is now at 162 billion kilowatt hours, the highest since the days of the decrepit East Germany.
Japan, too, is turning to coal in the wake of the Fukushima nuclear disaster. On April 11th the government approved a new energy plan entrenching its role as a long-term electricity source.
International coal companies face two worries. One is that governments may eventually impose punitive levies, tariffs and restrictions on their mucky product. The other is the global glut. Prices for thermal coal (the kind used for power and heating) are at $80-85 a tonne, which barely covers the cost of capital. Some Australian producers are even mining at a loss, having signed freight contracts with railways and ports that make them pay for capacity whether they use it or not.
One answer to that is cost-cutting and efficiency, much stressed by companies such as BHP Billiton. Unlike oil and gas, coal is geologically simple and does not require a costly array of drills, platforms and pipes. If the price is too low, companies can decide to stop production and await better times. But thriftiness with capital has its limits: the cost of mining is going up, as the easiest coal seams are worked out.
Some companies have tried to switch efforts to “met” (metallurgical) coal, which fuels smelters. This was thought to be scarcer and more profitable. But that theory has suffered. Supplies of met coal have proved more abundant than expected.
Perhaps the biggest hope for all involved in the coal industry is technology. Mining and transporting coal will always be messy, but this could be overlooked were it burned cheaply and cleanly. Promising technologies abound: pulverising coal, extracting gas from it, scrubbing emissions and capturing the CO2. But none of these seems scalable in the way needed to dent the colossal damage done by coal. And all require large subsidies—from consumers, shareholders or taxpayers.
A $5.2 billion taxpayer-supported clean-coal plant in Mississippi incorporates all the latest technology. But at $6,800 per kilowatt, it will be the costliest power plant yet built (a gas-fired power station in America costs $1,000 per kW). At those prices, coal is going to stay dirty.
Serena Park
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박주하
Hi YEDGers!
I hope all of you had a great holiday!
Coming Sunday, we are going to have sunday discussion as usual at 9:30.
First time guest, please refer to the map as follows. (Coffeenie Sinchon)
http://map.naver.com/local/siteview.nhn?code=20570114
Then, I hope to see you all.
Ciao from Serena,
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