What Sort of Brexit Is It: Light Continental or Full English?

Posted by MIT Sloan Executive Education - 7 days ago

Contributed by MIT Sloan Senior Lecturer, Phil Budden


Late last June, the British referendum on the EU resulted in a "vote heard 'round the world." In the weeks after that shocking result, we saw market volatility, the departure of British Prime Minister David Cameron, and much speculation around how and when the UK would formally leave the EU. Fortunately, the state’s automatic stabilisers kicked in—from the Bank of England, through the Civil Service, to the reassuring presence of the Queen.

As the summer comes to an end, and the initial turmoil has subsided, many executives are asking what’s now going on, and what do they need to know for the fall. One thing is clear: the so-called "Brexi"” is a process, not a single event. The referendum on the 23rd of June was "advisory," so—in the British parliamentary system—it is for the Government (now led by Theresa May) to take this forward, including when to trigger the formal two-year process of negotiating with the EU under Article 50, and when to bring a deal to Parliament.

While the initial shock waves of uncertainty roiled the currency and stock markets (as well as the political parties), the immediate economic picture is still uncertain: it could have been much worse without the major efforts of the Bank of England, HM Treasury and wider Civil Service. Markets have now stabilised, but the fundamental economic picture will not be clear for a while. This is unsettling for executives making medium-to long-term plans, as the short-term state will remain so unclear until further data comes in, with those for the first quarter after the referendum (i.e. Q3) perhaps not being out before Thanksgiving.

Post Brexit: What to watch for?

I am often asked what sorts of issues executives might be watching out for in the coming months. A challenge is that those advocating Brexit did not have a fixed plan: this is partly how the "Leave" coalition secured the 52% vote, i.e. by not specifying what a vote for Brexit would entail.

At the end of this piece, I set out two extremes on the spectrum for Brexit options, with Britain's opening negotiating position likely somewhere between, depending on how the following key issues are addressed

Reviewing the statements of the “Leave” campaign’s members (and polling of its voters), it is possible to identify four key issues which would need to be addressed in the UK’s negotiating position: these are immigration, "control," budget, and the market (mnemonic: 'ICBM'). The issue now is for the Government—assisted by its professional Civil Service (known informally as "Whitehall")—to define a negotiating position that respects the 52%'s vote, identifies the national interest for the whole country, is acceptable to a majority in Parliament, and might be negotiable with the rest of the EU.

1. Immigration

Immigration was, effectively, the emotional issue that won the Brexit vote, but it is not clear how this will translate into a negotiating position. In the heat of the debate, it was often forgotten that “immigration” is a two-way street (with many Brits benefitting from living in the rest of the EU), and that most of the immigrants come into the UK from outside the EU. Exiting the EU (with its "free movement of people") would not stop the bulk of the immigrants into the UK, but it would put in jeopardy the rights of Brits in the rest of the EU.

Looking closely at immigration into the UK, it’s clear that some places with the greatest numbers (e.g. London) were in favour of this influx (as its Mayors had recognized), and it voted heavily to remain in the EU. This openness had helped London become Europe's hotbed of innovation-driven entrepreneurship. Other communities—which had already been experiencing wider social and economic challenges, and then faced a recent rapid rise in immigration—voted to leave the EU. (Sadly, one of the side effects of the Brexit vote has been a spike in racist attacks in England.) Immigration will clearly be one of the thorniest topics.

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Monetization lessons from Pokémon Go

Posted by MIT Sloan Executive Education - 8 days ago

Marketing lessons from Pokemon Go and Catherine Tucker of MIT

Marketing successes often spark a series of copy cats—companies that decide the best approach to a quick marketing win is to just "do what they did" and reap the same benefits. Sadly, that almost never works. Mostly this is because what makes the marketing campaign successful is its uniqueness, and a copycat campaign lacks just that. So for all those companies thinking they should copy the wildly popular Pokémon Go, it’s time to put the brakes on that idea.

But there are some marketing strategies—or, more specifically, monetization strategies—that companies can learn and co-opt from Pokémon Go’s commercial and viral success. Catherine Tucker, Professor of Marketing at MIT Sloan School of Management, touched on these in her TechCrunch article, "The Monetization Promise and Pitfalls of Pokémon Go." We've summarized them below.

Develop target partner personas
One might think nearly every business—especially small business—would appreciate the extra foot traffic from Pokémon Go players hunting rare characters. Some businesses with traditionally long lines and a tendency towards rapid ordering and service are not necessarily the right place for people to be playing games on their phones, however. Imagine being in a lunchtime line at a typical New York pizza place, only to be held up by Pokémon Go players glued to their phones—that’s not going to go over well with the other patrons, or with the counter staff (think Seinfeld’s famous Soup Nazi!).

On the other hand, Tucker points to franchise companies like Jamba Juice. "For starters, Pokémon Go and Jamba Juice have similarly youthful brand images ... At the very least, it's unlikely that Pokémon Go customers searching for Pokémon would inadvertently annoy Jamba Juice's existing customers." Lesson: think about how your customers, their demographics, and their behaviors map to those of your ideal partners' customers.

Don't over-value your data
Consumer or user data was once thought of as extremely valuable. What kind of powerful and successful business could Foursquare build based on all that data it was acquiring (where and how frequently its users dined at and visited various types of businesses)? Well, one rather disastrous pivot later and that question will never be answered. As Tucker points out in her article, Waze and Facebook both have volumes of location-based data. Pokémon Go also has location-based data. It’s all valuable, but not unique. If you think data is your monetization strategy, proceed with caution.

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MIT's Bengt Holmström wins 2016 Nobel Prize in economics

Posted by MIT Sloan Executive Education - 9 days ago

MIT's Bengt Holmström wins Nobel Prize in economics

Bengt Holmström, an influential MIT economist and long-time MIT faculty member, was this week awarded the 2016 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. He shares this honor with Oliver Hart of Harvard for their deeply influential work on contract theory, including the optimal design of contracts between employers and employees.

Holmström holds a joint appointment between the Department of Economics and the MIT Sloan School of Management.

"MIT's latest Nobel laureate is not only an extraordinary economic thinker," said MIT President L. Rafael Reif while introducing Holmström at an on-campus press conference on Monday morning. "Bengt Holmström is also an outstanding citizen of MIT and a delightful human being."

Oliver Hart and Professor Holmström have devoted their lives' work to what's called contract theory—how and why contracts work and how they can be made better. This niche has just begun to gain the same cachet in academic circles as game theory and the study of stock market fluctuations.

"Their analysis of optimal contractual arrangements lays an intellectual foundation for designing policies and institutions in many areas, from bankruptcy legislation to political constitutions," the Royal Swedish Academy of Sciences wrote in its Nobel announcement.

Their work has touched on everything from executive pay to health insurance deductibles to the use of tax shelters and how to divide up control of a firm when it's not explicitly written into an agreement. Holmström's economic models, for example, can help companies develop the right incentives to optimize employees' performance.

"This theory has really been incredibly important, not just for economics, but also for other social sciences," said Per Stromberg, a member of the prize committee and professor at the Stockholm School of Economics.

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Success isn't comfortable: Lessons in leadership from the Human Capital Institute

Posted by MIT Sloan Executive Education - 18 days ago

confused executive

There is value in discomfort--business value. If you happened to attend the Human Capital Institute's Learning and Leadership Development Conference held in Boston last month (MIT Sloan Executive Education was a sponsor), you heard more than one session speaker tout the benefits of being squarely outside of one's comfort zone. According to speakers like MIT's own Hal Gregersen, who presented a keynote speech at the conference, business leaders need to get uncomfortable to be successful.

Three ways discomfort drives success

We generally think of people who enjoy uncomfortable situations as thrill seekers--or masochists. Most people don't take pleasure in being nervous, humbled, or overly challenged. We are conditioned to appear as confident and competent in front of our peers as humanly possible. And we avoid tasks that are out of our wheelhouse because, frankly, we don’t want to screw up. However, in the context of leadership development and business success, staying comfortable is actually a dangerous game. And, most importantly, a missed opportunity.

Here are three takeaways from the recent HCI conference that remind us of the value in discomfort.

Executives who learn to stretch their comfort levels and ask tough questions make better leaders and innovators.

Hal Gregersen, Executive Director of the MIT Leadership Center and a Senior Lecturer at MIT Sloan Executive Education, says it's all too easy for senior leaders to isolate themselves in a "good news cocoon" where everyone says things are fine and no one challenges your ideas or asks tough questions. It's comfy, and it's dangerous. Powerful organizational and industrial forces can keep any senior leader from asking (or hearing) uncomfortable questions, creating a perilous, answer-centric environment rife with blind spots. They lose sight of the big picture of how things really are, ultimately missing opportunities for innovation and increasing the risk of disruption.

"Executives who ask and invite probing questions are much better equipped to manage threats and spot opportunities," said Gregersen in his keynote speech, The Leader's Dilemma: Asking Tough Questions (Before Someone Else Does). Having interviewed hundreds of the world's most innovative CEOs as part of his ongoing leadership research, he finds that those who seek out uncomfortable, risky, and challenging situations in search of a line of inquiry have greater success at leading innovative products and process. By becoming better questioners, leaders unlock new solutions, innovations, and processes, ultimately creating greater business value.

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How meta data is changing expectations of privacy at work

Posted by MIT Sloan Executive Education - 23 days ago

How metadata is changing expectations of privacy at work

Workplace privacy and the expectations that go with it is a thorny and ever evolving issue. A few decades ago, many employees likely had high expectations of privacy in the workplace, as the breach of it was relegated mostly to overheard phone conversations. More recently, with the advent of email and its proliferation into the workplace, the thinking around workplace privacy has changed. Today, many organizations require their employees to sign paperwork indicating they understand that any and all emails sent through the company's email system and servers are the property of the organization—and that the employee should have no expectation of privacy.

While one may agree to the idea that the organization owns the emails sent through its own system, they may be taken aback at the thought of someone--a manager, an IT person, an HR executive--actually reading those emails. In most cases, of course, no one is reading any one employee's emails unless there is cause to, such as suspected misbehavior.

This topic was a discussion point at the recent Boston CHRO Leadership Summit (MIT Sloan Executive Education was a sponsor). The executive boardroom session, "The Gold Mine Between the Lines—Analytics-Driven HR," focused on organizational analytics and how they are evolving to drive wide-scale transformation. This discussion included the use of meta data around email to understand how an organization collaborates and reaches (or does not reach) performance management goals. The diverse group represented private sector businesses, non-profit organizations, and governmental agencies. Interestingly, some of the participants commented that their millennial employees (in general) aren't concerned by the idea of their employer looking at email meta data, or even the contents of email.

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Entrepreneurship Center expands to better serve its mission

Posted by MIT Sloan Executive Education - 26 days ago

MIT's Entrepreneurship Center expands to better serve its mission

With its reputation as an entrepreneurial hotbed, it’s no surprise that MIT has recently invested approximately $10 million to expand and renovate the 26-year-old Martin Trust Center for MIT Entrepreneurship, located at One Amherst St. in Cambridge, Massachusetts. The center is responsible for entrepreneurship across all five schools at MIT starting with education but also extending well outside the class room with student clubs, conferences, competitions, networking events, awards, hackathons, student trips, and most recently accelerators. Last year, students who work at the center started more than 50 new companies.

An additional 2,700 square feet were added for a total of 7,200 square feet of space dedicated to all things entrepreneurial in the heart of Kendall Square. The redesigned center now features an expanded maker-space workshop (ProtoWorks), event space, nine conference rooms equipped with wireless presentation systems, a café, and phone booths that provide free international calling. The Center is equipped with room scheduling software created at the nearby Cambridge Innovation Center.

"The thoughtfully-designed space will enable new and expanded collaboration across campus, with students from all parts of the Institute exploring entrepreneurial interests in a dynamic environment," said MIT Sloan School of Management Dean David Schmittlein, who added that the space was designed to accommodate the need for creativity and collaboration.

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Next steps for C-ROADS and climate change

Posted by MIT Sloan Executive Education - 29 days ago

Earlier this spring, MIT Sloan Professor John Sterman presented an important and well-attended live webinar, The Dynamics of Climate Change--from the Political to the Personal. One of the highlights of the webinar was a live demonstration of C-ROADS (Climate Rapid Overview and Decision Support) a free, award-winning computer simulation that helps people understand the long-term climate impacts of policy scenarios to reduce greenhouse gas emissions.

In the live Q&A sessions immediately following the webinar, Sterman fielded a great number of questions from the audience. However, there were simply more questions than could be answered in the time allotted. We recently posed three of the larger, unanswered questions to Sterman, and we have shared his responses below.

What's next for C-ROADS?
The next steps for C-ROADS are driven by the negotiations and conversations occurring during the Paris climate agreements. First, there will be a new interface that will be easier to use and more widely available. (You can view a video preview of it here). And while the team behind C-ROADS will continue to work with negotiators and policymakers, they are also actively seeking to increase the number of skilled users. If you are interested in learning how to use C-ROADS in any setting--from the classroom to the community room to the boardroom--you can join the movement at: https://www.climateinteractive.org/programs/world-climate/

The team behind C-ROADS also has a number of other related projects in the prototype phase, one of which is EN-ROADS, a simulation tool (similar to C-ROADS) for understanding how we can achieve our energy transition and climate goals through changes in energy use, consumption, and policies. The tool focuses on how changes in global GDP, energy efficiency, R&D results, carbon price, fuel mix, and other factors change carbon emissions, energy access, and temperature. It is ideal for decision-makers in government, business, NGOs, and civil society.

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Certificate helps executive “future proof” his career

Posted by MIT Sloan Executive Education - 1 month and 4 days ago

MIT Sloan Certificate holder Robert Robertson

Robert Robertson is president of the Bahamas Technical and Vocational Institute and recently received an Executive Certificate in Strategy and Innovation at MIT Sloan Executive Education. In this interview, Dr. Robertson shares his thoughts about the experience and how he has applied those lessons in his professional endeavors

Initially, what made you consider the MIT Sloan Executive Certificate?
The reason I chose the MIT Sloan Executive Certificate was because of the reputation of the School and recommendations from previous attendees.

Can you share some lessons learned from your MIT Sloan experience? Were you able to apply them in your workplace?
The scope and speed of change challenges us all to think outside the box, and these programs afforded the means to address that reality. The training was very practical and relevant. The programs provided excellent cases and exercises that engaged everyone, and in addition, there was a very good range of participants, which added value to the work. Also, the ability to link disruptive innovation to my work was very useful.

What were the highlights of your experience with the programs you completed?
The instructors, the environment, the materials, and the planning by all involved were highlights of the programs. In fact, I have retained the materials and still use them. They are excellent! All of the faculty presenters were well prepared, and the sessions were definitely world class. It is difficult for me to single out any one instructor in particular. In my experience, all of the professors reached an exceptionally high standard across the board.

Was there anything that surprised you about the programs?
What surprised me initially was the consistent quality across all of the courses. Also, the diversity of the cohorts and the ease with which you could work with the participants was really a plus. It was an enriching experience to be able to work with people from so many different factions. For example, I had course mates from the U.S. military, the European commission, and a large Japanese company. The differences in terms of experience that the participants brought to the table were applicable immediately to my current situation.

Were you able to connect with your classmates? If so, what were the benefits of doing so?
The networking opportunities were an important aspect of the classes. I have had good connections from the certificate experience and have maintained contacts in Southeast Asia, Hanoi, and Ho Chi Minh, who have shared emerging issues, trends, and problems—and given me good feedback, which has assisted me in my teaching.

Did the programs meet your expectations? Would you recommend them to colleagues? Overall, the programs exceeded my expectations. They were well organized, and the takeaway materials were excellent. I found the programs to be a very useful and well worth the time and energy to attend. I would highly recommend the experience.

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