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G100 Network Notebook | March 2016

Dallas Fed CEO

Former Harvard Business School professor Robert Steven Kaplan ranks among the newest additions to a growing consensus at the central bank about raising interest rates gradually:

The Fed needs to keep raising short-term interest rates to diminish risks to the economy and markets of “excessive accommodation,” Mr. Kaplan told the Journal on Monday. However, fragile and interconnected financial markets, slow global growth, and the perils of driving the economy back into recession all mean the Fed can’t move aggressively, he said.

Culture and Succession Planning

Last year, Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, spoke to G100 about building a culture of “radical transparency.” New details emerging from an unexpected shift in succession planning leave little doubt why some workers find Bridgewater too intense. In an interview with Business Insider, Dalio explains succession and why his firm remains so misunderstood. An excerpt:

Each employee uses an iOS app called The Pain Button to log negative work experiences for the purpose of later discussion and resolution.

Team Building Lessons from Google

After countless hours studying what makes the best team, Google found behaviors, such as communication and empathy, were better indicators of success than any mix of personalities, skills, or backgrounds. Motivated by this insight, Google has created ways for managers to better elicit these behaviors from team members:

It’s not only Google that loves numbers, or Silicon Valley that shies away from emotional conversations. Most work­places do. ‘‘By putting things like empathy and sensitivity into charts and data reports, it makes them easier to talk about,’’ said [Google manager Matt] Sakaguchi.

Perspectives on Globalization

Falling commodity prices and declining value in global trade portend waning globalization, a phenomena Daniel Gros at the Center for European Policy Studies scrutinizes as overhyped. He says:

It is now becoming clear that the perception that globalization is some overwhelming and inexorable force largely reflected the side effects of the last decade’s commodity boom. If prices remain low, as seems likely, the next decade might well see global trade stagnate, as the trade pattern “rebalances” from emerging economies to the established industrial powers.

A rigorous analysis of the major global trends impacting the energy ecosystem tells a more nuanced story. By 2040, fossil fuels will remain the dominant source of energy, despite exponential growth in renewables, say authors of Looking Ahead. They foresee a time when the shale revolution fades, oil prices rise, and Saudi Arabia replaces the US as the number one oil producing country. From a preview of the book:

Among [OECD] members,…renewables are expanding by 4.6% a year. Among those outside the OECD, the figure is 7.4%. In the next 25 years, renewables will account for an estimated 43% of Africa’s new power plants, 48% of Asia’s, and 63% of Latin America’s. Asia alone is projected to add 1,587 renewable-power plants, almost as many as the rest of the world combined.

Technology and Transformation

True digital transformation requires leaders who can think past the number of connected devices to focus on aligning strategy, organizational structure, and culture, says Cisco Executive Chairman John Chambers:

The majority of companies will be digital in 5 years, yet the majority of their digital efforts will fail, which speaks to what a CEO needs to do differently.

This means understanding how technology shapes the future of work. New research from CHREATE offers us a glimpse:

IBM’s Open Talent Marketplace allows managers to deconstruct work into short-cycle events, publicize [them] to an internal and external population of players who use the platform to bid for and form communities to complete the work, and track their work history and capabilities, supported by common work language that constantly evolves through a partnership between Watson-like artificial intelligence and human judgment.

The State of HR Analytics

Think twice before joining the “arms race” for HR analytics, cautions economist Alec Levenson, who acknowledges the progress and limitations of current software. His refreshing take explains why organizations may not need a team of data scientists to identify performance barriers. For example:

A good, thorough analysis sometimes requires only interviews without crunching lots of numbers in your data warehouse or fielding a new survey. This is an entirely different type of weapon and ammunition than is typically deployed in the practice of HR analytics today.

What it Takes to Simplify Regulation

Thanks to a recent settlement with the Department of Justice, active duty servicemen and women have an easier process to apply for an interest rate cap on student loan payments. Streamlining this customer experience required persistence in the face of government bureaucracy and misplaced public criticism, says G100 member and Navient CEO Jack Remondi:

Today, military personnel no longer have to submit paperwork to obtain SCRA benefits on their student loans, unlike other consumer credit products. Instead, student loan servicers cross reference a Department of Defense (DOD) database and automatically apply the benefit. … It’s unfortunate that it took this extraordinary legal approach to create a better solution for service members — a solution that had been proposed by servicers several years earlier.

An Entrepreneurial Boom on the US Horizon

The outlook is improving for startups, which account for nearly all net new jobs, according to the Kauffman Foundation. Its upbeat report, two years in the making, provides a thoughtful examination of the obstacles and pathways to renewed entrepreneurship in the US:

We need an entrepreneurial safety net, of sorts — something that creates a form of insurance to reduce the opportunity cost of entrepreneurs and enable more people to experiment with ideas. This effort could take the form of a new type of social insurance program or a tweak to a current program, like unemployment insurance.