Global expansion is a core goal of many major corporations, but some are beginning to rewrite the multinational rules of the road. With 300 locations around the world, General Electric (GE) is one such pathfinder, recently rethinking which functions should be regionalized and which should remain local.
Global Operations Executive Leader, Oleg Bodiul, SF ’13 took on the vast transformation role as part of a GE leadership team tasked with creating a global shared-services organization that would centralize many of the company’s key functions, including accounting, finance, and commercial operations.
Among the top 100 firms in the world, GE is a digital-industrial player providing software-defined machines and solutions for markets ranging from aviation, power generation, and oil and gas to renewables, healthcare, and financial services. “Historically, functions like accounting and order management were performed in hundreds of locations around the globe. The objective was to centralize, where possible, into a few locations to leverage scale and deliver better outcomes for our customers, employees, and shareholders.”
“No smart business strategist would start a business in the small diesel engine marketplace,” says Tana Utley, SF ’07. But that’s exactly the project she was charged with turning around at Caterpillar, Inc. recently. Utley is vice president with responsibility for the large power systems division at Caterpillar, one of the world’s leading engine manufacturers.
What’s so bad about small diesel engines? The list is long. Small diesel engines are being made all over the world and the competition is stiff as companies in emerging markets try to gain a toehold by keeping their prices at rock bottom. “It’s almost impossible for us to sell our equipment at prices that low,” Utley says. “On top of that, there’s an overcapacity of small diesel engines in the global marketplace, bringing the market price even lower.” Getting out of the business was not an option, however. Caterpillar needs those small engines; they power a variety of the company’s machines, generator sets, and some external applications.Continue reading
Over the last decade, MIT Sloan researchers Erik Brynjolfsson and Andrew McAfee have become adept navigators of our digital future, and their most recent book, Machine Platform Crowd: Harnessing our Digital Future pretty much guarantees their place at the helm. The best selling authors of The Second Machine Age (2014) have taken the lead in making sense of the technological advances that are confounding the rest of the world.
In their new work, McAfee and Brynjolfsson, codirectors of the MIT Initiative on the Digital Economy, help the average citizen understand what the integration of machines, platforms, and crowds will mean to our collective tomorrow. Robots are front and center in that digital future-scape. The authors talk about restaurants in which customers order, pay for, and receive meals without interacting with human employees. Ordering, they point out, is something that a robot—or a computer interface—can accomplish very adeptly if the programming is smart enough.
Thad Allen, SF ’89, is known as something of a superhero when it comes to turning around major disasters. Barack Obama chose Allen, the former Commandant of the Coast Guard, to serve as the National Incident Commander for the coordinated response to the Deepwater Horizon oil spill in the Gulf of Mexico. As successful as he was in mitigating that disaster, Allen, who is now a senior executive at Booz Allen Hamilton, is perhaps best known for turning around another national crisis—Hurricane Katrina.
Days after the storm barreled into New Orleans in the late summer of 2005, Michael Brown, President George Bush’s FEMA head, was finding the situation increasingly unmanageable. Secretary of Homeland Security Michael Chertoff tapped Allen, then chief of staff of the U.S. Coast Guard, to turn the disintegrating situation around.
“The hurricane made landfall on the 29th of August. I dispatched on the 5th of September,” Allen remembers. “What I found was a complete breakdown of law and order. Chaos in the Superdome. Press reports were showing the same human remains on street corners day after day. We were dealing with the equivalent of a weapon of mass effect—but the terrorist was nature. New Orleans, in effect, lost continuity of government.”
The first step in any turnaround, Allen says, is to correctly identify the problem. “One of the things that crippled the government’s initial response was that the leaders in charge did not get the problem right. We were dealing with the loss of civil institutions and the lack of local government capacity—not a hurricane. You must understand the challenge before you can even begin to turn a situation around.”
A recent report from the Global Entrepreneurship Monitor (GEM) found that 27 million working-age Americans—nearly 14 percent—are starting or running new businesses.
Impressive though that number is, says Mark Anthony Thomas, SF ’14, the uptick leaves many Americans behind.
Senior Vice President of Partnerships at the New York City Economic Development Corporation, Thomas says that while high-tech startups produce innumerable benefits, they tend to create jobs for college graduates. “In the United States,” he notes, “universities have sophisticated entrepreneurship programs that help students bring their new ideas to market.” But entrepreneurship opportunities, Thomas says, should not be limited to those moving along an academic track.
Outside the digital marketplace, Thomas says, relatively few American-born citizens appear to consider starting a new enterprise. In fact, foreign-born Americans outpace those born in the U.S. in developing new businesses.
Not all entrepreneurship is good entrepreneurship, but how do you measure, evaluate, assess a new enterprise? How do you identify which are destined for success—and which are headed for failure? Catherine Fazio, SF ’14, Managing Director of the MIT Lab for Innovation Science and Policy is working to get real answers to those questions.
Part of the Institute-wide MIT Innovation Initiative (MITii), Fazio’s lab convenes faculty and students from across campus to study innovation systematically and identify factors that create effective outcomes. “We’ve made terrific progress on developing new metrics for entrepreneurial quality and innovation ecosystems,” says Fazio. “Now the challenge is to turn our evidence-based research into effective policies and programs.”
Fazio, MIT Sloan doctoral student Jorge Guzman, and MIT Sloan professors Scott Stern and Fiona Murray put their collective insights into a 2016 policy briefing, A New View of the Skew: A Quantitative Assessment of the Quality of American Entrepreneurship. The idea is to help regional and national government agencies improve their performance in stimulating economic growth.
Fazio notes that the two most common methods for measuring entrepreneurship have polarized public policy debates in recent years. “One approach, which tracks the sheer quantity of new businesses, shows a three-decade decline in U.S. startup dynamism. The other method uses performance outcome post-mortems that end up conflating startup potential at founding with other factors that contribute to later success, such as regional ecosystems, the supply of capital, and luck. Some analysts look at that data and say we have too much entrepreneurship.”
Alexander Graham Bell would be astonished at the power of today’s smart phones. Yes, the app that makes it possible to find a Starbucks along an unfamiliar highway can feel like a miracle, but the true revolutionary power of the telephone is felt most in developing countries. In Kenya, for example, the mobile phone has, to some extent, stabilized the economy for many citizens and transformed quality of life.
Nearly all Kenyan households own at least one mobile phone—not state-of-the-art smart phones, but phones “smart” enough to accommodate at least one M-Pesa account. Available to any customer of Safaricom, Kenya’s mobile network leader, M-Pesa is a money transfer service that allows a daughter at one corner of the country to send money safely and securely to her mother in a village seven hours away. Previously, she would have entrusted an envelope of cash to a bus driver heading to her mother’s village (at considerable risk) or relied on a money transfer that took days—and a daunting amount of red tape—to process.
Of course, to withdraw funds through an M-Pesa account you must have access to an agent who can disperse the cash. Happily, in response to the popularity of M-Pesa, the network across Kenya has mushroomed to 150,000 agents. Working with Innovations for Poverty Action, Associate Professor of Applied Economics Tavneet Suri, a native Kenyan, and her colleague William Jack have been tracking incomes in regions where new agents have opened for business. They compared the financial health of those regions with that of regions where agents are not as accessible.
When the International Olympic Committee settled on Vancouver for the 2010 games, Bruce Dewar, MOT ’92, wanted to make sure the region could survive it. Host cities have suffered devastating economic fallout, and Dewar was determined that the Vancouver Games would give back to the community as much as it reaped.
As CEO of 2010 Legacies Now, he developed and supported projects to help British Columbia leverage the games to strengthen local communities—an effort that the International Olympic Committee has lauded as best practice. Today, seven years after the event, Dewar is still tapping the impact of the Games. In 2011 he launched a venture philanthropy organization called LIFT Philanthropy Partners that grew out of the new enterprise climate generated by the Olympic Games.
LIFT invests in building the capacity, sustainability, and impact of charities, nonprofits, and social enterprises working to remove barriers to health, education, and employment for vulnerable Canadians. Dewar, who is president and CEO, says that LIFT is improving the fabric of society. “We’re building self-sufficiency. We’re building confidence. We’re building support networks.”
Local governments across Africa should make every effort to promote entrepreneurship, says Flavian Marwa, SF ’10, but they shouldn’t enter the risky business of picking and backing winners. Founder of Sebelda Global Development Advisors and a consultant for the World Bank Group’s Africa region, Marwa is responsible for developing sustainable models of technology-based startup incubators with a focus on Africa.
“When governments provide seed money,” he says, “new enterprises tend to rely on it rather than learn to compete in the real marketplace. They lose their incentive to make it work when they know they can get capital infusions from the government.” Marwa believes that governments can best promote a healthy enterprise culture by partnering with industry to create mentorship programs. “Governments need to facilitate connections between young entrepreneurs and seasoned business leaders who can help them anticipate and navigate thorny patches,” he says.
Marwa also stresses the importance of promoting a healthy lending climate. He notes that government investment is critical, but not straight-out subsidies. “It costs investors a relatively steep sum of money to write a loan, and that discourages them from making the small-scale loans that would be appropriate to help a startup.” He believes that governments can offset loan origination costs with incentive programs—and similarly provide economic perks in the form of tax breaks or subsidies to motivate established businesses to invest in new enterprises.
How does an isolated nation like New Zealand become a major player in the international marketplace? The short answer is that they know how to weave. Lynne Dovey, SF ’02, who has spent the last four decades working for the New Zealand government in a range of policy roles, notes that the nation’s remoteness has inspired Kiwi entrepreneurs to embrace new ideas from around the world through trade relationships, scientific collaborations, and commercial partnerships.
But the country has a prodigious store of indigenous wisdom, Dovey says, and that knowledge is a vital part of the mix. Dovey says that the New Zealand government promotes a culture of entrepreneurship that leverages proprietary knowledge in areas that have become the nation’s province like biosecurity, healthcare, earthquake science, and renewable energy. Into that approach it integrates a healthy dose of ancient, homegrown Māori wisdom, the body of knowledge first brought to New Zealand by the Polynesian ancestors of present-day Māori. Woven together, these components have made for a thriving enterprise climate.