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The 250 Most Effectively Managed U.S. Companies—and How They Got That Way

Posted by hkarner - 6. Dezember 2017

Date: 06-12-2017
Source: The Wall Street Journal

Amazon is on top, followed by Apple and Alphabet, in a landmark ranking, the Drucker Institute’s Management Top 250

Amazon, Apple and Alphabet are innovation and customer-satisfaction standouts because so many of their products are reshaping industries and social behavior.

A nearly century-old timber company is an unsung management gem. Investor-favorite blue chips haven’t lost their luster in terms of how well they are run. And the tech giants shaping much of today’s society are the most effectively managed U.S. companies.

Those are among the many insights revealed in the inaugural Management Top 250, a landmark ranking marking the first time the ideals and teachings of the late business guru Peter Drucker have been used to analyze and compare the performance of major U.S. companies. http://www.drucker.institute/rankings-2017/

Hailed as the father of modern management, Mr. Drucker influenced generations of business leaders with his writings, including a regular column in The Wall Street Journal. His principles of what makes a well-managed organization have never before been translated into a quantitative model to measure how effectively a company is run.

The Management Top 250 does just that. The ranking—compiled by the Drucker Institute, founded in 2007 to advance the ideals of the management sage—differs from other “best of” lists in that it doesn’t measure any single aspect of a company’s prowess, such as profits or productivity. Rather it takes a holistic approach, examining how well a business does in five areas that reflect Mr. Drucker’s core principles: customer satisfaction, employee engagement and development, innovation, social responsibility and financial strength.

Amazon.com Inc. tops the list of the nation’s most effectively managed businesses. On the online retail juggernaut’s heels are Apple Inc. and Google parent Alphabet Inc . , in second and third place, respectively. Tech behemoths International Business Machines Corp., Microsoft Corp. and Cisco Systems Inc. and Silicon Valley up-and-comer Nvidia Corp. take four of the other top 10 spots. Rounding out the Top 10 are old-line stalwarts Johnson & Johnson (No. 4), consumer-products giant Procter & Gamble Co. (tied with Microsoft at No. 6) and 3M Co. (No. 8), the company behind Post-it Notes and Ace bandages.

To measure a business’s success in each dimension, the Drucker Institute—part of Claremont Graduate University outside of Los Angeles—scored how companies stacked up in 37 specific metrics, from market-share data to patent applications to employee ratings on the career-review site Glassdoor. The companies listed in the Management Top 250 are the highest scorers among 608 U.S. corporations studied that in the fall of 2016 belonged either to the S&P 500 stock index or Fortune 500 list or had a market value of more than $10 billion. The ranking methodology hasn’t been formally peer reviewed.

Tech success
Why do so many of the biggest names in tech—some of which didn’t even exist three decades ago—make the Management Top 250 list?

For the most part, the tech companies at the top get high grades across all five categories, landing in all but a few instances in the upper 15% to 20% of the more than 600 companies analyzed by the Drucker Institute.

Amazon, Apple and Alphabet are innovation and customer-satisfaction standouts because so many of their products—from cloud-computing platforms to smartphones to the burgeoning field of drones and driverless vehicles—are reshaping entire industries as well as social behavior.

Tech firms such as Alphabet and Microsoft also contract out much of their front-line work. The official staff that remain tend to be highly paid and enjoy generous perks, a likely factor in those companies’ high employee scores, says Rick Wartzman, director of the Drucker Institute’s KH Moon Center for a Functioning Society. “Their workforces are the winners of the knowledge economy,” he says.

An innovation powerhouse
There is more than one way to the top. No. 1 Amazon is actually one of the Management Top 250’s most uneven performers. Within the larger universe of analyzed companies, it scored in the bottom 20% on social responsibility. The lackluster grade comes after years of critical news reports about the working conditions of its warehouse workers and poor marks from activists for not being more transparent about its environmental record. Yet, its mighty innovation score—so high that it lies off the charts compared with other companies’ scores—catapulted it to first place.

Amazon, which has assembled a high-profile corporate-responsibility team over the past few years, declined to comment for this article.

The company’s $20.85 billion research-and-development spending in the 12 months through September outstripped all other U.S. companies, according to S&P Global Market Intelligence data. It has kept ahead despite its swelling size by moving quickly and sticking to its founding principle of starting with the customer, says Reid Greenberg, executive vice president of digital and e-commerce at research and consulting firm Kantar Retail.

Its agility, he says, comes from grouping workers in small teams. Chief Executive Jeff Bezos instituted the “two-pizza team” concept, where the ideal team size is one that can be fed on two pizzas. When it was instituted in the early 2000s, it was “really jarring,” says Eric Heller, CEO of Marketplace Ignition, a consulting firm for brands and retailers, and a former senior manager at Amazon. But by getting rid of bureaucratic layers, it fueled innovation. Each team owned projects as small as a single button on the website and was responsible for improvements.

The 250 Most Effectively Managed U.S. Companies—and How They Got That Way

At Amazon, potential product ideas get written up into dummy news releases that get marked up. Creators must answer questions such as the cost of the project, how much the product or service would sell for and the launch date.

It’s always day one for Amazon—”today we’re starting day one of the next five years or the next 10 years and we’re not dwelling in the past”—says Mr. Greenberg. “That’s really how the company thinks and breathes, and…that helps them maintain a competitive advantage.”

The company’s early emphasis on frugality led to creative ideas, the most impressive of which were rewarded with a highly coveted “door desk award,” a trophy that looked like a typical worker’s desk. Ideas ranged from how to better affix shipping labels to packages to how to save money on conference-room equipment.

Hidden strengths
In contrast to Amazon, six companies were particularly consistent in their strengths, scoring in the top 15% to 20% in all five categories: Apple, Alphabet, P&G, 3M, Nike Inc. and Colgate-Palmolive Co.

The ranking and its approach can highlight strengths and weaknesses that might be otherwise harder to spot. While this is the first year the list has been published, the Drucker Institute calculated the performance for most companies back to 2012 to be able to identify potential trends. For instance, the score of Intel, ranked No. 14 overall, has steadily slipped over the past five years, weighed down by its customer-satisfaction grade as the chip maker has struggled to catch up to the mobile revolution. Intel has made big bets in artificial intelligence and autonomous driving as it moves into data-centric growth markets, but they have yet to bear fruit.

The ranking reveals a handful of hidden management champions that typically fly under the radar, such as Jack Daniel’s maker Brown-Forman Corp. , electrical-equipment maker Eaton Corp. and commercial real-estate firm Jones Lang LaSalle. And who knew that 17th-place Weyerhaeuser Co., a forest-products company with little public name recognition outside of the lumber and wood-products industry and its base in Washington state, would score in the top 1% of companies in terms of innovation?

Weyerhaeuser, which owns or controls about 13 million acres of timberland in the U.S. and manages additional timberland under licenses in Canada, stands out for the resources it continues to dedicate to research and development, says Mark Wilde, managing director at BMO Capital Markets. Unlike many other forestry companies, many of which rely on universities and other outside institutions for research, Weyerhaeuser spent $17 million on R&D last year, much of which goes toward forestry management and determining which trees and methods yield the most valuable timber growth where.

In the timber industry, “they are the last man standing in terms of their own independent forestry research,” Mr. Wilde says.

Insight into critiques
The Management Top 250 also provides both a counterpoint and insight into the critiques of activist investors who have targeted corporate stalwarts such as P&G and General Electric Co. Both companies score high—P&G at No. 6 overall and GE in 20th place—despite coming under pressure from Nelson Peltz’s Trian Fund Management LP to revitalize profits.

P&G in particular scores in the top 2.5% of the more than 600 analyzed companies in terms of innovation and financial strength, the latter because brands such as Tide, Gillette and Tampax dominate so many consumer-product markets. Yet two of Mr. Peltz’s chief criticisms are that the company isn’t innovating enough and has let upstarts such as Dollar Shave Club cut into its market share.

Indeed, a closer look at the metrics behind P&G’s overall score affirm a slip in the company’s overall market dominance in recent years, but from a very large position to begin with. “Yes, there are some red flags,” Mr. Wartzman says of the data. But what you also see built into the ranking, he says, “is the excellence of their management over incredibly long periods of time.”

P&G CEO David Taylor argues the company has taken steps to accelerate innovation in the two years since he became CEO and has won customers with new products or enhancements to existing brands.

“The point of contention is the rate of progress—an activist investor often has a shorter time frame than a company that looks over many stakeholders,” Mr. Taylor says, echoing the holistic philosophy behind the Drucker model. Over time, he adds, “it is a combination of a few key capabilities that determine whether you win: superior products that delight consumers, technology that sustains that…and what underpins it all is acquiring the best people.”

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Juncker Seeks Greater Commission Control over Eurozone

Posted by hkarner - 6. Dezember 2017

Date: 06-12-2017
Source: DER SPIEGEL.
Subject: Ego Trip in Brussels

European Commission President Jean-Claude Juncker would like the EU executive to have more control over the Eurozone in the future. But member states aren’t eager to give up control.

Jean-Claude Juncker never lets others outshine him if he spots an opportunity to give the European project a boost. And that goes for friends and enemies alike.

Indeed, the European Commission president has now come up with a project that not only transgressions the mandate given him by the leaders of the European Union member states, but also pits him against all the Eurozone finance ministers as well.

Juncker was supposed to reach an agreement with finance ministers from the common currency area on proposals for deepening European integration he will present at the forthcoming EU summit later this month. Plans for greater EU integration are currently in vogue, a trend started by French President Emmanuel Macron, who presented his ideas for a better Europe two days after the German election in late September.

But instead of getting the finance ministers on board, Juncker has embarked on an ego trip. On Wednesday, the Commission is to present its plan without any input from the finance ministers whatsoever. The Eurogroup of 19 Eurozone finance ministers met in Brussels on Monday and on Tuesday it was the turn of Ecofin, which represents the EU finance ministers, but officially neither group was consulted on the Commission’s plans. Den Rest des Beitrags lesen »

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Resetting the Africa-Europe Relationship

Posted by hkarner - 6. Dezember 2017

Ibrahim Assane Mayaki, a former Prime Minister of Niger, is CEO of the New Partnership for Africa’s Development (NEPAD) Agency

Africa faces a broad range of development challenges, and overcoming them will require huge sums of foreign aid and investment. But as Africa develops, its people will also need partners who recognize that there are mutual benefits to engaging with the continent’s mobile and highly-educated base of human capital.

JOHANNESBURG – In October, the European Union announced a plan to invest €40 billion ($47.6 billion) in Africa, a “Marshall Plan” for the continent that would boost economic growth, create jobs, and, ultimately, slow the migration of young Africans to Europe. “Words won’t convince migrants to stay at home,” European Parliament President Antonio Tajani said. “We must give them a chance to have a decent life.”

Tajani is right. Unfortunately, his approach is not.

For almost 60 years, well-meaning foreign governments, many of them European, have poured huge sums of money into Africa, with little to show for it. Lasting solutions to Africa’s development challenges require funding, to be sure, but they also demand a significant recalibration in relations with foreign partners. And Africa’s relationship with Europe may require the biggest overhaul of all. Den Rest des Beitrags lesen »

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Record Earnings Boost Confidence in Global Markets Rally

Posted by hkarner - 6. Dezember 2017

Date: 05-12-2017
Source: The Wall Street Journal

Earnings per share hit new high, underscoring broad economic recovery

Listed companies are at their most profitable on record after a bumper year of earnings growth across global equity markets.

The earnings-per-share of a FactSet index of over 20,000 listed companies from around the world has now reached an average of $9.69, increasing nearly 19% in the last year.

That is the fastest year-over-year rise since 2011, surpassing the late-2014 high of $9.55. While the FactSet data only stretch back to 2001, increased earnings in emerging markets like China, among other factors, mean that the per-share level has likely never been higher. Den Rest des Beitrags lesen »

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Europe’s Crisis Starts at Home

Posted by hkarner - 6. Dezember 2017

Mark Leonard is Director of the European Council on Foreign Relations.

According to conventional wisdom, the biggest threat to the European project is „illiberal“ saboteurs on the periphery of the European Union who have decided not to play by the rules. But what this narrative misses is the even deeper divide within EU member states, including bastions of liberalism such as France and Germany.

LONDON – Deep divisions within Europe are increasingly threatening the values upon which the European project of “ever closer union” is based. In 2015, during the refugee crisis, many commentators saw a divide between German Chancellor Angela Merkel’s Willkommenskultur (welcoming culture) and Hungarian Prime Minister Victor Orbán’s vision of ethnic purity: a Western Europe of bridges versus an Eastern Europe of walls.

But another threat to European unity comes from within individual countries. In Germany, talks to form a center-left, center-right coalition have broken down. In the Netherlands, it took Prime Minister Mark Rutte 208 days to form a new government after elections in March. In the United Kingdom, the political establishment is in disarray over Brexit. And in Poland, white nationalists and neo-Nazis recently staged a massive march through the streets of Warsaw. Den Rest des Beitrags lesen »

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The Globalization of Our Discontent

Posted by hkarner - 6. Dezember 2017

Joseph E. Stiglitz, recipient of the Nobel Memorial Prize in Economic Sciences in 2001 and the John Bates Clark Medal in 1979, is University Professor at Columbia University, Co-Chair of the High-Level Expert Group on the Measurement of Economic Performance and Social Progress at the OECD, and Chief Economist of the Roosevelt Institute. A former senior vice president and chief economist of the World Bank and chair of the US president’s Council of Economic Advisers under Bill Clinton, in 2000 he founded the Initiative for Policy Dialogue, a think tank on international development based at Columbia University. His most recent book is Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump

Globalization, which was supposed to benefit developed and developing countries alike, is now reviled almost everywhere, as the political backlash in Europe and the US in recent years has shown. The challenge is to minimize the risk that the backlash will intensify, and that starts by understanding – and avoiding – past mistakes.

NEW YORK – Fifteen years ago, I published Globalization and Its Discontents, a book that sought to explain why there was so much dissatisfaction with globalization within the developing countries. Quite simply, many believed that the system was “rigged” against them, and global trade agreements were singled out for being particularly unfair.

Now discontent with globalization has fueled a wave of populism in the United States and other advanced economies, led by politicians who claim that the system is unfair to their countries. In the US, President Donald Trump insists that America’s trade negotiators were snookered by those from Mexico and China. Den Rest des Beitrags lesen »

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Trump’s Willing Accomplices

Posted by hkarner - 6. Dezember 2017

Ian Buruma, Editor of The New York Review of Books, is the author of numerous books, including Murder in Amsterdam: The Death of Theo Van Gogh and the Limits of Tolerance and Year Zero: A History of 1945.

Many leading Republican politicians who stand by Donald Trump, and even the multi-billionaires who fund their campaigns, may have private misgivings about the US president, just as the industrialists of Germany’s Herrenklub probably once despised Hitler. But with only a few exceptions, they continue to support him – and for similar reasons.

NEW YORK – On February 20, 1933, a secret meeting took place in Hermann Göring’s palatial residence in Berlin. More than 20 of Germany’s top industrialists, including Gustav Krupp, Friedrich Flick, and Fritz von Opel, listened to a speech by Hitler, who promised them that their assets would be safe under his rule. So they agreed to support the Nazi Party with over two million Reichsmark, an enormous sum that was almost enough to pay for the upcoming election campaign.

Few of these men, if any, were convinced Nazis. They were members of the German Herrenklub (Gentlemen’s Club), which was very conservative but not National Socialist. But, acting from narrow self-interest, they became Hitler’s enablers. Den Rest des Beitrags lesen »

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Is It Time to Regulate Bitcoin?

Posted by hkarner - 6. Dezember 2017

Date: 05-12-2017
Source: The Wall Street Journal

As the digital currency grows in size, it will be hard for regulators to resist the urge to step in

Bitcoin has been the ideal proving ground for investment’s most powerful advice: caveat emptor, buyer beware.

Individuals who lose money day trading a cryptocurrency hyped as a way to avoid central bank meddling can hardly expect to appeal to governing institutions when things go wrong. Watchdogs have intervened occasionally to restrict money laundering. But financial regulators have mostly steered clear.

Regulators are unlikely to sit on the sidelines much longer, and that is a shame. People gulled into putting a small amount of bitcoin into a worthless initial coin offering or persuaded to day trade bitcoin on margin are taught important lessons in trust and security. It is better for the bitcoin naif to lose a little quickly and learn that if an investment looks too good to be true it probably is, than never learn and end up losing their life savings on some wild speculation later on. Den Rest des Beitrags lesen »

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