Entrepreneurship

We have just been treated to news on how many publicly listed Internet firms that gave stock or stock options to their employees have seen major declines in the value of their stock. Famous firms like Zynga and Facebook have been hit, as well as some less well-known ones. The immediate concern for these firms is that they are losing some of their employees, who have seen the big stock payoffs they anticipated (and briefly had) disappear. In fact, this has not happened yet, at least on a large scale, but executives worry that employees might leave once the job market gives them better outside options.

Apple gets a lot of stick about manufacturing in China, and the issue came up again recently with the release of the iPhone 5. A recent article on the “Cult of Mac”contrasts Apple to Timbuk2, a US producer of traveler and messenger bags, that proudly locates most of its of its manufacturing in San Francisco, one of the most expensive places on earth. The workers in the factory are neither overworked nor are they underpaid, yet Timbuk2 is not struggling financially unlike many other US-based manufacturers. This begs the question: can’t Apple do the same and move jobs back from China? We covered this issue in a recent post on HBR network.

Procter & Gamble (P&G) has had poor financial results as of late, and the Wall Street Journal is reporting that its CEO Robert McDonald is under pressure from hedge fund manager William Ackman. Ackman is convinced that Mr. McDonald is not the right person to lead P&G because of apparent inaction in the face of a three-year run of profit declines. I have earlier argued that it is simplistic to just argue for CEO replacement when things go poorly, and I could make the same case here: P&G has a high-quality, high-price position in many markets, which means it will temporarily suffer when the economy is doing poorly. In the long run it may do better by holding firm and waiting for the recovery than by changing its position.

After a brief hiatus due to vacations and travel over summer, the Renaissance Innovator blog is back! While I was catching up on the stack of journals which accumulated over summer, a Fortune article about Volkswagen which describes transformation of the company from a local German producer to a global phenomenon with over €160B in sales caught my eye. Volkswagen has quietly passed General Motors and Toyota last year to become the largest automotive maker in the world. So what is its secret?

Why are some companies able to create and sustain a high innovation premium while others don’t?

Knight Capital Group (www.knight.com) is a trading house that helps others access financial markets by executing their trades. It serves as a designated market marker, which means that it provides buy/sell orders so that others can always execute a trade against it, for more than 600 securities on the NYSE and NASDAQ stock exchanges. It also serves as a market maker for many other securities. Because market making and trading are key activities in financial markets, requiring reliable and honest dealing, it is no wonder that its web site carries the slogan “The Standard of Trust.”

There is mounting excitement over how well Japan Airlines (JAL) is emerging from bankruptcy to now have good profit margins (17 percent last year) and the confidence to start adding routes again after a period of cutting. As always when there is excitement about a firm, there will also be a great deal of hype. Can we separate the parts of the recovery that are genuinely interesting for observers (and worrying for competitors) from the hype? I don’t have a crystal ball, but I can make a few suggestions.

It’s not all about business plans and spreadsheets and getting to the next goal. The picture of real success is at least partly in your mind.

A merger between mining company Xstrata and commodities-trader Glencore would seem like a great opportunity for the two companies to gain market power through the control of both mining and trading, as well as the ability to use subtle trading signals to control mining operations in ways that non-trading miners would not be able to. Whether for power or efficiency reasons, the merger must look attractive to the two firms. It is large and complicated too. In total it involves a market value of around $58 billion for the two companies; Xstrata employs 70,000 people, Glencore 58,000 people.