CEO Corner

CEOs are Optimizing Workforce Management Through Technology

Chief Executive Magazine -

A survey by Korn Ferry found that many chief executives have a lack of confidence in the people in their organizations, while putting a higher value on technology and tangible assets. More than 60% surveyed said technology would be the firm’s greatest source of competitive advantage in the next five years, while almost 70% said this technology will soon create greater value than people will.

Jean-Marc Laouchez, global managing director of solutions at Korn Ferry, said leaders can have a “tangibility bias” that encourages them to prioritize thinking, planning and execution on tangible assets rather than people. “Soft skills such as the ability to lead and manage culture will become critical factors of success for companies in the future of work as they need to maximize their value through people,” says Laouchez.

Organizations can use new technologies not only to optimize processes, but also to optimize their human capital. Advanced HR departments are now using analytics at the C-suite level to optimize human potential and labor through precise scheduling and understanding employee motivations. They’re also testing new organizational structures and philosophies around management.

Timothy Manhardt, practice manager at Kronos, says leaders should look to automation, accessibility and education as primary drivers of improvement and optimization. Businesses also can tap into new solutions to deliver work-related information directly to the smartphones of employees. Mobile self-service tools also can boost engagement tools and enable employees to have more ownership in daily decisions. The key is to leverage technology not for the sake of technology, but to enable people.

“Soft skills such as the ability to lead and manage culture will become critical factors of success for companies in the future of work as they need to maximize their value through people.”

“Optimization isn’t just about technology, it is more about supporting the people who use the technology…Combining systems, processes and people to achieve meaningful change, especially when the intended outcome is to improve productivity and support employee engagement, is a complex task that must be nurtured,” says
Manhardt.

Leveraging technology to optimize workforce management may require CEOs to influence some changes in organizational structure. Biro says that with the growing millennial workforce, there are more flat organizations with little hierarchy where “managing up” is part of the workforce management system.

“It is clear that large, slow moving, siloed organizations are susceptible to disruption—and they may never see it coming. Companies that embrace a more streamlined, fast-moving culture already are reaping the benefits,” says Biro.

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5 Reasons Why Your Tech Company Should Target Sales to CEOs

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Tech companies almost always target the CIO or other top IT executive in their sales efforts. It’s the way things have been done for many years—and it’s largely ineffective.

The main problem with this approach is that CIOs and other IT executives usually have the authority to do what was done last year: budget constraints give them very little room to spend on newly-identified solutions that you provide. They also are bombarded by your competitors and every other tech vendor, so it’s easy to let vendor calls go to voicemail and to ignore those emails.

But there is a better way: target the CEO. Here are 5 reasons why this is a good strategy.

1. Targeting the CEO Provides Access to Funding
“No budget” is the easy way for potential clients to get rid of vendors, and every corporate executive is constrained by budget realities. Everyone, that is, except for the CEO. You read that right. While the CEO is responsible for delivering results, only the CEO can decide—at any time—to reallocate funds from one department to another. No other executive can decide to take funds from one place and give it to another.

“When the priority of a company is all about growth, you can find the money to make that happen.”

Getting new funds is no slam dunk: CEOs will do this only for initiatives that are strategically important and align with their top priorities. But if you know the CEO’s agenda and can get access, you have the keys to the kingdom.

“IT organizations always have budgets. They typically range between 1% and 2% of the company’s revenues. But what we’ve been able to tap into beyond those budgets are the line-of-business executives’ budgets, also the CEO agenda,” says Salesforce President Kevin Block. “When the priority of a company is all about growth, you can find the money to make that happen.”

By getting on the CEO agenda, Block says Salesforce is able to access pools of funding beyond regular IT budgets.

2. Targeting the CEO Beats the Competition
It’s unlikely your competitors know how to effectively engage CEOs—yet. Doing so requires both access and a collaborative approach that’s hard to pull off without senior-most executive involvement.

Let’s face it: most CEOs don’t get involved in sales in any meaningful way unless they have to. But when CEOs do get involved, the impact is powerful.

“I can probably rattle off dozens of CEOs that [the President and I] are having to constantly interact with and collaborate with and creating these transactions,” says Benioff. “I think it’s really unusual and that’s why we are really selling more enterprise software than Oracle or SAP in the applications area.”

3. Targeting the CEO Bypasses the Naysayers
Enterprise technology purchases involve, on average, 15.5 people in a purchasing organization, according to IDG Research. Half those individuals are within the IT department and the other half are within individual lines of business.

Good luck trying to merely identify all the players, much less getting them all to agree. Typically, if any one of these 15.5 people has an objection to your product/service, you’re sunk.

On top of this, in the typical large enterprise, corporate survival demands that managers be more concerned with not making mistakes than with innovating. With the risks of new technology implementations so well documented and widespread, corporate bureaucracies hunker down and reject intruders. After all, the downside to any individual is worse than the potential upside.

There is only one person who can wrangle all the necessary players to consensus—and is responsible for innovation—and that person is the CEO. In short, what the CEO wants done, gets done.

4. Targeting the CEO Accelerates the Purchase Decision
Enterprise sales seem to stretch on forever. It’s no wonder, with those 15.5 corporate people each needing to vet and approve any new idea. Each of them has their own priorities and politics, and the chance for your proposal to keep moving along those 15.5 desks is slim.

It’s best to have a champion who can nurture your proposal through the layers and decision-making process, or simply have the authority to complete the deal on their own.
Of course, the quality of your champion determines the success of your pitch. Is there anyone you would rather have champion your proposal than the CEO?

5. Targeting the CEO Gets you Past the Gatekeepers
Sometimes, you know that a company would be a perfect fit and truly benefit from your solution, but you simply can’t get in the front door. It’s incredibly frustrating, but completely common.

From your potential customer’s view, it’s a necessary evil: without effective gatekeepers, they would collapse from the weight of all the people trying to gain access to decision makers.

But for those few who bypass the gatekeepers and effectively align their solutions to CEO priorities, they will find the gatekeepers falling in line behind the CEO. If you start at the top and get buy-in from the boss, everything falls quickly into line.

In my own company’s experience, we frequently target Chief Marketing Officers. But in a few cases when we couldn’t get a call back and had a specific, compelling case for their company, we took our case directly to the CEO. That happened this week with one of the world’s largest shipping companies. I just received a faxed back order form from the CEO for $14,000 with no questions asked, bypassing everyone else in his company.

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So you Want to Serve CEOs? 5 Critical Questions to Ask your Organization

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CEOs are busy individuals who can rarely afford errors. In working with them, you may only get one chance to do things the right way. Thoughtful preparation, including answering these five questions, will help you develop into a trusted advisor, provide real value for the CEOs you serve and get results for your own organization.

1. Do we understand the CEO market? 
CEO responsibilities vary widely depending on company size, industry and culture. Your organization needs to understand the various CEO personas to adequately understand their needs and motivations.

The large company CEO (annual revenue $1 billion +), for example, is typically engaged in strategic issues over a long time frame. This CEO must often deal with questions like which business lines to invest in, harvest or divest, how to motivate, groom and attract up-and-coming talent and key executives, how to deal with investors and/or regulators, and more. Significant responsibility for vendor selection and needs identification can often rest with functional executives, with input or final decision-making coming from the CEO. Most likely publicly listed, the large company CEO spends significant time managing investor relations, company image and board relations.

An upper-mid-market CEO (annual company revenue $100 million-$1 billion) faces many of the same challenges as a large-company CEO, but without the same resources. This places added demands on the individual, as he or she must assume additional responsibility in key functions like strategic planning, corporate finance, mergers/acquisitions/divestitures, international issues, talent development and management, technology and more. The upper-mid-market CEO often conducts need identification and vendor selection by his or herself, with input from key executives.

Lower-mid-market ($10 million to $100 million annual revenue) and small company CEOs (under $10 million revenue) have their own unique characteristics, and are most often the sole or critical decision maker when it comes to strategic investments. Most likely privately owned, investment funds in the lower-middle market company often come out of personal or family assets.

Understanding these key segments of the CEO market is a critical building block in designing, communicating and executing products and services that successfully serve CEOs.

2. Can we individualize?
Like the fictional town of Lake Wobegon in which author Garrison Keillor says every child is above average, every CEO considers his or her company to be special. By design, your organization must treat each CEO with the individualized attention they seek and deserve. Attempts to serve CEOs in a uniform manner to serve your own business processes will backfire. Ask your marketing and sales teams, for instance, whether they ask CEO prospects to conform to their own rigid sales process. Doing so sends the wrong signal to prospective CEO clients: that you’re treating them as commodities and are not focused on their needs.

3. Do we really understand CEO needs?
Serving CEOs requires a strategic mindset. Conversations must revolve around benefits, rather than the language of features. Partners who understand and can help CEOs achieve their strategic business goals will earn trust and opportunities to work with their clients’ organizations.

4. Can we execute flawlessly?
CEOs are a demanding lot. Their time is valuable, and their investments are precious. When a CEO gets involved with a partner, that relationship reflects on them personally. Judgment of people and partners is a core competency of every successful CEO, and there may be no faster route to the exit than disproving that judgment. Partners and vendors who reaffirm that relationship by providing business value will keep their place of trust. The corollary, however, is also true: when trust is broken even in a single instance, CEOs will almost never give a second chance—and will tell their peers about poor experiences.

5. Can we measure value?
Nothing speaks to CEOs more powerfully than the language of Return on Investment (ROI). Every profit-making entity looks to improve profitability, so partners that understand and can improve profit drivers will enjoy access, investment and continued trust among CEOs. If your value is hard to explain to CEOs, it will be hard to sell to CEOs. Make it easy for CEOs to understand your value proposition by translating it into ROI.

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Don’t go Chasing the Eureka Moment Myth, Warns Facebook’s CEO

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The Greek scholar Archimedes had the first ever eureka moment, as legend would have it, when he realized why the water level rose when he got into his bath. Newton apparently had his eureka moment—discovering gravity—when an apple fell from a tree onto his head.

These days, some CEOs and entrepreneurs report being lucky enough to experience a sudden magic moment when all became clear. And any number of other CEOs must be wishing they could join the club, as they fret about bleeding customers to disruptive upstarts.

Trip Adler, the founder and CEO of digital library Scribd, had his special moment during a conversation with his father. A doctor, he had a medical paper he wanted to publish and share with colleagues, but the formal route to publication took as much as 18 months.

“So that inspired the idea of making a website that would let him really easily share this paper. And then we decided to broaden that to all kinds of content,” Adler has claimed.

“Ideas don’t come out fully formed. They only become clear as you work on them. You just have to get started.”

While a convincing account, other leaders should be careful about how they interpret such stories, according to one of the world’s most easily recognized innovators.

Mark Zuckerberg reportedly had his eureka moment when he and three of his Harvard classmates created FaceMash, a hot-or-not game that allowed users to compare the physical attractiveness of student photos placed side-by-side.

But in a speech to Harvard students this week, the Facebook CEO rubbished those claims.

“Movies and pop culture get this all wrong,” he said. “The idea of a single eureka moment is a dangerous lie. It makes us feel inadequate since we haven’t had ours. It prevents people with seeds of good ideas from getting started.”

By Zuckerberg’s account, he had no idea what Facebook would become. “But let me tell you a secret: no one does when they begin,” he said. “Ideas don’t come out fully formed. They only become clear as you work on them. You just have to get started.”

Neil Blumenthal, the co-founder of eye glasses company Warby Parker, agrees. He acknowledges the idea for the company was inspired suddenly when friends, frustrated about losing their glasses, thought it would be great if people could order cheaper, more accessible pairs online. But for the most part, he says, most innovators won’t experience a single lightening strike that brings them instant success.

At a recent forum on coming up with ideas, he recommended that leaders instead spend time each day writing down a few frustrations, building to dozens of gripes by the end of the week and scores by the end of the month. “And you can go through those and prioritize to figure out is there an opportunity here for us to solve a real problem,” he said.

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Global Travel to the U.S. Slips as Industry Laments Trump Funding Cut

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A demonstration of how Donald Trump’s “America First” policy agenda could affect the broader economy is showing up in the travel sector. And the early indications, at least from that perspective, aren’t great.

The U.S. share of international tourism dropped by 16% in March year-over-year, while the rest of the world gained share, according to a new report from location app Foursquare, based on data from around 13 million of its customers.

Less inbound travel would hurt the entire retail sector by reducing foot traffic at a time when it’s already dealing with the rise of e-commerce giants such as Amazon. There are also signs the education sector is suffering: a recent survey of more than 250 colleges found 39% had experienced a decline in international applications in autumn 2017.

Leaders including Marriott International CEO Arne Sorenson and Expedia CEO Dara Khosrowshahi have warned the administration that it’s attempted travel bans, blocked by the courts, could sour travelers’ appetite for America.

“With international visitation being the country’s No.2 export supporting 15 million American jobs, we’re struggling to understand how cutting Brand USA squares with this administration’s stated priorities.”

“The administration’s actions around travel are not helpful,” Sorenson recently told the Financial Times. “There’s no doubt about that. There’s no way to anticipate that they will be good news.”

The president, however, isn’t backing off. This week, he announced his budget plan would involve eliminating Brand USA, a federal tourism marketing arm that was established in 2010 with bipartisan support to encourage inbound tourism and clearly communicate visa and entry policies.

“With international visitation being the country’s No.2 export supporting 15 million American jobs, we’re struggling to understand how cutting Brand USA squares with this administration’s stated priorities,” said Roger Dow, the CEO of the American Travel Association, a key industry lobby group.

Foursquare also found that America’s share of global travel had dropped by an average of 11% each month between October and March, coinciding with the tail-end of Trump’s campaign and his subsequent election.

While not an official research company, Foursquare’s findings jive with figures from the National Travel Association. According to the NTA, international inbound travel to the U.S. increased modestly in March, though at a much slower pace than during the first months of the year.

The association noted that the slowdown could partly be blamed on a strengthening U.S. dollar, which makes the country a less attractive travel destination than places with weakening currencies. But it also pinned the slowdown on negative perceptions of the president’s rhetoric and policies related to travel restrictions, immigration and international relations. “Looking ahead, it appears these factors will likely continue to negatively impact international inbound travel,” it said.

The Trump administration posits that its policy agenda is bringing jobs back to the American manufacturing sector. That may indeed be the case, but pain being felt in the travel sector shows it will also come at a cost.

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In Rare Display of Humbleness, Outgoing CEO Shows How to do Demotion

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Although he’ll only get to be CEO for about a month, Jeff Cotten, while disappointed, isn’t getting annoyed.

In a lesson in humbleness for other ambitious executives, he has heaped praise on his successor—and on the company’s board for overlooking him for someone else instead.

It’s rare for CEOs to put their career ambitions on public display, but Cotten did just that after finding out he’d be replaced as head of Rackspace by Joe Eazor on June 12. Cotten had stepped into the interim role about three weeks ago, when Taylor Rhodes left to pursue another career opportunity.

“I don’t mind telling you that when I was named interim CEO of Rackspace a few weeks ago, I was hoping that I would be able to shed the first word of that title and serve as the long-term chief executive of the company that I love,” Cotten wrote in a company blog post.

“my attitude was that if the board could find someone with more relevant experience, someone I could learn from and collaborate with, I would be all for it. And that’s exactly what the board has done.”

“But my attitude was that if the board of directors could find someone better—someone with more relevant experience, someone I could learn from and collaborate with, I would be all for it. And that’s exactly what the board has done.”

Cotten then went on to detail Eazor’s achievements, at one point calling him “one of the most seasoned and effective executives in the entire technology industry.”

While it’s hard to find another overlooked candidate expressing such humility, Cotten’s attitude is shared by some more well-known leaders who have been fortunate enough to occupy the corner officer for extended time periods.

Pepsi CEO Indra Nooyi, for instance, urges ambitious executives to direct their entire focus to the job at hand. “The minute you get obsessed about wanting to be CEO, you forget what you have to do, because you’re more focused on the next job as opposed to doing the current job very, very well,” she told LinkedIn’s Influencer series.

Henry Paulson, a former Goldman Sachs CEO and U.S. Treasury Secretary, said he never intended to reach the top.

“I think if I had said I want to run Goldman Sachs, I would have come in—and I don’t think I ever would have run Goldman Sachs,” he recently told students at Stanford. “I just focused on doing what I was doing when it was in front of me, enjoying it, learning and growing.”

By that token, Cotten, should he still want to be Rackspace’s permanent CEO, is playing his cards right.

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Recession Predictions, One by a Robot, Temper CEO Bullishness

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While many CEOs hold bullish growth expectations, recession fears still bubbling under the surface have been stoked by a couple of new predictions. One has been issued by an investment bank. The other by a robot.

In a recent client note, Goldman Sachs economists predicted a 31% chance of a recession in the next nine quarters. They defined a recession as one quarter of negative growth.

The robot concurred, at least on time. Developed by economics and data science firm Intensity Corporation, the machine learning “forecasting engine” has most recently scheduled a recession for April, 2019.

Any number of recent CEO surveys have demonstrated a growing air of confidence, underpinned either by the economic recovery underway since the end of the financial crisis, or optimism that Donald Trump will execute on his pro-growth agenda.

“CEOs ranked a global recession as their number one fear, ahead of more than a dozen other factors such as talent shortages, wage inflation and cyber crime.”

Business leaders, however, are still wise to the risks: 555 of them recently polled by peer group The Conference Board ranked a global recession as their number one fear, ahead of more than a dozen other factors such as talent shortages, wage inflation and cyber crime.

CEOs who have been a little more cautious on the outlook include BlackRock’s Larry Fink. The funds management kingpin fears the stock market has gotten ahead of itself because there’s still too much uncertainty over whether the president will get tax, regulatory and infrastructure reform bills through Congress.

JPMorgan Chase’s Jamie Dimon, meanwhile, has been more sanguine, indicating that it’s not unusual for a new administration to encounter a few bumps in the road and that its prevailing pro-growth attitude will ultimately help corporate America.

The Goldman Sachs prediction wasn’t all bad news, however. Although the bank’s economists believe the likelihood of a recession has grown, they still see a strong chance the U.S. economy will experience its longest recovery on record.

The current expansion, at 95 months, is the third-longest on record, behind 120 months between March 1991 to March 2001 and 106 months from February 1961 to December 1969.

The economists aren’t so much afraid of demand fading away. Instead, they contend that unemployment rates are so low there’s a danger the economy will overheat. “The most obvious way to keep risk from rising much further would be a slowdown of output and employment growth to a trend pace before too long,” they wrote. That would require the Federal Reserve to step in with more interest rises than the market is currently expecting.

The robot, meanwhile, provides a forecast that relies on “continual model updating,” as well as “continual model selection and model combination,” its creators told Seeking Alpha. It takes real-time data and various models and combines them to figure out the most likely outcome in a given situation.

The forecast is regularly updated based on changing conditions and can be checked on Intensity’s website here.

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Delivery Bots, Drones Under the Microscope as CEOs Testify Before Congress

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U.S. lawmakers reached out to the CEOs of several delivery companies, who went before Congress recently to explain what the advent of robots and drones could mean for employment and safety.

Their testimonies will provide some useful insight into how key business figures are practically applying cutting edge technology and whether they still see a role for humans in an increasingly automated world.

Postmates CEO Bastian Lehman is optimistic. He explained in written testimony ahead of the hearings how robots could complement human functions to optimize services and ultimately improve conditions for workers.

“This need not be a terrifying exercise that evokes imagery of the Terminator or a world in which an entire labor force gets displaced,” Lehman said.

“The right question isn’t which jobs are going to be replaced, but rather, what work will be redefined, and how?”

Collaboration between robotics and humans in manufacturing is indeed beginning to gain steam. “The people are always going to be there in one way or another,” said to David Mindell, an author and professor at the Massachusetts Institute of Technology.

In January, Postmates partnered with food delivery outfit DoorDash and self-driving company Starship Technologies to test deliveries by “sidewalk class” robots.

When working out how to apply such technology, Lehman said CEOs more generally need to cut through the hype around automation and pinpoint how it will specifically affect their business. “The right question isn’t which jobs are going to be replaced, but rather, what work will be redefined, and how?” he wrote, quoting the Harvard Business Review.

In Postmates’ case, the joint venture found that robots could help fill a specific gap: short-distance deliveries that human workers were often reluctant to take, since tips and charges are often based off distance traveled. The same thinking could be applied, for example, to cab drivers, who may be reluctant to pick up passengers who only need to travel a couple of blocks.

“Commerce across a given town is able to move at even higher rates, with more functional ways to make deliveries in a given city,” Lehman said. “In the long-term, this could ultimately help drive down the overall cost of delivery, as the supply of couriers increases.”

Still, Lehman acknowledged that he doesn’t yet have all the answers, which is why he planned to argue that experiments like the joint venture’s delivery-testing program are crucial to collect data and gain an understanding of their impacts.

And while human couriers will still be needed, he also was adamant that lawmakers must advance a budget that advances so-called STEM education, given the extra job opportunities that will be created by dispatching robotic couriers.

“To win the future, we must create an all-hands-on-deck approach to science, technology, engineering, and math,” he said. “We need to make this a priority to train an army of new teachers in these subject areas, and to make sure that all of us as a country are lifting these subjects for the respect that they deserve.”

Association for Unmanned Vehicle Systems International CEO Brian Wynne and Flirty Chief Evangelist Shyam Chidamber also were scheduled to testify.

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Employees are Taking More Vacations, Leaders Not so Much

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American workplaces could be at a tipping point. For the first time in over a decade, the nation’s citizens are taking significantly more vacation time.

Business leaders, however, are still leaving an out-sized number of vacation days on the table, contributing to a lingering paranoia in the workplace that’s preventing the rank and file from using up their entitlements in full.

The average worker took 16.8 days off last year, up from 16.2 days in 2015, according to a survey of 7,331 individuals commissioned by travel-industry lobby group Project Time Off.

The finding comes as the economy continues to recover from the global financial crisis, lowering unemployment and possibly giving workers more bargaining chips—although wage growth has so far remained relatively subdued.

“The conversation at the top needs to reach further into the company, in addition to leadership modeling good behavior.”

Employers are offering more vacation time, too: in 2016, the average worker earned 22.6 paid vacation days, up from 21.9 the year before.

Many workers, however, remain fearful that appearing less dedicated to work could make them more expendable or obstruct a raise or promotion. Management isn’t doing a very good job at quelling those fears, with 66% of workers saying their company culture with regards to vacations was ambivalent, discouraging or sent mixed messages.

People still left about a week’s worth of holiday entitlements on the table last year, and while vacation days are starting to increase again, they’re still well down on the average 20.3 days taken back in 1978.

According to Project Time-Off, the most influential thing a CEO could do is lead by example. Senior managers were much less likely to use their full entitlements, with 61% leaving vacation time on the table, compared to 52% of non-managers.

“The gap between senior leaders and non-managers demonstrates a communications failure,” the report’s authors said. “The conversation at the top needs to reach further into the company, in addition to leadership modeling good behavior. Without both talk and action, the messages that do reach non-managers will feel like lip service.”

Studies have shown that refreshed employees returning from holidays are less prone to burnout, relationship problems and other health conditions, such as heart disease.

Most executives are at least wise to the risks, with 82% questioned in the survey agreeing that vacations improve health and well-being. Most also accepted that they improve employees’ focus, commitment to their job and willingness to work longer hours when needed.

Of course, CEOs might have more important fish to fry than fretting over their own holiday agenda: like keeping their business competitive in an increasingly disruptive marketplace.

To be sure, one of America’s most disruptive leaders, Netflix CEO Reed Hastings, likes to make it clear to staff he always takes six weeks off each year, so it can be done.

The post Employees are Taking More Vacations, Leaders Not so Much appeared first on ChiefExecutive.net | Chief Executive magazine.

Employees are Taking More Vacations, but Leaders Aren’t

Chief Executive Magazine -

American workplaces could be at a tipping point. For the first time in over a decade, the nation’s citizens are taking significantly more vacation time.

Leaders, however, are still leaving an out-sized number of vacation days on the table, contributing to a lingering paranoia in the workplace that’s preventing the rank and file from using up their entitlements in full.

The average worker took 16.8 days off last year, up from 16.2 days in 2015, according to a survey of 7,331 individuals commissioned by travel-industry lobby group Project Time Off.

The finding comes as the economy continues to recover from the global financial crisis, lowering unemployment and possibly giving workers more bargaining chips—although wage growth has so far remained relatively subdued.

“The gap between senior leaders and non-managers demonstrates a communications failure. The conversation at the top needs to reach further into the company, in addition to leadership modeling good behavior.”

Employers are offering more vacation time, too: In 2016, the average worker earned 22.6 paid vacation days, up from 21.9 the year before.

Many workers, however, remain fearful that appearing less dedicated to work could make them more expendable or obstruct a raise or promotion. Management isn’t doing a very good job at quelling those fears, with 66% of workers saying their company culture with regard to vacations was ambivalent, discouraging or sent mixed messages.

People still left about a week’s worth of holiday entitlements on the table last year, and while vacation days are starting to increase again, they’re still well down on the average 20.3 days taken back in 1978.

According to Project Time-Off, the most influential thing a CEO could do is lead by example. Senior managers were much less likely to use their full entitlements, with 61% leaving vacation time on the table, compared to 52% of non-managers.

“The gap between senior leaders and non-managers demonstrates a communications failure,” the report’s authors said. “The conversation at the top needs to reach further into the company, in addition to leadership modeling good behavior. Without both talk and action, the messages that do reach non-managers will feel like lip service.”

Studies have shown that refreshed employees returning from holidays are less prone to burnout, relationship problems and other health conditions, such as heart disease.

Most executives are at least wise to the risks, with 82% questioned in the survey agreeing that vacations improve health and well-being. Most also accepted that they improve employees’ focus, commitment to their job and willingness to work longer hours when needed.

Of course, CEOs might have more important fish to fry then fretting over their own holiday agenda: like keeping their business competitive in an increasingly disruptive marketplace.

To be sure, one of America’s most disruptive leaders, Netflix CEO Reed Hastings, likes to make it clear to staff he always takes six weeks off each year, so it can be done.

The post Employees are Taking More Vacations, but Leaders Aren’t appeared first on ChiefExecutive.net | Chief Executive magazine.

Two CEOs Face Off Over Border Tax

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CEOs have finally gotten their first chance to argue their cases for and against a proposed border-adjustment tax publicly in front of lawmakers. And the lowdown is that divisions remain deep, potentially obstructing its passage into law.

Juan Luciano, the CEO of grain handler Archer Daniels Midlands, was among supporters of the tax who appeared yesterday before a House Committee.

Proposed by House Republicans, including Speaker Paul Ryan, the plan would impose a 20% tax on imports and render exports tax free, ultimately encouraging U.S. companies to make more goods at home.

“We must have a globally competitive U.S. tax code,” Luciano said. “We must encourage the return of capital to the U.S. and enable companies, like ADM, to create and maintain jobs here in the United States. The proposal we’re discussing today will accomplish those goals.”

“We must have a globally competitive U.S. tax code. We must encourage the return of capital to the U.S. and enable companies … to create and maintain jobs here. The proposal we’re discussing today will accomplish those goals.”

Backers of the tax, who also include the heads of other major exporters, such as Boeing and GE, maintain that it would push up the value of the U.S. dollar, helping to lighten the burden on importers. But CEOs in the retail sector remain concerned the tax would force them to pay more for scores of products, raising prices for consumers.

Target CEO Brian Cornell said that although the current U.S. tax code was “broken”, funding reforms with a tax on imports wasn’t the answer.

“It’s simple math,” Cornell told lawmakers. “If the government takes nearly four out of every five dollars we make, there’s no capital to invest and no prospects for growth. And that matters a lot. Both to us and to the American economy. Instead of investing and creating American jobs, we’d be pushed in the other direction.”

Wal-Mart Stores is among hundreds of other retailers who have vocally opposed the border tax. Interestingly, though, one of its former leaders is an unlikely backer.

Previous Wal-Mart CEO William Simon, who also addressed Tuesday’s hearing, said that while he understood Cornell’s concerns, he needed to consider the long-term benefits that a border tax could create for retailers.

“Once the middle-class jobs start to return to the country, and the wage increases that would come with that, retail will start to see a new sort of resurgence and a period of growth,” Simon said. “Right now the wind is coming out of retail sales because the wind is coming out of the middle class.”

The post Two CEOs Face Off Over Border Tax appeared first on ChiefExecutive.net | Chief Executive magazine.

Delivery Bots, Drones Under the Microscope as CEOs Testified Before Congress

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U.S. lawmakers reached out to the CEOs of several delivery companies, who explained before Congress today what the advent of robots and drones could mean for employment and safety.

Their testimonies hopefully provided some useful insight into how key business figures are practically applying cutting edge technology and whether they still see a role for humans in an increasingly automated world.

Postmates CEO Bastian Lehman is optimistic about the future. He explained in written testimony ahead of today’s hearings how robots could complement human functions to optimize services and ultimately improve conditions for workers.

“This does not need be a terrifying exercise that evokes imagery of the Terminator or a world in which an entire labor force gets displaced,” Lehman said.

“The right question isn’t which jobs are going to be replaced, but rather, what work will be redefined, and how?”

Collaboration between robotics and humans in manufacturing is indeed beginning to gain steam. “The people are always going to be there in one way or another,” said David Mindell, an author and professor at the Massachusetts Institute of Technology.

In January, Postmates partnered with food delivery outfit DoorDash and self-driving company Starship Technologies to test deliveries by “sidewalk class” robots.

When working out how to apply such technology, Lehman said CEOs more generally need to cut through the hype around automation and pinpoint how it will specifically affect their business. “The right question isn’t which jobs are going to be replaced, but rather, what work will be redefined, and how?” he wrote, quoting the Harvard Business Review.

In Postmates’ case, the joint venture found that robots could help fill a specific gap: short-distance deliveries that human workers were often reluctant to take, since tips and charges are often based off distance traveled. The same thinking could be applied, for example, to cab drivers, who may be reluctant to pick up passengers who only need to travel a couple of blocks.

“Commerce across a given town is able to move at even higher rates, with more functional ways to make deliveries in a given city,” Lehman said. “In the long-term, this could ultimately help drive down the overall cost of delivery, as the supply of couriers increases.”

Still, Lehman acknowledged that he doesn’t yet have all the answers, which is why he was planning to explain that experiments like the joint venture’s delivery-testing program are crucial for collecting data and gaining an understanding of their impacts.

And while human couriers will still be needed, he was also adamant that lawmakers must advance a budget that advances so-called STEM education, given the extra job opportunities that will created by dispatching robotic couriers.

“To win the future, we must create an all-hands-on-deck approach to science, technology, engineering and math,” he said. “We need to make this a priority to train an army of new teachers in these subject areas, and to make sure that all of us as a country are lifting these subjects for the respect that they deserve.”

Association for Unmanned Vehicle Systems International CEO Brian Wynne and Flirty Chief Evangelist Shyam Chidamber also were scheduled to testify.

The post Delivery Bots, Drones Under the Microscope as CEOs Testified Before Congress appeared first on ChiefExecutive.net | Chief Executive magazine.

4 Ways CEOs can Smooth the Adoption of a Circular Economy

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Take, make, waste. It’s the traditional linear economic model that most companies still apply to their procurement and manufacturing processes.

An increasing number, however—including GE, Apple, Walmart, Unilever, Dell, DuPont, HP and Kimberly-Clark—are gravitating toward the circular economy. And their CEOs often have played a critical role in ensuring they’ve successfully made the commitment.

To provide a blueprint for leaders interested in creating more sustainable business models, executive peer group The Conference Board performed a deep dive into practices at seven companies that adopted a more circular approach. It also surveyed more than 50 senior executives to understand what drove them to start recovering, reusing and regenerating materials, rather than making products that ultimately ended up in landfills or oceans.

It turned out that many weren’t simply inspired by a desire to enhance their company’s reputation, though 12% of respondents said this was indeed an important benefit. A greater proportion, 37%, said cost savings were the main benefit, while 35% said it was creating new revenue streams.

“Participants identified the biggest hurdle to making a change as business case and leadership buy-in.”

DuPont, for example, decided to apply a circular model to its polymers business that focused on waste reduction, waste recovery, recyclability and reducing its dependence on oil. The chemicals company has since developed solutions for meat packaging that doubled the product’s shelf-life, reducing in-store food waste by half.

“Businesses can reap impressive savings by adopting attributes of the circular economy—and at the same time, secure revenue opportunities by winning over the growing number of customers who seek products and services that align with their own sustainability goals,” said Thomas Singer, the report’s author.

Participants identified the biggest hurdle to making a change as “business case and leadership buy-in”, trumping other concerns, such as supply infrastructure constraints, product development changes and marketing and customer education requirements.

For CEOs to successfully adopt a circular approach, the report makes these four recommendations.

1. Convey the value of the circular economy to stakeholders. It takes a visionary leader, with good communication skills, to instill cultural change throughout an organization. HP and Phillips are among companies whose leaders regularly speak about the importance of the circular economy to their respective strategies, as shown in this great example.

2. Foster a culture of experimentation. The kind of initiatives applied by DuPont don’t just fall into leaders’ laps. They’re the product of bright ideas generated across business functions that are confirmed by trial and error. But if you’re going to fail, do it fast and move on.

3. Remain focused on the long-term. A recent slump in commodity prices, including oil, could prompt companies to revert to old habits. Don’t be distracted: prices will move up and down throughout any cycle, reinforcing the importance of building resilient business models.

4. Elevate sustainability within the organization. Most companies are led from the top and it’s crucial that sustainability issues are dealt with in the C-suite. It may sound obvious, but it’s often a hindrance to generating leadership buy-in.

The post 4 Ways CEOs can Smooth the Adoption of a Circular Economy appeared first on ChiefExecutive.net | Chief Executive magazine.

US Steel CEO Mario Longhi’s Sudden Departure Not so Sudden

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Mario Longhi, last person on right at table, and other CEOs at a meeting with President Trump.

In early May, US Steel CEO Mario Longhi stepped down from the CEO job, with plans to fully retire from the company by the end of June. Many observers saw a connection between that sudden move and the company’s troubling earnings report a few weeks earlier.

Longhi joined US Steel in 2012 as executive vice president and chief operating officer, and took over as president and CEO in 2013. He inherited some significant long-term problems, including an aging plant infrastructure and slowing demand in emerging markets. In response, he oversaw a transformation effort dubbed “The Carnegie Way,” which led to a $745 million benefit to the company in 2016.

Nevertheless, in the first quarter of this year, US Steel’s revenues missed analyst expectations, and the company showed a surprisingly large loss of $180 million—at a time when market conditions for the typically cyclical industry were on the rise. The result: a rapid drop of more than 25 percent in the company’s stock price.

Longhi’s replacement is David B. Burritt, the company’s president and COO—positions that he moved into earlier this year. Burritt brings a largely financial background to his new job—he joined US Steel as CFO and executive vice president in 2013, and before that spent 32 years at Caterpillar, where he eventually become CFO.

“By naming a lifelong finance leader to run the company, the board is signaling the need to quickly stem recent losses while retooling the enterprise to compete successfully in the future,” says Jeff Kirschner, a partner at RHR International. “Burritt will have a large leadership challenge in turning around the company. He will need to move rapidly to establish his leadership through re-enrolling key talent and articulating a strategy that takes advantage of market conditions and lifts performance in the short-term.”

The post US Steel CEO Mario Longhi’s Sudden Departure Not so Sudden appeared first on ChiefExecutive.net | Chief Executive magazine.

CEOs Accompany Globe-Trotting Trump to Forge Offshore Deals

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The unprecedented involvement of CEOs in Donald Trump’s administration has extended to his official overseas visits, with around 30 invited to attend a summit with Saudi Arabian dignitaries over the weekend.

The trip has given business an even greater exposure to America’s foreign policy agenda, which is already being overseen by former Exxon CEO Rex Tillerson in his capacity as Secretary of State. Business leaders will be hopeful such summits will at least encourage bilateral cross-border deals amid concerns the administration will continue to distance itself from multi-lateral free-trade agreements.

As part of a speech delivered at the Riyadh Four Seasons hotel on Sunday, the president confirmed that the U.S and Saudi Arabia had signed agreements involving the investment of $400 billion in their respective countries, including a $110 billion arms supply deal. Some of the agreements, however, were early-stage “memorandums of understanding” that didn’t include binding commitments.

“To the leaders and citizens of every country assembled here today, I want you to know that the United States is eager to form closer bonds of friendship, security, culture and commerce,” Trump told the summit.

“To the leaders and citizens of every country assembled here today, I want you to know that the United States is eager to form closer bonds of friendship, security, culture and commerce.”

Although it’s common for business leaders and politicians to be present during individual deal-signing ceremonies, It’s rare for world leaders to invite CEOs to important political summits. In this instance, though, Trump perhaps took a leaf from Angela Merkel’s book: in March, the German chancellor brought the heads of BMW and Siemens along to her first meeting with Trump.

Lockheed Martin, targeted previously by the president for the cost of its defense tenders, appeared to be a major beneficiary in this instance. On Saturday, it announced that Saudi Arabia had agreed to procure $28 billion worth of arms from the company, including tactical aircraft and missile defense systems.

Speaking from Riyadh, Lockheed Martin CEO Marillyn Hewson said she was proud to be involved in U.S, Saudi relations. “We are especially proud of how our broad portfolio of advanced global security products and technologies will enhance national security in Saudi Arabia, strengthen the cause of peace in the region and provide the foundation for job creation and economic prosperity in the U.S. and in the Kingdom.”

Boeing CEO Dennis Muilenburg was also sure to mention the number of jobs created via its new deals. Boeing confirmed on Sunday that it had agreed to provide Saudi Arabia with more combat helicopters, patrol aircraft and commercial aircraft. “I appreciate the efforts of King Salman, President Trump and his administration to support American manufacturers as we seek to grow at home and around the world,” Muilenburg said.

Blackstone, meanwhile, announced it had formed a $40 billion investment joint venture with Saudi Arabia’s Public Investment Fund that would largely fund infrastructure projects in the U.S.

The Saudi Arabian visit marked the president’s first official overseas trip and is part of a whirlwind tour that includes stops in Israel, Belgium and Italy. It’s not clear whether any CEOs will accompany the presidents on these subsequent legs.

Among others attending in Riyadh were JPMorgan’s Jamie Dimon, GE’s Jeff Immelt, Blackstone’s Steven Schwarzman and Dow Chemical’s Andrew Liveris.

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Here’s the Best Way to Keep Staff with Long Commutes Productive

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Letting them work from home may not be the answer.

They might get to catch up on the latest Game of Thrones series or listen to their favorite album. But everyone knows long commutes are generally depressing affairs that are probably hazardous to mental and physical health.

They also drain productivity, according to the results of a new British study, which suggest that CEOs who react by merely allowing staff to work from home could be making a big mistake.

Employees commuting less than 30 minutes to work gain an additional seven days’ worth of productive time each year, compared to those with commutes of 60 minutes or more, according to the study of more than 34,000 workers.

“employers should be looking at flexible working arrangements as a more prominent part of their workplace wellness or productivity management strategy.”

Conducted by insurance company VitalityHealth, in conjunction with Cambridge University and consultancy Mercer, it found that long commuters were 33% more likely to suffer from depression.

These workers also were 37% more likely to have financial concerns, 46% more likely to get less than seven hours sleep each night and 21% more likely to be obese.

Virgin CEO Richard Branson is among leaders who advocate allowing staff to spend more time working from home. “Too many companies don’t realize the monotony of a lot of people’s day-to-day life at work,” Branson said in a recent blog post. “I try to encourage chief executives worldwide to make sure there’s as much flexibility in the workplace as possible.”

Interestingly, however, this latest study questioned whether allowing workers with long commutes to stay at home was the answer. These workers actually tended to be the least productive of the lot, losing 29 working days worth of time each year.

To get the balance right, managers may want to consider being more flexible. But perhaps not as flexible as Branson suggested.

One solution would be to allow staff to clock on and off at times that help them avoid the rush hour. Would it really be that disruptive, for example, to allow some staff to work a 10 AM to 6 PM shift?

Alternatively, daily routines could be tailored to help long commuters better manage work commitments. So, for example, an important weekly meeting could be scheduled later in the day, rather than first thing in the morning.

Employers also could consider introducing financial wellness programs specially targeted at travel expenses.

“Our research suggests that employers should perhaps be looking at flexible working arrangements as a more prominent part of their workplace wellness or productivity management strategy,” VitalityHealth strategy director Shaun Subel said.

The post Here’s the Best Way to Keep Staff with Long Commutes Productive appeared first on ChiefExecutive.net | Chief Executive magazine.

Ford CEO Out as Investors Show Little Patience for Leaders Seen Falling Behind

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Former Ford CEO Mark Fields at a recent business leader meeting with the president.

Ford has replaced CEO Mark Fields just three years into his tenure, marking a clear demonstration of the consequences leaders face if they aren’t seen to be adequately combating digital disruption.

The auto giant announced it will replace Fields with Jim Hackett, a veteran of the office furniture industry who currently heads up Ford’s autonomous driving division.

CEOs almost everywhere are under immense pressure to overhaul legacy business models, under fire from tech titans, such as Google, and sector specialists, such as Tesla. In Ford’s case, the company’s shares have fallen by around 40% since Fields got behind the wheel in July, 2014.

“Hackett is well known for his creative management approach to business and is widely recognized as a leader in innovative design.”

Tesla shares, meanwhile, have continued to strengthen as the company, founded by CEO Elon Musk, prepares to launch its first mass-market electric sedan.

Ford disappointed investors in January by forecasting lower profits in 2017 after national auto sales came off the boil and Fields flagged higher costs for its investments in emerging technologies. Ford’s profit margins have become narrower than rival GM’s amid criticism from some analysts that it hasn’t kept a lid on costs at its traditional trucks and sports utility businesses.

“You have to have one foot in today, but also one foot in the future,” Fields told the company’s annual shareholder meeting last month. “I think investors understand our strategy.”

Some, however, are concerned the company has fallen behind rivals such as GM in embracing the future, even as Fields oversaw deals including a $1 billion investment announced February in self-driving technology company Argo AI.

Hackett was appointed as head of Ford’s Smart Mobility unit in March last year. Before joining Ford, he spent 30 years at office furniture group Steelcase, where he was credited for predicting the office landscape would shift toward an open-space environment from cubicles.

Hackett is “well known for his creative management approach to business” and is “widely recognized as a leader in innovative design,” according to his bio page on Ford’s website.

His promotion at Ford would comes as more non-tech companies, such as Starbucks and Mattel, look to the tech sector for CEO succession candidates to deal with disruption.

The post Ford CEO Out as Investors Show Little Patience for Leaders Seen Falling Behind appeared first on ChiefExecutive.net | Chief Executive magazine.

Former AOL CEO Steve Case Tells CEOs to Prepare for the Tech 3.0 Revolution

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Steve Case, co-founder and former CEO of America Online, has watched the Internet evolve from its earliest days of noisy dial-up access to today’s integration with almost every aspect of commerce.

Since retiring from the company in 2003, Case has engaged in a number of entrepreneurial endeavors, and also has served as a member of Barack Obama’s Council on Jobs and Competitiveness and as presidential Ambassador for Global Entrepreneurship. He is current Chairman of the Case Foundation which invests in individuals, nonprofits and social enterprises to connect people and foster civic action.

Case says in his New York Times bestselling book, The Third Wave: An Entrepreneur’s Vision of the Future, that we are entering a “new dawn of technology” which will change virtually every aspect of business. Case recently spoke with Chief Executive about the coming tech 3.0 revolution and what CEOs should do to get ahead of the unparallelled digital changes in the coming years.

Q: You say say we’re entering a “Third Wave” of a tech revolution which will be unlike anything we’ve ever seen before. Please explain.
A: It’s really going to integrate the Internet in seamless, pervasive and even invisible ways throughout our lives. It will impact how we stay healthy, move around, how we learn and in the process disrupt some big sectors of the economy, including healthcare, education, energy, transportation, food and agriculture. People talk about the Internet of Things. This will be the Internet of Everything.

“People talk about the Internet of Things. This will be the Internet of Everything.”

Q: What does this mean for business?
A: There are opportunities and challenges. Organizations will need to embrace the opportunities and lean into the future. If you’re a large [or mid-sized] company, you might partner with smaller companies that have ideas and agility to position you [for growth]. The second wave was really about software and apps. The third wave goes beyond that and will be about how to work with partners to integrate that technology into their workflow. The ones who see it as an opportunity seize it and figure out ways to embrace it will position themselves to do well.

Q: Would you say that technology is also changing corporate leadership itself?
A: Yes. There’s clearly a set of technologies that didn’t exist a half century ago. There are communication technologies, collaborative technologies, and new ways in which the marketplace, including your customers, can engage and react. If you don’t understand and take advantage of that, you can be caught flat-footed. The recent example with United Airlines [having to remove a passenger due to oversold seating] is something that couldn’t have happened a couple of decades ago. It requires a different approach of how you deal with your customers, employees and others. It requires you to be a little bit more open, more transparent, more flexible, and collaborative to succeed in a world that has new possibilities and is continuing to evolve at a rapid pace.

“It’s not just about looking at your current competitors, it’s looking at what new competitors and technologies may be emerging.”

Q: What should CEOs do to prepare themselves and their organizations for this Third Wave?
A: They’ll need to understand what’s happening around the periphery of their sector and industry. Often these disruptions can come from surprising places. It’s not just about looking at your current competitors, it’s looking at what new competitors and technologies may be emerging. It also will require building a network around your company through partnerships, particularly with startups.

Q: How will technology change how leaders think about talent?
A: They’ll need to think about creating a culture and environment that allows people to innovate, take risks and be proud of what they’re doing as these things drive employee retention. You also need to realize that the average tenure is shorter and more people are working in the gig economy. As a result you always have to be on the hunt for talent [even when you’re not hiring] and doing everything you can to retain the best and brightest.

Q: Would you say CEOs have a responsibility to help foster entrepreneurship in their communities and among their workers?
A: Yes. I spent a good bit of time in the last few years traveling around the country on these “Rise of the Rest” bus tours. We visited 26 cities and traveled 6,000 miles. In many places, companies are stepping up and recognizing that the future of their cities is, in large part, a function of start-ups. They are the big job creators, and if you’re not backing new entrepreneurs, you’re not going to have a robust economy 20 years from now. My argument is that it’s in the interest of the communities they serve and in the self-interest of many of these companies and CEOs to work with entrepreneurs.

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2017 Smart Manufacturing Summit Speaker Presentations

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IOT: A Revolution on the Factory Floor

By Raj Batra, President of the Digital Factory Division, Siemens USA
The implementation of IoT technology on the factory floor, as well as in tracking products after they leave the plant, holds the most promise for companies looking to streamline production, manage energy use, gather operational data, and gain insight into both supply chains and future product development

Robotics and Automation: New Frontiers

By Sujeet Chand, SVP of Advanced Technology & CTO, Rockwell Automation
How robotics impacts all aspects of 21st century manufacturing, from talent to distribution, sourcing to safety, process to pitching

Due to its large file size, this presentation cannot be viewed online. Please follow the prompts to download it to your computer. Manufacturing 2020: Where are We Headed?

By John Lundgren, CEO, Stanley Black & Decker
The seven major forces driving global change in manufacturing: Globalization, Supply Chain, Environment, Talent, Technology, Productivity and Consumer Requirements

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