From the Knowledge@Wharton today blog.

Yahoo’s hiring of Marissa Mayer — a high-profile executive and innovator ensnared from rival Google — as its new CEO has all the trappings of a coup. But Wharton experts say Mayer will have to move quickly to win the search engine new users and advertisers, and to jump-start product innovation.

“Will Mayer be the one to finally work some magic at Yahoo and restore its glamour in the industry?” asks Wharton management professor Lawrence Hrebiniak, adding that he his happy with the choice. “She brings experience with, and knowledge of, consumer websites gained at Google, a good place to work and learn.”

Mayer’s last post in her 13-year Google career was vice president of the search giant’s local, maps and location services, overseeing product management, engineering, design and strategy. Yahoo credits Mayer — who made Glamour magazine’s 2009 list of “Women of the Year” — with heading up some of Google’s most successful innovations and launching more than a hundred features and products, including Gmail, Google News, and the “look and feel” of the Google experience.

“Marissa Mayer is a great win for Yahoo,” says Wharton operations and information management professor Kartik Hosanagar. “She’s from a relevant domain and is a star exec. She will provide good, positive PR and will help in recruiting some good folks back to Yahoo.”

Prior to Mayer’s hiring, Hosanagar told Knowledge@Wharton Today that Yahoo needed a leader with an “entrepreneurial spark” as CEO. “Marissa is close, but not quite that,” he says now. “She joined Google very early … but she’s been at Google too long and it’s not clear to me she’s the person who comes up with new product ideas and gets them done. I’d have preferred someone who has started and grown a company. Even Jack Ma [founder of Chinese business-to-business trading platform Alibaba.com] would have been a great choice. That said, I think Marissa is overall not a bad choice.”

Mayer will have to hit the ground running at Yahoo, which has struggled to maintain stable leadership at the top and seen a steady decline in revenue over the past few years. “Her focus will be on Yahoo’s core advertising business,” says Hrebiniak. Adds Hosanagar: “The one thing Marissa needs to do is to focus on developing a new winning product at Yahoo instead of financial reengineering, restructuring the organization and the like. Some of the latter is needed, but what will get Yahoo out of this mess will be a new product, much like [the introduction of the] iPod for Apple. Given her background, I think her focus will indeed be on products.”

Hrebiniak suggests that the work done by Mayer’s predecessor, interim CEO Ross Levinsohn, including settling disputes with Google and Alibaba, will allow her to focus on the advertising business.

Closing the Revolving Door?

But Mayer could face other distractions, as well as formidable hurdles to overcome, Hrebiniak points out. “Levinsohn’s being passed over may generate resentment among key managers and employees, which could [lead to] defections and other problems,” he says. “Google and Facebook, which have steadily been stealing Yahoo’s users and advertising revenues, aren’t going away. A frontal attack by Mayer is certainly anticipated and the two formidable foes will assuredly be prepared for Yahoo’s new assaults.”

Mayer is Yahoo’s fifth CEO in as many years, and “a revolving door itself creates uncertainty and possible confusion,” Hrebiniak notes. “Levinsohn, for example, was reportedly in the process of formulating and executing his version of a new strategy. Mayer may upset the apple cart with something new and different, creating confusion and a feeling of ‘here we go again.’”

Wall Street seemed to cheer the choice of Mayer, notes Hrebiniak, but adds that “only time will tell if the trust in her capabilities in a competitive marketplace is warranted.” Mayer has a lot going for her — including a baby boy due Oct. 7 — and has been named in four consecutive years starting in 2008 to Fortune‘s list of the “50 Most Powerful Women in Business.” As one of only 20 female CEOs of Fortune 500 companies, and Google’s 20th-ever employee, “maybe 20 is the magic number,” for Yahoo, says Hrebiniak.

This blog was previously posted in Knowledge@Wharton today blog: As Mayer Brings the Pizzazz, Yahoo Waits for the Magic

Greg Wall | CSI Blog

A huge opportunity has opened up for co-operatives everywhere. The door is wide open. The timing is right. The global debt crisis is not going away. Pundits predict 10-15 years of slow global growth. Australian businesses, even in a more robust national setting, have to compete in this slow growth international economy. This is the chance for the global co-operative sector to demonstrate it can outperform other forms of business in challenging times in terms of growth, productivity, and the capacity to make the tough operational changes to stay competitive.

A major report handed down in the UK has shown this superior economic performance. The Co-operative Economy 2012  released last week reported that the sector had outperformed the corporate sector for the fourth consecutive year. The UK co-operative sector has grown by 21% since the start of the credit crunch in 2008 whilst the UK economy as a whole has stagnated. The co-operative financial services sector in the UK grew 12.9% from 2008-2010 compared to 8% for the rest of the sector. The growth rate of employee owned businesses is 50% higher than the UK economy (1.1% compared to 0.7 for the economy at large). The sector includes the John Lewis Partnership and we are fortunate to have ex-John Lewis Chair, Sir Stuart Hampson’s blog this week to tell us why their model is so successful.

This is further evidence that co-operatively owned businesses are more resilient in economic downturns than their conventionally owned counterparts. I would like to be able to report on the economic performance of Australian co-operatives with such clarity.

Fortunately, the United Nations International Year of Cooperatives has provided us with the opportunity to launch some sector initiatives and we have a mapping project for the Australian co-operative and mutual sector currently underway. The report is due in September. Co-operative Australia’s Top 100 list  of Australian co-operative and mutuals businesses, updated for 2012, is also due out at the end of this month.

This Saturday, 7 July, marks the most important day of the year for co-operative businesses – International Co-operative Day. This year is of particular importance given that 2012 also marks the United Nations International Year of Co-operatives, a landmark achievement for the one billion owners of co-operative businesses globally and the estimated 7.5 million Australian co-operative and mutual members. 

It is no accident that this is the first time that the United Nations has awarded a business structure with International Year status. In dedicating 2012 to co-operatives, the UN recognises the vital contribution of co-operative enterprises to global socio-economic development and to achieving the Millennium Development goals, in particular poverty reduction, employment generation and social integration; and we are very pleased that Australia’s Foreign Minister, Senator the Hon Bob Carr, will give a keynote address at the Development Co-operation Forum hosted by UN Secretary General Ban Ki-moon in New York this week (5 July).

In the IYC, the UN encourages Governments and regulatory bodies to establish policies, laws and regulation conducive to co-operative formation and growth. We believe that strong government support will go a long way to helping achieve these goals. 

The recognition of the role of co-operatives in Australian communities and the economy has recently gained momentum at the Federal level. Co-operatives received strong bi-partisan support in the House of Representatives on 25 June during the debate of the Private Members’ Bill tabled by Mr Luke Hartsuyker MP, Federal Member for Cowper. In addition, the passing of the Co-operatives Bill 2012 and Co-operatives National Law 2012 in the NSW Parliament marks a renewed commitment by Government to the co-operative sector. 

In launching the IYC 2012 Commemorative Coin in Australian Parliament House on 22 November 2011, the Minister for Employment and Workplace Relations, Financial Services and Superannuation, the Hon Bill Shorten MP noted: “We are the only nation in the world to produce a collectible coin celebrating the UN International Year of Co-operatives in 2012, as we recognise the impact of the co-operative business model on the burgeoning strength of the Australian economy on the world stage”.

Plaudits such as these are nice but the real opportunity of an International Year focusing on the co-operative model of business is the platform it provides for co-operatives, credit unions, customer owned banks, mutuals and other forms of member-owned business to showcase their economic and social achievements, and to raise awareness about the important role they play in providing a competitive marketplace and promoting social responsibility.

Australia’s IYC 2012 campaign has been fully funded by the industry – the co-operative members of Australia – and focuses on our vision for sustainable growth into the future.

The campaign aims to raise community awareness about socially responsible forms of business and the role they play in supporting local communities in Australia. I am proud of our ‘co-operative’ achievements as a sector this year, but the real game is the long term one. Charles (Chuck) Gould, Director-General of the global peak body for co-operatives, the International Co-operative Alliance, believes that the co-operative will be the fastest growing form of enterprise by 2020, and that 31 December 2012 marks a beginning not an end, of a ‘co-operative decade’.

 I am willing to place a bet that Chuck is right.

This post previously appeared in the CSI Blog: Open door beckons for rising stars of the global credit crunch – co-operatives

From the Knowledge@Wharton today blog.

Rupert Murdoch’s move to split News Corp. into entertainment and publishing businesses may unlock the value he seeks. But the big imponderable in that shift could be Murdoch himself and his tainted legacy, say Wharton management professors Lawrence Hrebiniak and John Kimberly.

“Murdoch overseeing both companies actually may be a drag on performance,” notes Hrebiniak. The phone hacking scandal involving News Corp.’s defunct newspaper, News of the World, and other group publications has “definitely hurt Murdoch’s image and perceived effectiveness as a leader,” he adds. The newspapers’ employees were accused of phone hacking and bribery in publishing stories between 2005 and 2007.

Hrebiniak says Murdoch’s “past mistakes still are fresh in many peoples’ minds.” He refers to criticism that News Corp. overpaid in its August 2007 purchase of Wall Street Journal publisher Dow Jones from the Bancroft family for $5 billion. “As head of both companies and CEO of the entertainment division, [Murdoch] could easily stifle and overwhelm the creative thinking, influence, and strategic autonomy of the chosen head of the publishing business when these capabilities or skills are most needed to turn the business around,” notes Hrebiniak. “Murdoch should take a step back and reduce his active management role.”

Murdoch could still oversee both businesses, Hrebiniak adds, but needs to appoint new CEOs for each of the two divisions, and become a hands-off executive. Those CEOs could then focus on strategic opportunities and challenges “with a fresh vision, without excessive Murdoch influence or interference.”

News Corp. also has to contend with the overhang of Murdoch’s legacy, and two key components of that are unclear, according to Kimberly. First, he wonders how history will view the man as a business leader given the stain of the hacking scandal and the questions it raised about Murdoch’s personal integrity. Second, how well would Murdoch’s empire fare once he is gone, Kimberly asks. “Arguably, the most important challenge facing any leader is building an organization that can thrive in his or her absence.”

The phone hacking scandal has “severely tarnished” Murdoch’s personal reputation, and its economic consequences will not be known for some time, Kimberly notes. The fallout from the incident also led Murdoch’s son and heir apparent James Murdoch to step down as chairman of British satellite and broadcasting company BSkyB (of which News Corp. owns a 39% equity stake) this past April.

Unshackled by the Murdoch style and legacy, News Corp.’s split will bring some obvious benefits, experts say. For one, it allows for separate strategic attention to the two very different businesses of entertainment and publishing. “Each business can focus more directly on its own industry forces, competitive problems and opportunities,” Hrebiniak says.

Hrebiniak also suggests that with a more sharply focused entertainment business after the split, Murdoch could revive his attempt to complete his ownership of BSkyB, which is the biggest pay TV broadcast company in the U.K. and Ireland. The phone hacking scandal forced Murdoch to withdraw his bid last year to buy the remaining equity in the firm. Hrebiniak points to the immediate increase in the stock value of both News Corp. and BSkyB shares after the split announcement as indicative of the value investors see in the move and what might follow.

But News Corp. still faces major challenges after the separation, which is expected to be formalized over the next year after regulatory approvals. Hrebiniak notes that not all of its entertainment businesses have high growth prospects and profitability. The company’s cable business is doing well — much better than broadcast and satellite TV. “But the split won’t guarantee increased growth and profitability for the entertainment side of the business; serious strategic and execution issues won’t be overcome automatically,” Hrebiniak says.

In steering the newly separate publishing business, News Corp. will need major efforts to reduce costs and avert further slippage in already thin profit margins, according to Hrebiniak. He doesn’t see that as an easy task, given the many competitive challenges to publishing.

The split, in fact, raises more questions about the future of News Corp.’s publishing business than the entertainment arm, according to Kimberly. He notes that the publishing business is the “historical core” of Murdoch’s empire, and that he is understandably very attached to it. “By spinning it off, and by painting an optimistic picture of its future, he is playing a very risky game,” says Kimberly. “If he wins, his judgment is vindicated and some reputational capital will be rebuilt. If he loses, he loses big.”

Sasha Graham | CSI Blog

What kind of Australia do we want?

We all want a better life, for ourselves and our children. We also care about the progress of our communities and our country. We like to think that we will leave a positive legacy for the generations that come after us. But how do we know if we, as a nation, are on the right track?  What does progress really mean? How do we decide what counts as progress? How can we measure how well we are succeeding? By definition, the progress of a nation or a community is measured by how well it moves towards set goals and values. Until recently, most of the national conversations about our progress have been focused on economic growth or GDP as the key goal for Australia. The growth of wicked problems such as social and financial exclusion, mental health and environmental degradation are all linked to our state of wellbeing. Now, more than ever, human progress is increasingly being understood as more complex than this, including the values that underpin our life together, goals that relate to our wellbeing as individuals and as communities, and the effective and sustainable use of our resources for the wellbeing of future generations.

Deciding what progress means for Australia and how to measure it isn’t simply a matter of policy for lawmakers or a technical question for experts. It’s a democratic question for all Australians. Interestingly, the Australian Bureau of Statistics (ABS) was the first national statistics office in the world to develop an integrated set of national progress measures and this project itself became one of the main inspirations for the OECD’s global project. Over the past year, there have been some interesting developments at the Federal level, with commencement on development of Australia’s Wellbeing Index announced in 2010. Where traditional polling methods and ‘social-lite’ census questions exist, there is a need for local place-based approaches in addressing disadvantage and sustainability. 

Place or asset-based strategies have emerged as a key element of the Australian Government’s Social Inclusion Agenda, and last year its Social Inclusion Unit released a groundbreaking report, Governance Models for Location Based Initiatives. Based on deep research and consultation, the Board provided a set of recommendations and proposed that location-based initiatives should be based on six key elements:

• a clear connection between economic and social policy and programs at a local level;
• a framework for providing integration of effort across governments;
• a level of devolution that allows significant and meaningful local involvement in determining the issues and solutions;
• capacity development at both local level and in government, without which greater community engagement or devolution of responsibility will be impossible;
• and funding, measurement and accountability mechanisms that are designed to support the long term, whole-of-government and;
• community aims for an initiative, rather than attempting to build an initiative around unsuitable measurement and accountability

This is reinforced by recent developments in NSW Government with release of the Department of Education’s Connected Communities strategy. The strategy positions disadvantaged schools within high Indigenous/disadvantaged populations as community hubs. Similar to any location or ‘asset’ or place-based strategy, these hubs will be co-designed with each community based on contextual information from a comprehensive community profile, including input from the community about its strengths, issues, vision and aspirations. And, this month the Strategy was raised as a matter of public importance in NSW Parliament with support by the Opposition. This is a radical move which is sure to advance the collective social impact mission. 

Progress is more than economic growth

In the past decade, there has been increasing recognition that national wellbeing is based more than just economics. This movement is being driven by citizens, policymakers, academics and statisticians working together globally and locally and championed by international organisations like the OECD and the United Nations.

This has stimulated research to define fulfillment and quality of life through measures related to social, cultural, spiritual and environmental dimensions. A focus on wellbeing recognizes that increased economic wealth is not always positively aligned with increased health and happiness of an individual or the wider community. Hazel Henderson put it aptly that, ‘statistical codes become the DNA of our nations’ and that ‘they reflect society’s values and goals and become the key drivers of economic and technological change’.

Here is an interesting link to national “indicator land map” which highlights various indexes and projects from the Australian Community Indicators Network.

So, who should decide what progress is, our values and goals are for our nation or communities? Why should citizens be engaged in that task? And how can they be best engaged? And, why should we measure our progress (national, community) and how best to? 

Understanding community wellbeing 

Wellbeing is a holistic concept that is closely related to ‘quality of life’ and wicked problems that face communities require non-linear, iterative processes to solve them. An understanding of genuine progress requires multi-dimensional measurement. Each of these dimensions is a ‘domain’, for example; environmental, social, economic and cultural. Within a domain, there are numerous specific indicators of progress and programs or activities (outputs) to support them. Indicators, Schmindicators *reader mumbles*.  Perhaps the best way to convey the concept of a community wellbeing project is to explain my experience whilst working on fly-in/fly-out social impact projects in rural and remote areas of Queensland while at The Hornery Institute. In order to gain a deeper understanding of these communities, we developed a place-based strategy to engage all stakeholders in exploring the issues, aspirations and opportunities inherent to the local government area (Maranoa and Gladstone). Through an inclusive approach we were able to meaningfully engage people about what they value, working collaboratively to prototype and develop community agreed sustainability indicators framework and suggested social programs that would help mitigate potential negative impacts of industry.

We consulted widely, with over 750 voluntarily participants from schools, local businesses, farmers, landowners, NGO’s, industry, Indigenous groups, local government, universities and state government using a combination of participatory group action research methods and face-to-face meetings. Meanwhile, back at headquarters desktop team members undertook research to profile the community using demographical ABS data, regional strategies and other ethnographic research. Appreciative enquiry methods had us also photographing the urban character and its heritage as we mapped the local community services and facilities (assets).

We gained a lot through the ‘wisdom of the crowds’ and I was blown away with the willingness of the community in sharing their insights to intelligently map and tap the resources within the local area. They were knowingly committed to helping themselves with that self-determination common to most Queenslanders. Throughout the project we returned to engage original community groups and present findings, adding to their ideas for suggested programs, community assets and urban planning. Given the independent status of working for a non-profit community development organization, we were able to scaffold trusting relationships.

Reams of butchers paper later, delivery of the studies to community groups they intelligently deliberated, voted and agreed on priorities for approval of each community wellbeing framework. It was true democracy in action. The indicators in each domain are transparent, were publicly released and are referenced often. To demonstrate the impact of the study (Maranoa LGA) fifteen community development programs have been implemented since 2010. Not all issues could be addressed alone by the local community, but the process served as an evidence gathering exercise to identify externalities that could inform higher tiers of government  to undertake more research in areas, such as health and human services or environmental legislation. However, combined with a collective impact approach, there is unlimited potential for more humanitarian service design which can serve to create system level change.

Through our work we developed strong relationships, particularly the Lord Mayor who invited us to present the study at Council’s AGM. Based on community support for the project, we also met with Premier Bligh’s office and Queensland University to discuss the community wellbeing approach as a more stringent method of evaluating social impact assessments for environmental impact assessment development applications.

The community wellbeing framework is intended to provide complete impact data to drive forward positive change and sustainability around key areas of community defined progress. Once experienced and understood, the approach is essentially a concept which makes sense to everyone. Despite the complexity and ambiguity of working on experimental projects with communities, my intention is to leave you with a good impression of just how practical and enjoyable place-based projects can be. A transparent framework for measuring progress, over time, is a journey that involves all stakeholders within a local context to establish agreed priorities for the community, therefore creating evidence of a shared vision for the future. Local engagement with as many stakeholder groups as possible serves to articulate community concerns, aspirations and policy priorities for the future of their area and community – which is really, everyone’s business.

The need for a locally supported approach

Redefining progress requires a contextual approach, and while common wellbeing framework methodologies exist, perhaps the biggest barrier is that current indicator initiatives are a bit of a magpie. Given that measurement of community wellbeing requires the development of location-specific studies, currently we are lacking a cohesive and visible national entity at the macro level that supports local community and governments to undertake this work easily on the ground. And, although data research has gone to great lengths in seeking to highlight certain indicators, for example, financial exclusion, there is no one-size-fits-all solution that truly reflects other meaningful priorities and indicators for sustainability from one community to the next. This is why a shared cross-sectoral commitment by State and Local Government is urgently needed in building momentum for the development of community wellbeing action plans.

We expect place-based indicator frameworks will provide a richer evidence base from local governments that will inform and guide Federal government on ‘community accounts’ of wellbeing to prioritise strategic funding and policy decisions. This will be enabled by a combination of networked and online engagement. With the growing innovation of interactive platforms, the proposition of using the internet makes this idea a whole lot more do-able. Perhaps one of the most impressive examples of community accounts we could hope to emulate is in the Canadian province of Newfoundland-Labrador.

Once in full swing, a platform like this would help guide due diligence for social investment; scope more strategic social enterprise development; provide crowdsourcing opportunities; form volunteering initiatives, providing an evidence base of unmet need to stimulate creative financing, for example, matched community development funding through councils and community banks.

There are a number of benefits from a national index which reflects more holistic local priorities. With the capacity to distil multiple dimensions of progress measures, it will also attract high levels of public, political and media attention that will be referenced frequently. The single number result will be the doorway through which people will start thinking about which elements of progress matter most to them. It will also challenge the specificity of economic measures that are currently used.

Progress on measuring progress – an Australian National Development Index (ANDI) is underway

….which brings me to ANDI and what this blog is really all about. Its development has been a long process in Australia going back 16 years, with some members providing international input since the 1970s. It is an independent, citizen-led, community initiative to revitalise our democracy and engage all Australians in a national debate about our shared vision for Australia. Based on the idea of an ongoing national conversation about what kind of society we want to be, ANDI’s aim is to help develop clear, ongoing measures of our progress towards increasing equitable and sustainable wellbeing through an Australian National Development Index. ANDI’s interim National Organising Committee comprises a large collaborative of distinguished practitioners from government, non-profit and academic institutions, with key advisors and sponsors from across the sectors. ABS is a key partner to ANDI for development of the Australian Wellbeing Index. ANDI seeks partners from the private, not-for-profit, academic, government and philanthropic sectors. ANDI and the Australian Community Indicators Network are working closely together to develop the tools for citizens to be engaged in measuring, planning and discussing their own communities, whether local or national. ANDI is currently seeking to form a partnership with an information technology company to support the technical development of  its website, as well as media partners and sponsors to help advocate and drive this national and locally led initiative.

For more information please see the ANDI website: www.andi.org.au

This post previously appeared in the CSI Blog: What kind of Australia do we want and how do we know if we are making progress?

From the Knowledge@Wharton today blog.

The Indian economy may be going through a rough patch, but a recent study points out that as compared to women in developed nations like the U.S. and the U.K., women in India are more bullish about their entrepreneurial ventures.

Commissioned by PC maker Dell, the Women’s Global Entrepreneurship Study surveyed women entrepreneurs across India, the U.S. and the U.K. The study found that women entrepreneurs in the U.S. anticipate an average growth of 50% in their businesses over the next five years, while in the U.K. women entrepreneurs expect to see their businesses growing by only 24% over the same period. In India however, women entrepreneurs anticipate an average of 90% growth over the next five years. And 80% said that they are hiring.

The study was released by Dell at the third annual Dell Women’s Entrepreneur Network (DWEN) event held in New Delhi recently. The earlier DWEN events were held in Shanghai in 2010 and Rio de Janeiro in 2011. According to a statement by Dell, India was picked as the host country for this year’s conference because of “its role as one of the largest emerging markets, as well as its influence on the world of technology.”

“Women are playing increasingly important roles in leadership and we’re seeing some of the most exciting global growth coming from female-led companies,” said Moira Forbes, publisher of Forbes Woman, who led the two day event. She noted that in Asia, “female business leaders and entrepreneurs are changing the face of business and India is at the forefront of this phenomenon.“

Hema Ravichandar, a strategic HR advisor, suggests that the emergence of the services sector in India, which has resulted in an increase of women in the workplace, has played a key role in encouraging them to strike out on their own. “Many [women] after experiencing life as an employee [in the services sector] have been inclined to adopt entrepreneurship,” she says. “This not only gives them much-needed flexibility with regard to their respective work patterns — especially useful when on the ‘Mommy track’ — but also empowers them to do things differently and, [in] many cases, more effectively. This success in a way reinforces others into experimenting with this option.” Ravichandar adds that the emergence of the services sector “has also made [entrepreneurship] a much more level playing field unlike traditional industries, [such as] manufacturing.”

Nirmala Menon, founder and CEO of Interweave Consulting, a Bangalore-based firm that focuses on diversity management and inclusiveness in the workplace, points out that there is a lot of visibility and acknowledgement of women entrepreneurs as reliable partners and vendors. “Some organizations are encouraging them as part of their corporate supplier diversity programs. This is spurring other women to enter the space as well.”

Menon adds that Indian women inherently have an important entrepreneurial trait — resilience. “Women in India have had to traditionally manage with limited resources and that native intelligence helps them manage creatively with frugal resources available,” she notes. “They reuse, save, negotiate, find alternatives — all of which contributes to their success as an entrepreneur.”

But what are some of the challenges that they face? Menon suggests that women find it more cumbersome than men to navigate the regulatory and procedural complexities. She attributes this to “a fairly complex process managed mostly by men.” Menon adds that while women entrepreneurs have domain expertise, they often lack profit and loss experience and by consequence could struggle with the “business-side” of an enterprise. However, the biggest challenge for women entrepreneurs in India, she says, is coping with societal expectations. “These are changing, but still have some way to go.”

This post previously appeared in the Knowledge@Wharton today blog: A Bullish Outlook for India’s Female Entrepreneurs

From the Knowledge@Wharton today blog.

In 1991, when the Indian economy was on its last legs and the country was on the verge of defaulting on its international obligations, Prime Minister P.V. Narasimha Rao and Finance Minister Manmohan Singh ushered in an era of economic reforms. They worked: India became one of the fastest-growing large economies in the world.

But history is now repeating itself. India’s rating has been downgraded by S&P and Fitch. And a duo including Finance Minister Manmohan Singh is heading the rescue act. Of course, things are not exactly the same. Singh is prime minister too, having taken additional charge when erstwhile Finance Minister Pranab Mukherjee stepped down to run for president. (The presidential elections are on July 19 but, as a candidate for the ruling party with outside support, Mukherjee is near certain to win.)

This time around, Singh’s companion in action is the ruling Congress Party chief Sonia Gandhi and she is expected to want approval on every policy change. On June 27, shortly after taking over as PM, Singh called upon the country to shed the current climate of pessimism. “Revive the animal spirits in the country’s economy,” Singh told finance ministry officials. (Singh, an economist, was talking in a Keynesian sense of consumer confidence.)

Singh further spelled out the problems facing India. “At the current juncture, we are passing through challenging times economically,” he said. “The growth rate has taken a dip, industrial performance is not satisfactory, things are not rosy on the investment front [and] inflation continues to be a problem…. On the external front, I am concerned about the way the exchange rate is going. Investor sentiment is down and capital flows are drying up.”

There seemed to be acceptance of the fact that mistakes have been made. Former Finance Minister Mukherjee, on his last visit to his office, told the media: “I know that not every decision I have taken might have been right. But I have taken those decisions always keeping in mind the simple and poor people I knew from my childhood.” That is the nearest a politician can get to admit giving in to populist inclinations.

Perhaps Mukherjee’s biggest errors, his critics say, have been in the last Union Budget. He reversed a Supreme Court decision in a tax case against Vodafone. Retrospective taxes added to the scare. “There are problems on the tax front, which need to be addressed,” noted Singh. Much must be done “to restart the India growth story,” he added.

Getting Mukherjee out of the way was the first step, observers note. He has repeatedly defended his tax proposals, and suggestions that he move to another ministry with former Finance Minister P. Chidambaram taking over were not welcomed, as this would have been seen as a demotion. Mukherjee has been through this before. In 1984, when Prime Minister Indira Gandhi was assassinated, he threw his hat into the ring to become prime minister. But the party instead chose Rajiv Gandhi, a pilot for a commercial airline, to become prime minister. And Mukherjee spent many years in the cold. This time the President’s job can be projected as a promotion, though the role is entirely ornamental. (In India, it’s a job equivalent to that of the Queen of England.)

Will Singh be able to usher in reform a second time? Among the potential roadblocks are that some loyalists of the Gandhi family would like to see him fail, as success would take part of the aura away from Sonia Gandhi and heir apparent, Rahul Gandhi. A successful Singh may start commanding a political base of its own. Besides, the real issue is building up confidence in foreign investors and Indian businessmen. After the shocks they have had from the budget and other measures, that may not be too easy a task. The stock market, the principal leading indicator, has been ambivalent. They prefer to wait and watch.

This post previously appeared in the Knowledge@Wharton today blog: Manmohan Singh Attempts a Second Economic Turnaround in India

Gina Anderson | CSI Blog

Healthcare is a global issue, not just a local problem. Virus and pandemic, chronic illness and disability: they don’t generally have any respect for geography.  As such, they often have common symptoms and common outcomes; death, lifelong disability, spiraling healthcare costs and increasing impacts on those who can least afford it.

Australian research organisations like The George Institute for Global Health, Baker IDI, Burnet Institute, and many others, undertake global projects specifically designed to provide evidence that will directly inform decisions about health policy and help change practice. That is health policy anywhere in the world. They don’t guard their research results because stroke, obesity, road trauma or diabetes don’t only affect Australians. You can suffer from diabetes in Mumbai as in Melbourne.

However this international medical research work is under a threat with proposed ‘In-Australia’ legislative tax changes for charities. The proposed changes include an ‘operated solely in Australia’ restriction, designed to ensure that tax deductible donations are used for the benefit of the Australian public. Unfortunately these changes appear to put the deductible gift recipient status of medical research institutes that undertake work internationally at risk because their research trials and activities are not conducted ‘solely in Australia’.  

For instance, as a world-class Australian-based medical research institute, The George Institute undertakes critically important clinical research into the causes, prevention and treatment of the most common diseases affecting Australians. In addition, the work of  The George Institute has also already changed the healthcare received by millions of people worldwide. 

To continue to undertake this critical work, The George Institute needs to reliably ascertain the causes of disease and the effects of various interventions. This requires large numbers of participants in studies and trials, the most important of which will typically need to be run internationally to gather the greatest knowledge and insights. Indeed most high-impact research requires some form of international activity or collaboration. It is through this work that they contribute to improving the health of people around the world, including major advances in the healthcare of Australians.

The proposed legislation would be a backward step that would punish successful Australian research institutes by denying them deductible gift recipient status on the basis that some of their work is international.

While it appears the proposed changes were not intended to target medical research institutes, if passed as they stand, these changes would have an extremely damaging impact on the sector, and consequently on the health of Australians going forward.

Let’s hope common sense prevails so medical research institutes like The George Institute, can achieve their mission to “improve the health of millions worldwide”.

Gina Anderson is a member of The George Institute Board and was Executive Director and Chief Executive Officer of Philanthropy Australia from 2005- 2010. This article first appeared on the CSI Blog.

 Tim Harcourt | The Airport Economist

London is still abuzz from the recent royal celebrations, deemed the perfect lead-in for this year’s Olympics. And in typical fashion, Australians are pushing their way to the forefront of this sporting bonanza.

From BBC newsrooms to boardrooms the Australian accents are present and many of a Gen X and Gen Y vintage are making their own mark on London society.

The build-up to the 30th Olympics has seen every body from Prince William and Kate Middleton, the Duke and Duchess of Cambridge to the irrepressible Sacha Baron Cohen as his new character The Dictator in an orange Ferrari surrounded by 20 beautiful bodyguards pushed to the fore to promote the UK.

But Australians are quietly infiltrating the party as London prepares to host its first Olympics since the post-war games of 1948 under what were then times of austerity (a term used a lot in European political circles nowadays).

All the big names in Sydney 2000 are there again – Sandy Hollway, Michael Pirrie, David Higgins, and Simon Baulderstone along with newer players like Rob Abernethy, the ex-FFA official who runs the aquatic centre and Mark Evers, an Australian who runs the transport and logistics side of the games. Even the BBC studio at White City is full of Australian accents. The Sydney 2000 Games is now considered the model Olympics for LOCOG and the IOC itself.

Newly re-elected London mayor Boris Johnson constantly talks of Sydney being the benchmark and the need for the British Olympic team to win more medals than Australia. We are just waiting for the inevitable bet with Sydney mayor Clover Moore to fly the winners’ flag over the Tower Bridge or the Sydney Harbour Bridge.

Many Australian companies have also been involved in London 2012. In the East End of London, Stratford Westfield dominates the skyline and Frank Lowy’s vision has been to leave a strong legacy in a new town centre and shopping complex to help ameliorate depressed conditions in that part of London.

Architects that were prominent in Sydney and in Beijing, like PTW (headed by rock-star architect John Bilman) and Populous are building key facilities.

Behind the scenes Spotless (Cleanaway) are continuing on from numerous international sporting events since Sydney 2000, Advanced Polymer Technology is laying down the Astroturf, and a small company from the Adelaide Hills, Steriline Racing, is again working on an equestrian arena with an eye to Rio de Janeiro 2016.

The Australian Government, like before, will be holding a major networking event.

The Business Club Australia concept was set up in Sydney to give companies a chance to meet major international business visitors and according to the BCA’s own architect Ashley White, the Sydney Games launched a whole new concept about using international sporting events to make business contacts and build the nation’s business brand.

Austrade’s senior trade commissioner in London, Kym Fullgrabe, says the Sydney Games was where a whole cluster of world-class Australian companies began delivering excellence at the Olympics.

It is well known that Australia played a big role in Beijing in 2008, given our strong presence in China but even in Athens 2004, there were 43 companies. So bring on the Games, hopefully it will help to lift some of the economic gloom in Europe but we will still come home with a major share of the medals.

Tim Harcourt is the JW Nevile Fellow in Economics and an adjunct professor in International Business Strategy, at the Australian School of Business, the University of New South Wales (UNSW) & author of The Airport Economist:  www.theairporteconomist.com.

From the Knowledge@Wharton today blog.

Every development that signals some progress in stemming the debt woes in Europe seems to do little to calm market nerves over the unfolding crisis. While the victory on June 17 of Greece’s pro-bailout New Democracy party eliminated the prospect of an imminent Greek departure from the euro, attention quickly focused on the difficulty New Democracy leader Antonis Samaris would have in forging a workable coalition with other parties in the country. Meanwhile, the eurozone’s plan to inject as much as 100 billion euro into Spanish banks was met with skepticism in the markets and mounting anxiety over the precarious financial position of the Spanish government. With pressure mounting for more action, reports are circulating of a possible deal to bail out Spain and Italy by directing two pan-European government funds to buy up 750 billion euro of their bonds. 

Mauro Guillen, a Wharton management professor and director of the Lauder Institute, and Olivier Chatain, a Wharton management professor, offer insights on the unfolding events in Europe in a conversation with Knowledge@Wharton.

Knowledge@Wharton: The victory of the New Democracy party in Greece seemed to calm the market for a brief period. Why?

Mauro Guillen: The debacle has been avoided, but that does not mean the preexisting problem is gone. Greece can’t service its debt under current terms, especially if the economy does not recover. And the economy [is] not recovering because Europe as a whole is entering a new recession. Some renegotiation of the terms might be necessary and/or the European Central Bank must accept higher inflation to underpin an economic recovery.

Olivier Chatain: There was relief because the prospect of an immediate and disorderly exit from the euro was not realized, as was feared if the far left had won the election. However, nothing has changed on the ground. There will be another government that will try to keep on muddling through, hoping to hold on until either the troika [of the European Commission, European Central Bank and the International Monetary Fund] becomes more flexible and renegotiates the bailout or until exit is unavoidable. Their preference is probably to stay in the euro, but at the same time the current course of austerity is not sustainable, so something will have to give.

Knowledge@Wharton: The bailout plan for Spanish banks seems to have only heightened worries about Spain. What is behind that growing concern?

Guillen: There are rumors of a plan to buy Spanish and Italian debt. With the economies in Spain and Italy shrinking, they need some help. There is no way out unless there is either a bailout or a return to economic growth (or possibly both).

Chatain: Greece is a sideshow compared to Spain and Italy. The root of the problem is that the Spanish banks have a large amount of bad debt following the implosion of the real estate bubble there and that the Spanish government has to bail out the banks to prevent a collapse of the Spanish economy. While the pre-crisis fiscal situation was very good, it is deteriorating very fast because of the need to rescue the private sector.

Now, it is clear that Spain will need significant help from the other countries and, until it gets it, investors are asking for higher interest rates, making a bailout even more necessary. The 100 billion euro package agreed upon last week is clearly not enough. If there is a larger bailout [as reports indicate], that will help Spain borrow at a lower rate, which is a prerequisite for moving forward. But the banking issue will still have to be dealt with.

Knowledge@Wharton: What do you believe must happen next to contain the crisis?

Chatain: The immediate concern is to fix the banking crisis that is propagating across the EU. These Spanish banks need capital injections. And Italy needs lower interest rates. There are many ways to make these things happen. But [attempts to address this] run into severe political constraints, as the electorates in countries that would need to pay for the bailouts are not happy with this prospect. At the same time, politicians are not explaining that the alternative — no bail out and the end of the euro — is likely to be much more damaging for them. Consider, for example, that if Germany were to revert to an independent currency, its exchange rate would rise … and its exports would suffer tremendously.

Guillen: There needs to be some debt restructuring in Greece, and at least a partial bailout of Spain and Italy might be necessary. But what is absolutely essential is that the conditions for economic growth are created, preferably through increased demand from the surplus economies, and [that there be] a tolerance for slightly higher inflation.

This post previously appeared in the Knowledge@Wharton today blog: ‘Greece Is a Sideshow Compared to Spain and Italy’

From the Knowledge@Wharton today blog.

The rapid growth in mobile phone use worldwide is good news for marketers and service providers, but challenges persist in monetizing that penetration.

Despite the fact that mobile users now make up 10% of all online traffic, ad spend in the U.S. on mobile was only 1% of the total, compared with 22% on the Internet, according to a report released last month by Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers (KPCB). Desktop Internet access scored over mobile phones in terms of average revenue per user (ARPU), the report noted: Last year, the ARPU from desktop Internet users was an estimated $49, while it ranged from below $4 to about $18 for mobile advertising at companies like Pandora, Zynga and others.

But advertisers have found desktop Internet advertising more expensive than mobile. The effective cost per thousand views in traditional online advertising is $3.50, compared with 75 cents on mobile devices, according to the report.

Kartik Hosanagar, a Wharton professor of information and operations management, says it makes sense that the ARPU is lower in mobile than on the traditional web. Mobile devices have limited screen space, and that makes it difficult to implement advertising efficiently, he points out. The nature of mobile usage presents another obstacle. “Most people access [data] on-the-go and are looking to pull information,” he says of mobile users. “Therefore, they are unlikely to linger around to consume other information/content that is pushed to them.”

However, Hosanagar finds significant untapped potential for other forms of monetisation in the mobile space. “A key difference is that while most content on the web is offered for free, paid content and apps are very much thriving on the mobile side.” The monetization model on mobile will be based less on advertising and more on paid content than the traditional Internet, he says.

The KPCB report also noted that the global Internet user population (including both desktop and mobile access) grew 8% in 2011 to 2.3 billion, led by China (513 million users) and followed by the U.S. (245 million users). A Cisco report, also released in May, put the number of Internet connections worldwide at 10.3 billion at the end of 2011, and projected that the number will grow to 18.9 billion by 2016. Driving that trend will be smartphones, tablets and other handheld devices. India will see Internet traffic grow the fastest, followed by Brazil and South Africa, according to a Bloomberg report.

As all that growth plays out, Hosanagar sees “a big opportunity” ahead for Internet service providers, but he notes that there are obstacles. “Their worry, of course, is that they might end up as dumb pipes carrying bits. If so, their services will become commoditised and have lower margins.” However, he doesn’t see service providers facing difficulties in monetising their investments in infrastructure with continued traffic growth in the medium term, especially with the increasing popularity of online video.

And while there has been tremendous progress in network speeds in recent years, the world has only harnessed a fraction of the Internet’s potential so far. “We are still having the same conversation we had 15 years ago, before the broadband revolution,” Kevin Werbach, a Wharton professor of legal studies and business ethics, said in a recent Knowledge@Wharton article. His comments came after a conference on broadband trends in April at Wharton’s San Francisco campus, organised by the school’s Mack Center on Technological Innovation and the Palo Alto-based Institute for the Future.

“We’re clearly at a fork in the road, but it’s not really clear yet what the branches are,” Werbach said about the evolution of Internet technology. “The most interesting questions are usually the hardest ones to answer.”

This post previously appeared in the Knowledge@Wharton today blog: Mobile Penetration Surges — Now, Where Are the Ads?