January 31, 2020

Report Focuses on How a Company's Long-Term Value Can Be Redefined and Communicated

The previous post on this blog centers on a report by the EY Center for Board Matters that presents eight priorities for boards in 2020. The report references a publication that explores why and how boards should guide management to focus on the long-term, better understand stakeholder needs and objectives, and improve communications about how their companies create value. How long-term value can be redefined and communicated contains information boards will find useful including the suggestion that "Boards can strengthen their oversight role by guiding management to focus on the long term, understand stakeholder objectives and communicate the many ways their companies create value."

The report says "[a] board’s primary responsibilities are to provide oversight, insight and foresight. Being well-informed is foundational to a board's ability to effectively execute those primary responsibilities. For this reason, boards have an obligation to seek a clearer understanding of stakeholder capitalism and its underlying rationales. Through this understanding, boards may see opportunities for their companies to deliver improved value over the long term by considering and addressing key stakeholder needs and demands."

A board that makes informed decisions helps mitigate the risk of making decisions that may adversely impact the company's operations or long-term strategy.

The report adds: "To facilitate more informed and 'patient' investment, many investors are asking companies to report on how they identify and measure both their intangible assets and the environmental, social and governance (ESG or sustainability) initiatives that are influencing long-term corporate value. They and other stakeholders are also seeking disclosure about whether and how those measurements are used to inform and improve strategic planning, risk management, executive compensation, sustainable operations, growth and, ultimately, long-term corporate value."

I concur that "[t]o more fully respond to these points of view, boards should consider how their company's value is reflected in intangible assets such as culture, human capital, innovation, corporate governance and ESG initiatives."

Moreover, "Boards can encourage their companies to develop better ways to identify, measure and communicate corporate value, including through narrative disclosures and nonfinancial metrics, and consider how a longer-term focus can lead to investment and innovation that promotes growth and value creation.

"This article highlights five market-driven and regulatory initiatives on long-term value that illustrate the shift to the longer-term, broader perspective of value suggested in stakeholder capitalism. Boards may consider how any of these initiatives might be useful for their companies to apply in ways that could clarify and support value creation."

1. Companies, investors and other market participants — moving toward a longer-term perspective

"FCLTGlobal, a private organization whose membership includes companies, asset managers, investors, financial advisors and service providers, was formed in 2013 with a goal of addressing how market participants weigh immediate financial pressures against long-term objectives. Believing that the balance was skewed toward investors and companies hitting near-term targets at the expense of long-term value creation, FCLTGlobal encourages a longer-term focus in business and investment decision-making and has developed practical tools to facilitate this focus, including:

  • "Objectives, questions and checklists for boards to use in assessing whether they have effective composition and are giving the appropriate focus, time and support to help their companies maximize long-term value
  • "Guidelines for investors, asset managers and companies on managing multi-horizon risks, including through communications on strategy, risk and performance and on strategic engagement that can enhance mutual understanding and support long-term value
  • "Guidelines for CEOs in developing a long-term road map designed to attract long-term investors, deter activist attacks, more accurately reflect company valuation, provide strategic clarity and address stakeholder concerns"

2. Embankment Project for Inclusive Capital (EPIC)

"EPIC was formed by the Coalition for Inclusive Capitalism and EY, with the view that 'the health of corporations and financial markets — and public trust in both — is critical to economic growth' and 'market participants have a role to ensure long-term value creation that benefits all.' Guided by these views, EPIC brought together more than 30 global capital market leaders representing institutional investors, asset managers and companies to work on developing a standardized, material and comparable set of nonfinancial metrics for the measurement of company activities related to long-term value."

The report explains: "In a report issued in November 2018, EPIC identified four key value drivers of long-term sustainable growth and value":

Talent: Employees have a significant impact on a company's ability to create long-term value by implementing company strategy and developing new ideas for success and growth. EPIC identified three areas where a company’s actions on the talent front could influence its long-term prospects and proposed metrics and narrative disclosures for each:

  • Human capital deployment, management, engagement and turnover
  • Organizational culture and related employee views and data
  • Employee health programs, participation and impact on productivity

Innovation and consumer trends: Companies must measure their interaction with and impact on consumers and other stakeholders to assess whether innovation is meeting evolving demands. EPIC identified three related factors for enhanced narrative disclosures and metric development:

  • Innovation, with a narrative addressing overall innovation strategy and metrics demonstrating performance against strategy
  • Consumer trust scores
  • Consumer health impacts

Society and the environment: To be successful in the long term, companies need to understand how they create the social value that provides competitive advantages in attracting talent and customers and that strengthens their "license to operate." EPIC explored how companies can use the United Nations' Sustainable Development Goals (SDGs) by linking them to strategy and explaining how their contribution to SDGs creates long-term value for the company.

Corporate governance: While companies already provide a great deal of disclosure about their boards and governance practices, current disclosures may not clearly demonstrate the quality of the board's composition and governance frameworks and how those assets impact long-term value. EPIC suggests narrative disclosures for companies to consider in better making this demonstration, including:

  • Whether the board has conducted a robust evaluation of its composition, dynamics and effectiveness
  • Whether the board maintains a decision-useful skills matrix to guide its composition determinations
  • Whether the company discloses (without risking competitive harm) strategic milestones achieved or to be achieved in execution of long-term strategy

3. Sustainability Accounting Standards Board (SASB)

"SASB, a private nonprofit organization, works with other prominent private organizations seeking to advance voluntary corporate reporting and disclosure on sustainability issues, including, among others, the Global Reporting Initiative, the International Integrated Reporting Committee and the Task Force on Climate-Related Financial Disclosures.

"In November 2018, SASB published a set of detailed, industry-specific standards intended to enable companies to manage, measure and report on sustainability factors that drive value and affect financial performance. In developing its standards, SASB identified 26 broadly relevant sustainability issues and organized them into five groups":

  • Environment — addresses environmental impacts, either through the use of nonrenewable, natural resources as inputs to the factors of production or through harmful releases into the environment that may result in impacts to the company's financial condition or operating performance
  • Social capital — addresses the company's management of relationships with key outside parties, such as customers, local communities, the public and the government on issues related to human rights, local economic development, responsible business practices, customer privacy and other matters
  • Human capital — addresses the company's management of human resources as key assets to delivering long-term value on issues that affect employee productivity, labor relations, and the health and safety of employees
  • Business model and innovation — addresses the integration of environmental, human and social issues into the company's value-creation process, including resource recovery, product innovation, and efficiency and responsibility in the design, use phase and disposal of products
  • Leadership and governance — addresses the company's management of issues that can create conflict between the business and stakeholders, and relating to regulatory compliance, risk management, safety management, supply-chain and materials sourcing, conflicts of interest, anticompetitive behavior, and corruption and bribery

4. Securities and Exchange Commission

"Regulators are considering the development of new approaches to measuring and reporting value," says the report. "Through its 'Disclosure Effectiveness' and other initiatives, the U.S. Securities and Exchange Commission and its staff (SEC) is reviewing its disclosure requirements and considering and implementing ways to improve those requirements for the benefit of both companies and investors. Additionally, and in light of the SEC's initiatives, the U.S. Government Accountability Office has been asked to prepare a report on public company disclosures and SEC disclosure requirements relating to ESG matters."

5. International Organization of Securities Commissions (IOSCO)

"In January 2019, IOSCO, an association of national securities regulators whose membership regulates more than 95% of the world's securities markets, published a statement setting out the importance of corporate consideration of ESG matters when disclosing information material to investors' decisions.The SEC did not vote on the publication of IOSCO's statement and therefore the statement should not be viewed as an expression of the SEC's views or as an endorsement by the SEC. IOSCO noted that ESG disclosures are increasing, particularly in some industries, and include 'environmental factors related to sustainability and climate change, social factors including labor practices and diversity, and general governance-related factors that have a material impact on [a company's] business.'"

I support the report's conclusion that "Boards can guide companies by examining how an expanded view of corporate value over the long term can more accurately define and clarify corporate value in ways that give investors, other stakeholders and the financial markets a clearer view of corporate value, long-term sustainability and the company's related strategy."

What is more, "By redefining value using the broader and longer-term lens of stakeholder capitalism and linking key nonfinancial metrics of value to strategy execution, companies can better communicate how they are working to achieve long-term value creation and sustainability for themselves, their stakeholders, and society and economies generally. This will help ensure the wider stakeholder perspective is considered, deliver transparency that should increase trust in the business and capital markets, and support more long-term decision-making and investment."

The report concludes by presenting the following questions for the board to consider:

  • How does the company define long-term value? Would a broader definition of value, supported by nonfinancial metrics, allow the company to better articulate its value to investors, other stakeholders and the markets?
  • Does the company explain its purpose, culture, investments, innovations and other initiatives and how they are linked and incorporated into strategy in ways that are enhancing the company's competitive position?
  • Do the company's communications adequately address the value of certain intangible assets, such as culture, human capital, innovation and corporate governance?
  • Can the company quantify the benefits of its ESG or sustainability initiatives to determine their effectiveness and whether to adjust or expand them? Does the company communicate the effectiveness and value of these initiatives in ways that gain stakeholder support?
  • What information or communications do key investors and other stakeholders say they need to invest their capital and resources in the company for the long term? Does the company clearly provide these communications in decision-useful ways?
  • Do current company performance metrics and executive compensation packages reflect the objectives of the company's long-term strategy?
  • How does the company communicate the value of its board, in view of its composition, effectiveness and leadership, and overall governance framework?

Do you agree with the report's findings in how long-term value can be redefined and communicated?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

January 19, 2020

Top Priorities for US Boards in 2020

"Boards will continue to be tested in 2020 as their work demands more diverse competencies, innovative thinking, complex problem-solving and stronger governance," the EY Center for Board Matters says in its report that presents eight priorities for boards in 2020. Importantly, "Boards will need to allocate additional time to understand and address factors that contribute to sustainable long-term value creation while meeting urgent challenges stemming from economic, geopolitical, technology and social developments."

Listed below are the eight priorities that will be top-of-mind for board members in 2020 with each priority followed by questions for the board to consider.

1. Strategically prepare for growth amid increased uncertainty

"Current economic, geopolitical and social signals are mixed, creating uncertainty across business environments and requiring companies to consider both defensive and offensive strategies."
  • Is the board effectively monitoring megatrends, new technologies and economic signals to gather early insights on potential impacts on the business?
  • Is the board taking steps to continue bringing an outside-in perspective to the boardroom and keeping a pulse on disruptive technologies and innovation drivers?
  • What methods is the board using to stay well-informed about key stakeholder demands, interests and preferences that can affect future strategic direction?
  • Is the board allocating enough time for discussion of and planning for different economic scenarios and outcomes in a range of time frames?
  • Amid ongoing uncertainty, is the board overseeing allocation of capital and other resources in a way that protects assets, optimizes operations and executes on long-term strategies for growth — both playing it safe and doubling down?

2. Accelerate the talent agenda and activate culture as a strategic asset

"Growing trends are continuing to change the future of work. Digitization is having a significant impact across all industries, affecting all businesses and the workforce globally. Employees are adapting to new technology, and new skills are needed to keep up with ongoing technological disruption."
  • Does the board set the right tone at the top, including by dedicating adequate time to talent and culture discussions, at the board and committee levels?
  • Has the company's culture been intentionally defined in the context of its strategy, and is there a shared understanding of the culture throughout the organization?
  • How frequently does the board receive reports on the health of the organization's culture? If there are gaps or problem areas, how are they being addressed?
  • Do the company's senior leaders understand the trends affecting the workforce of the future, and are they driving the necessary shifts in culture, training and development?
  • Is the board receiving relevant data and spending enough time with the chief human resources officer (CHRO) to oversee culture and talent strategy?
  • How is the company integrating human capital and culture metrics and performance into earnings calls, analyst meetings and its external financial reporting to better communicate long-term value?

3. Evolve enterprise risk management

"In late 2019, we surveyed 500 directors and CEOs from around the world on the topic of risk. The full results of the survey will be released in early 2020, but several key findings illustrate a need to evolve ERM."
  • Is the board using external perspectives and independent data to identify and monitor emerging risks?
  • Does the organization conduct risk assessments frequently enough to capture new risks and adjust its risk appetite accordingly?
  • Does the board allocate enough time on the agenda for open discussion and brainstorming on emerging risks and trends?
  • How can the organization improve its ERM practices and processes with the use of scenario planning, stress testing and technology-enabled risk analytics?

4. Prioritize cybersecurity and data privacy

"Cybersecurity continues to be a top priority for companies. In 2019, we learned that CEOs ranked national and corporate cybersecurity as the biggest challenge for the global economy in the next 5 to 10 years."
  • What resources is the board using to enhance its competency on cybersecurity and data privacy topics and better understand emerging threats as well as legal and regulatory developments?
  • What information has management provided to help the board assess which critical business assets and partners, including third parties and suppliers, are most vulnerable to cyber attacks?
  • How does the board evaluate the company's culture as it relates to cybersecurity and data privacy? Are employees routinely trained? What security awareness messaging is regularly conveyed to employees? Are performance bonuses at stake?
  • Is the company maintaining a defensible narrative with its customers and users regarding the collection, use and protection of their personal information?
  • Has the board practiced a cyber-breach simulation with management in the last year?

5. Address geopolitics from a strategic perspective

"In recent years, the global economy has remained strong not because of positive geopolitical developments, but despite negative ones."
  • Does the board have the capability to develop its own perspective on geopolitics? Does the board receive regular briefings on geopolitical risks and their potential implications?
  • Does the composition of the board include members with geopolitical expertise or multinational experience (i.e., government, academia or civil society)?
  • Does the board work with management in translating its perspective on geopolitics into operations?
  • Does the board understand how geopolitical and related risks map to the company's geographical footprint and enterprise risk management policies and procedures?

6. Embrace ESG as a business imperative

"At the start of 2018, $12 trillion US-domiciled assets under management were categorized as environmental, social and governance (ESG) investment strategies, up from $8.7 trillion at the start of 2016. This represents one in every four dollars of the total US assets under professional management."
  • Have management and the board sufficiently engaged with investors, consumers, employees and other stakeholders to understand their key priorities and concerns around ESG issues?
  • Does management regularly assess and does the company clearly articulate what ESG factors are material to the business and how those factors are managed to minimize risk and maximize strategic opportunities?
  • Do corporate disclosures explain how ESG is integrated into the company's strategic plan and risk management processes? Do the disclosures meet the information demands of key stakeholders?
  • Has the company considered whether enhanced reporting would reduce the burden associated with responding to various ESG-related surveys or the challenges raised by external ESG ratings?

7. Redefine and better communicate long-term value

"Earlier this year we released a report that explored why and how boards should guide management to focus on the long-term, better understand stakeholder needs and objectives, and improve communications about how their companies create value."
  • How does the company define long-term value? How would a broader definition of value, supported by data, KPIs and other nonfinancial metrics, allow the company to better articulate its value to investors, other stakeholders and the markets?
  • What information or communications do key investors and other stakeholders need to invest their capital, talent and resources in the company for the long term? Does the company address those needs in decision-useful ways?
  • Does management work collaboratively so that all the company's communications taken together consistently explain the company's value proposition and strategy?
  • Are management's disclosure controls and procedures designed to enable the accuracy, reliability and understanding of nonfinancial measures used and disclosed?

8. Take a continuous improvement approach to board effectiveness

"Certain core characteristics and behaviors have been and remain foundational to board effectiveness. Yet as business environments change, so too must the board competencies and practices that drive board effectiveness."
  • Have board meeting schedules and agendas changed to meet increased time demands?
  • Has the board challenged its information practices to improve the timeliness and quality of board materials and information? Does the board complement management's information through engagement with independent experts and stakeholders?
  • Has the board considered establishing ad hoc and advisory committees to address shorter-term matters or test formation of a new standing committee?
  • Does the board use an independent third party to facilitate board, committee and director evaluation?

Based on my experience as a board member, I concur that "[b]oards must help their companies face uncertainty by embracing the duality of strategy, meaning they must strategize for challenges beyond the horizon while driving current business results."

I also support the report's conclusion that "[t]he role of board directors will grow increasingly complex in the years to come. Emerging technologies, changing social demographics, customer preferences, a volatile geopolitical environment and an accelerating climate crisis are among the megatrends redrawing today's risk landscape and redefining long-term value. We believe that considering these eight board priorities now will help boards succeed in the new year and beyond."

Do you agree with the eight board priorities?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

January 16, 2020

Legacy Created by the 2020 Tokyo Olympics Will Launch 'Japan's Next Decade'

"Japan is back—and in the spotlight," proclaims the Economist Corporate Network (ECN) in a report entitled Japan's next decade: Opportunities for economy and society after the 2020 Tokyo Olympics. "Perceived as a laggard for decades, it is finally receiving attention, if not for staggering GDP growth, then as an example of how to deal with the population-related issues that many countries will face sooner or later."

Sponsored by Philip Morris Japan, the report notes that the "2020 Summer Olympic and Paralympic Games in Tokyo are playing a central role in the narrative of Japan's revitalization. The direct economic benefits of this iconic event are forecast to range from ¥30trn (US$282bn) to ¥32trn or around 0.6% of real GDP. The Olympic Games are also viewed by business executives as a great opportunity to boost morale and visibility, to 'catapult the host city into the premier league of cities,'" according to a report that looks into the economic impact of the Olympics.

Moreover, "The cumulative effect of the Olympics brings more important results than simply faster GDP growth. Olympic euphoria has developed into a new national idea, driving the country and its economy forward. 'The Olympics will be a great catalyst, showcasing all of the great things about Japan and Japanese society. There will be a huge positive effect from an incoming tourism point of view, but there is also domestic excitement, that will be created as well,' says Randall G. Wada, CEO of JLT Holdings Japan."

The report encouragingly explains that "this positive trend does not have to stop when the lights go off after the closing ceremony. The legacy created by the Olympics should be enough for the country to start building what we call Japan's next decade" as opposed to the 'lost decades' of economic stagnation in the 1990s and 2000s.

There are challenges, however, such as a rapidly aging population that may adversely impact Japan's next decade. "The statistics are well known: by 2030, more than 30% of Japan’s population—nearly every third person—will be over 65. This is unprecedented in world history. The Japanese government and people are concerned as to whether their society is sustainable with such a demographic structure."

What is more, "The Economist’s Glass Ceiling Index consistently ranks Japan as one of the worst environments for working women among OECD countries." In a chapter on driving growth through diversity and inclusion, the report says "improving conditions for working women and promoting 'total diversity' are crucial for Japan's next decade and beyond. The economic potential is huge, and the socio-demographic implications could benefit society as a whole."

Based on desk research and consultation with experts in Tokyo, the report's key findings include:
  • By 2030, more than 30% of Japan's population—nearly every third person—will be over 65, but the rate of aging peaked in the mid-2010s and is now beginning to plateau.
  • An aging population presents a market opportunity for companies that can recognize the needs of potential new customers, especially in the technology sector and IT and software industry.
  • The number of employees in Japan who are over 65 rose from 5.7m to 8.7m in 2008-18 and their share in workforce will amount to around 20% by 2030.
  • Up to 80% of Japanese companies in hospitality, nursing and transportation experience severe lack of workers. However, due to the decline in population, Japan finds itself in the unique position where the labor shortage presents a chance for the development of new automating technologies, without the risk of creating huge unemployment.
  • Eliminating the gender employment gap and promoting women to full-time positions can bring Japan a 15% increase in GDP.
  • Added value driven by the 4th Industrial Revolution in Japan can be as high as ¥30trn—in terms of economic impact, essentially another Olympics.
  • The manufacturing sector in Japan has a very high level of automation potential—at 71%, it is 11% higher than that of the US. By 2025, with the use of the internet of things (IoT) and automating technologies, industries such as construction can improve productivity by 20% and manufacturing productivity can grow by up to 2% per year.
  • Japan is lagging in the adoption of digital technologies, but there are still considerable achievements in innovation in Japan, particularly in manufacturing sector.
  • The number of international tourists in Japan increased more than six-fold in 2011-18, making Japan one of the top countries in the hospitality industry globally in just a few years.
  • The size of Japan’s domestic tourism market still dwarfs the inbound at ¥20.5trn compared with ¥4.52trn. The government is aiming to increase annual revenue from international travelers to ¥15trn by 2030.
  • If put together, the opportunities around the silver market, increased productivity, inbound tourism and diversity promotion could bring the national economy to a much larger size than the government's current target of ¥600trn.
Source: ECN

The report concludes that "[d]espite serious challenges, Japan has immense potential for the future. If put together, the opportunities around the silver market, increased productivity and diversity promotion could bring the national economy to a much larger size than the government's current target of ¥600trn. This would require more than new programs by the Cabinet Office new strategies by business, however; a shift in perspective and change of mindset are needed to see the risks as opportunities to be realized by society as a whole."

Is your business planning to establish or expand its operations in Japan in the next decade?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

January 12, 2020

Innovative Startups Pitch at Silicon Valley Funding Summit 2020

Once again, I attended the annual consumer and electronics show in Las Vegas, Nev. Owned and produced by the Consumer Technology Association (CTA)®, a Virginia-based trade organization. CES® is promoted as "the world's largest and most influential tech event." While a separate post will focus on my experience of attending CES 2020, this post addresses an event, "Silicon Valley Funding Summit 2020," I attended on Jan. 6th.

Co-produced by Angel Launch, which connects Silicon Valley, American and foreign financial professionals and investors to global startups and private companies for high-level networking and deal-making to build successful ventures, and ENRICH in the USA, which establishes a network of European research and innovation centers and hubs throughout the United States acting as a central contact point for European research and innovation actors, the Silicon Valley Funding Summit aims to connect accredited investors and corporate partners to global startups. Those startups presenting to a panel of investors and audience come from a variety of sectors including consumer and enterprise apps; devices and platforms; hardware; software; data analytics; robotics; machine learning; smart devices; digital health; fintech; and cybersecurity.

Some of the companies that I found of particular interest include:
  • BARU's mission is to empower the customer you to create a home that fits your unique lifestyle and personality. Our made-to-measure furniture can fit right in. Design every dimension to the inch and preview it in your space with our Augmented Reality app.
  • Brilliant Sole focuses on merging footwear and virtual reality.
  • Calamus Electric Private Limited (Calamus) promotes itself has built the world's first e-bike with an inbuilt TFT touchscreen that interacts with the Ultrabike's advanced features.
  • Sensors provided by Caregiver Smart Solutions track movement and patterns to provide caregivers with some reassurance that things are as they should be, without the use of invasive video cameras or wearable tracking devices.
  • CloudBackend provides a world-wide service for accelerating applications and harvesting data through a distributed cloud with intelligent data management. The platform is designed for smart vehicles, telecom infrastructure, public clouds, on-premise, smart devices in homes and offices, and in between.
  • Cyber Reconnaissance, Inc. (CYR3CON) specializes in combining artificial intelligence with information mined from malicious hacker communities to avoid cyberattacks.
  • Dr. i-Coach® by Eyes4lives is a patented sensor and software package that sits on top of a laptop/monitor and monitors the users blink rate, sitting height, screen distance, screen time and ambient lighting. The product will alert the user if they are in violation of any of the above-mentioned factors and will coach them on developing and maintaining proper sitting and screen use habits.
  • FATRI (Xiamen) Technology Co., Ltd. (FATRI) focuses on the development of new materials, chip design (MEMS Chip & AI Chip), sensors, data acquisition designed assemblies and AI data analysis platforms.
  • Joué makes MIDI instruments for creative musicians. The Joué Board is a MIDI controller to play drums, guitar, keyboard and more.
  • MJN Neuroserveis developed MJN-SERAS, an earpiece that records brain activity from the ear canal. In combination with AI algorithms the device triggers a warning signal minutes before an epileptic seizure occurs and also records it during the onset.
  • UltraUVTech revolutionizes the way consumers disinfect wet and dry surfaces through its reliable ultraviolet sterilizing technology.
The summit presented me with the opportunity of sitting on a panel of accredited investors. The panelists were asked to briefly provide advice to the presenting entrepreneurs and audience members. I recommended that entrepreneurs adopt the mantra "if you do not know your numbers, you do not know your business." Entrepreneurs should know various financial metrics for their startup such as gross gross profit margins; expenses as a percentage of their gross profit; annual operating expenses segmented by sales and marketing, general and administrative (G&A), and research and development (R&D); and cost of revenue (sales).

In addition, entrepreneurs should comprehend eight risk factors that may prevent their startup from becoming a successful (i.e., profitable) venture.

While I found that several companies are developing useful products and services, I was underwhelmed by many of the actual presentations. First, most entrepreneurs did not complete their presentations within the time allowed. Being prepared including practicing the pitch will go a long way in presenting a polished presentation.

I also found many entrepreneurs spent too much time explaining the problem they are trying to solve, but not enough time to thoroughly explain the solution their business is providing to their customer.

And when pitching to prospective investors, a strong presentation should include the "WOW!! Factor" -- why are customers excited to do business with you?

Mike Grigg, who provides soft skills leadership coaching in storytelling, produced the images below on how to improve your presentation skills, which my colleagues and I find useful.


I am grateful for having the opportunity to attend the Silicon Valley Funding Summit 2020. The organizers did a great job in producing an event both entrepreneurs and investors found valuable.

What advice do you have for startup entrepreneurs?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

January 8, 2020

Report Outlines the Prospects for Unrest in Latin America Throughout 2020

"Latin America is by no means a stranger to social unrest and political turmoil. Yet, even by historical standards, 2019 has proved to be an extremely volatile year for the land of the cacerolazo," says a report published by The Economist Intelligence Unit (The EIU). "Governments across the region, irrespective of their ideological leanings, have had to deal with the backlash of a public whose tolerance for the status quo has all but disappeared."

In its report entitled Where next and what next for Latin America? The EIU "outlines the prospects for unrest in Latin America throughout 2020, assessing the stress points that might trigger fresh instability in the year to come, and taking a closer look at countries hit by unrest in 2019 or at risk of unrest in 2020."

Key figures include:
  • Countries across Latin America—from Bolivia to Chile—have been roiled by political turmoil in 2019. Although each episode of social unrest is clearly distinct from the other, the roots of public frustrations across the region lie in dysfunctional political systems and economic malaise.
  • The problems faced by countries across the region are structural and, with a few exceptions, governments lack the fiscal and institutional capacities to sufficiently address citizens concerns. Consequently, Latin America will remain a breeding ground for political unrest.
  • According to the "political instability risk heat map" developed by The EIU, the preponderance of Latin American countries are at "moderate" or "high" risk of facing renewed volatility in 2020.
Source: The EIU
Source: The EIU

The report explains: "To assess the risk of unrest in the region, The Economist Intelligence Unit has produced a political instability heat map, which assesses the key drivers of unrest in the region, and which shows that the country with the greatest number of potential flashpoints in 2020 is Nicaragua (Venezuela was excluded from the sample owing to inadequate data availability), followed by Guatemala, Brazil, Honduras, Chile, Mexico and Paraguay. Uruguay, by some distance, stands out as the country with the fewest potential flashpoints for unrest."

Moreover, "Taking a closer look at the heat map," The EIU considers "the following indicators to be among the most relevant in determining the likelihood of social unrest in the region.
  • "Income inequality. A high level of economic inequality tends to breed political disparity as well, creating more polarized societies and undermining social cohesion. Using our measure of inequality, we find that eight out of the 25 most unequal countries in the world are in Latin America, making any of those countries a prime candidate for inter-class strife.
  • "Adequacy of social insurance. The quality of social protection programs is a key determinant of human capital development and of the standard of living in a country. Although Latin America fares reasonably well on this indicator by emerging-market standards, there are clearly deficiencies in the region's safety nets. Furthermore, an important caveat in the interpretation of this measure is that average household expenditure levels vary by country, limiting comparability.
  • "Government effectiveness. Making progress on "good governance" is something that has eluded Latin America for some time. Many governments struggle with budget under-execution, while existing public services are coming under strain owing to migration and demographic transitions. Haiti, which ranks the lowest in government effectiveness in the region, has clearly struggled to address the concerns of its population, with people repeatedly taking to the streets to call for the resignation of their president, Jovenel Moïse.
  • "Corruption. As public opinion surveys highlight, the vast majority of Latin Americans perceive corruption to be a major problem, owing to its corrosive effect on public trust in institutions and on economic development more broadly. Anti-corruption protests have erupted periodically in countries across the region (in Brazil, Peru and Colombia to name a few), and these could well flare up again.
  • "Youth unemployment. The crisis of youth unemployment is less pronounced in Latin America than in many other parts of the world. Yet there are clearly countries—such as Argentina, Brazil and Uruguay (all of which have youth unemployment rates above 20%)—where labor markets cannot absorb the surplus of young job-seekers, sustaining the risk that a large pool of unemployed youth could catalyze public frustrations.
  • "Change in real per-head income after the commodities boom. Stagnation following the commodities boom (2004-13) has seen a halt in the expansion of the middle class in parts of Latin America, leading to dramatic declines in expectations of intergenerational improvement.
  • "Democratic backsliding. Democracy can have an important impact on political stability. In particular, freedom of expression and an ability to express dissatisfaction through the electoral process help to provide release valves for collective dissent. A regression in democracy could therefore presage civil unrest. Our Democracy Index, an annual report assessing the state of democracy around the world, is based on a broad measure of democracy that encompasses themes such as civil liberties, political culture, functioning of government and political participation."

The report also includes a section where The EIU takes "a closer look at some of the major countries in Latin America, including a number of countries that have struggled with unrest in 2019 and several countries that are in theory at risk of unrest in 2020, to assess what might happen next."

Is the risk of social unrest in Latin America adversely affecting your company's operations or anticipated plans to conduct business in the region?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

January 3, 2020

5G Will Transform the Way People Live, Work, Play and Communicate in Sub-Saharan Africa

According to a report authored by GSMA Intelligence, the research arm of the GSMA, a UK-based trade organization, "The world is on the cusp of the 5G era. By 2020, commercial 5G services will be available in at least 50 countries across Asia, Europe, the Middle East and North America. The 2020s will see more widespread deployment and adoption of the technology around the world, including in Sub-Saharan Africa."

As explained by GSMA Intelligence presented in this website, "Building on insights from a survey of key local stakeholders, including policymakers, mobile operators and equipment vendors, this report establishes the outlook and expectations for the 5G era in Sub-Saharan Africa."

The survey covered six areas: network deployment; spectrum; use cases; business models and financials; policy and regulation; and collaboration and future outlook." Respondents to the survey included:

  • Telecoms regulators from across the region;
  • Mobile operators (group level and local operators) with a combined share of more than 75% of total connections in the region; and
  • Equipment vendors with a combined share of more than 90% of the network infrastructure market in the region.
5G in Sub-Saharan Africa: Lay the Foundations presents the following key findings:

The transition to mobile broadband is underway

"By the end of 2019, there will be more mobile broadband connections (3G and 4G) than 2G connections in Sub-Saharan Africa. This reflects a growing shift from basic voice to data-centric services. Ongoing investments in 3G and 4G networks have taken mobile broadband coverage to around a quarter of the total population, while smartphone adoption has doubled over the last three years and now accounts for two in five mobile connections."

5G will be part of the future digital landscape, but mass adoption is not imminent

"5G in Sub-Saharan Africa is inevitable; it is a natural progression from previous technology generations. However, the 5G era is not imminent in most markets in the region as existing technologies are capable of supporting current use cases and demand for mobile internet connectivity. Around two-thirds of respondents to the survey for this report did not envisage commercial 5G services becoming available in their markets before 2025. That said, the time lag before large-scale 5G deployment could have positive implications for the region: it would allow the technology to mature and be fully tested in other markets. It would also allow economies of scale to be realized in 5G equipment and devices, potentially lowering costs for operators and consumers."

Market readiness is crucial to maximize value in the 5G era

"For all countries in the region, market readiness is necessary to determine the timing for the transition to 5G. This will help maximize value from 5G services for consumers, operators and the wider society. The GSMA 5G Market Readiness Index indicates that some countries are moving quickly towards a state of readiness, with 4G adoption approaching mass market and operators progressing with network modernization initiatives. By 2025, there will be commercial 5G services in at least seven markets, including Kenya, Nigeria and South Africa, with 28 million 5G connections (equivalent to 3% of total mobile connections) between them."

Localized FWA will be a primary 5G use case across Sub-Saharan Africa

"With fixed broadband penetration typically below 2% across the region, 5G fixed wireless access (FWA) will be a primary 5G use case, particularly in the early stages of network deployment and adoption. The cost benefit of addressing the growing demand for enhanced connectivity from households and businesses with FWA – relative to greenfield FTTx deployment – makes it an attractive proposition. However, the FWA opportunity is not universal; rather, it is dependent on local conditions. Localized and targeted deployments, as opposed to ubiquitous rollouts, will be the predominant approach as operators balance the potential cost of requisite cell densification with affordability constraints for many consumers."

The enterprise segment will drive initial 5G uptake in Sub-Saharan Africa

"5G presents an opportunity for operators to better serve the enterprise market. Initial use cases will center on 5G FWA, to address challenges around access, cost and reliability of current connectivity services, such as fixed broadband and satellite. Beyond connectivity, 5G will be a key enabler of the Fourth Industrial Revolution or Industry 4.0 – a time when technology is seamlessly embedded within society and especially in commercial and industrial processes. In Sub-Saharan Africa, 5G can enable new and existing technologies, such as artificial intelligence (AI) and the Internet of Things (IoT), to have a transformative impact on business processes, helping drive productivity and efficiency. A clear, supportive strategy and forward-looking policies to prepare for the 5G era and attract the necessary investment and skills are essential to realizing the aspirations of the Fourth Industrial Revolution, and to fully capture the social and economic benefits for the region."

The consumer segment will be a long-term play

"The consumer segment will be a long-term play as 5G adoption at the early stages of network deployment will be held back by a lack of affordable devices and immersive use cases, such as augmented reality (AR) and virtual reality (VR). Device subsidy will be crucial to 5G adoption in the consumer segment, but initial focus will likely target customer premise equipment (CPE) for FWA to the home, given the predominance of prepaid subscriptions in the mobile segment. In the meantime, therefore, 4G will continue to deliver high-speed mobile broadband, supporting the numerous and increasing connectivity needs of citizens and the economy."

The mobile ecosystem should lay the foundations now

"Ahead of 5G network launches, operators and network equipment vendors in the region need to make plans to prepare existing network infrastructure for 5G, adopt cost-effective infrastructure deployment solutions, and develop a framework to manage the complexity of operating multiple networks (2G, 3G, 4G and 5G) simultaneously. Further next-generation network deployments and the first phases of 5G rollouts will require significant capital investment; mobile operators in the region will invest $60 billion in their networks between 2018 and 2025. A fifth of this will be on 5G infrastructure. Given the growing pressure on revenues and margins, operators, vendors and other ecosystem players will need to explore ways to ease the financial burden."

Policymakers should look to foster a pro-investment environment

"The 2020s will usher in the 5G era in Sub-Saharan Africa; 5G-related activities will become more widespread across the region from mid-way through the decade. Now is the time to begin to put in place the necessary building blocks to facilitate the transition to 5G. Governments and regulators need to consider market structures that foster a pro-investment and pro-innovation environment for the development of the 5G mobile ecosystem. Specifically, regulatory focus should be on four key areas – network deployment, network flexibility, spectrum access and regulatory costs – in order to bring 5G in particular, and next-generation connectivity more generally, to fruition."

During my trips to the region during the past few years, I can attest to the report's assertion that "[d]igital transformation is well underway in Sub-Saharan Africa. This is evidenced by the emergence of new digital services and applications transforming the way people live, work, play and communicate."

What is more, "The emerging digital landscape in Sub-Saharan Africa is shaped by demand- and supply-side factors, each with the potential for significant, long-term impact on the digital economy."

Source: GSMA Intelligence

What services and applications do you think will transform the way people live, work, play and communicate in Sub-Saharan Africa?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.