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Until recently most incumbent industrial companies didn’t use highly advanced software in their products. But now the sector’s leaders have begun applying generative AI and machine learning to all kinds of data—including text, 3D images, video, and sound—to create complex, innovative designs and solve customer problems with unprecedented speed. Success involves much more than installing computers in products, however. It requires fusion strategies, which join what manufacturers do best—creating physical products—with what digital firms do best: mining giant data sets for critical insights. There are four kinds of fusion strategies: Fusion products, like smart glass, are designed from scratch to collect and leverage information on product use in real time. Fusion services, like Rolls-Royce’s service for increasing the fuel efficiency of aircraft, deliver immediate customized recommendations from AI. Fusion systems, like Honeywell’s for building management, integrate machines from multiple suppliers in ways that enhance them all. And fusion solutions, such as Deere’s for increasing yields for farmers, combine products, services, and systems with partner companies’ innovations in ways that greatly improve customers’ performance. [ABSTRACT FROM AUTHOR]

The article discusses the need for companies to adopt a new approach to investing during election years due to increased policy uncertainty. The authors explain that in typical election cycles, uncertainty decreases after the results are known, allowing managers to pursue low-commitment projects. However, they argue that the 2024 election year is different due to factors such as the post-pandemic economic recovery, rising debt-to-GDP ratios, and political gridlock. Managers are advised to consider factors such as monetary policy uncertainty, interest rates, government shutdowns, dependence on government policies, equity valuation, and green initiatives when making investment decisions. The authors emphasize the need for managers to be prepared for continued uncertainty after the election. [Extracted from the article]

This article explores the phenomenon of companies that continue to be successful despite reporting losses. The authors argue that traditional accounting principles are inadequate for assessing the true value of modern companies, which heavily invest in intangible assets such as research and development, technology, and brand building. They propose a method for recalculating financial statements to account for intangible investments, which reveals that many companies classified as loss-making are actually profitable. The authors emphasize the importance of accurately assessing a company's profitability and encourage managers to focus on long-term value creation rather than short-term accounting profits. [Extracted from the article]

According to a research article published in the Harvard Business Review, US firms are holding large amounts of cash, totaling $6.9 trillion, which is larger than the GDP of all but two countries. The article explores various reasons for this, including the need for investment and operational flexibility, managerial opportunism, and multinational tax savings. The research also introduces a new explanation called "precautionary cash holdings," suggesting that companies hold cash as a form of insurance against sudden economic shocks that could lead to failure. The study emphasizes that for small and vulnerable firms, cash holdings should be seen as an operating asset rather than a surplus asset. The article concludes by highlighting the importance of boards and managers assessing their circumstances and communicating with shareholders to explain the insurance benefit of cash holdings. [Extracted from the article]

We’ve all seen the signs in front of McDonald’s announcing “Over X Billion Served” and have watched the number rise over the years. But tracking how many burgers are sold every day, month, or year is a relic of the past. Today ask: Do we know where each consumer buys her burgers? At what time? What does she drink with it? What does she do before or after buying a burger? How can we satisfy more of her needs so that she keeps coming back? Datagraphs capture this information, helping to reshape competition in every sector. Leaders must invest in upgrading their data architecture to enable a real-time, comprehensive view of how consumers interact with their products and services so that they can develop unique ways to solve customer problems. [ABSTRACT FROM AUTHOR]

Innovations created for large, low-resource, emerging markets have a powerful potential to transform and even disrupt business models in the United States and other first world countries. Innovation for poor [...]

PepsiCo is among the few global, established companies that have delivered superior financial performance while meeting the needs of all stakeholders. It has always invested for the long term and delivered results in the short term. The layer that author Indra Nooyi added, first as SVP for corporate strategy and then as CEO, was a focus on sustainability—defined here as satisfying multiple stakeholder interests to ensure the long-term viability of a company. Called Performance with Purpose (PwP), it is based on four pillars: delivering superior financial returns (financial sustainability); transforming the product portfolio by making more-healthful, more-nutritious foods and beverages while reducing the sugar, salt, and fat in PepsiCo products (human sustainability); limiting environmental impact by conserving water and reducing the company’s carbon footprint and plastic waste (environmental sustainability); and lifting people up by offering new types of support to women and families inside the company and in the communities it serves (talent sustainability). [ABSTRACT FROM AUTHOR]