Burberry's CEO on Turning an Aging British Icon into a Global Luxury Brand
BY ANGELA AHRENDTS
Comments (0) January-February 2013
Photography: Getty Images
The Idea: Before Angela Ahrendts became Burberry’s CEO, licensing threatened to destroy the brand’s unique strengths. The answer? Centralize design and focus on innovating core heritage products.
When I became the CEO of Burberry, in July 2006, luxury was one of the fastest-growing sectors in the world. With its rich history, centered on trench coats that were recognized around the world, the Burberry brand should have had many advantages. But as I watched my top managers arrive for our first strategic planning meeting, something struck me right away. They had flown in from around the world to classic British weather, gray and damp, but not one of these more than 60 people was wearing a Burberry trench coat. I doubt that many of them even owned one. If our top people weren’t buying our products, despite the great discount they could get, how could we expect customers to pay full price for them?
It was a sign of the challenges we faced. Even in a burgeoning global market, Burberry was growing at only 2% a year. The company had an excellent foundation, but it had lost its focus in the process of global expansion. We had 23 licensees around the world, each doing something different. We were selling products such as dog cover-ups and leashes. One of our highest-profile stores, on Bond Street in London, had a whole section of kilts. There’s nothing wrong with any of those products individually, but together they added up to just a lot of stuff—something for everybody, but not much of it exclusive or compelling.
In luxury, ubiquity will kill you—it means you’re not really luxury anymore. And we were becoming ubiquitous. Burberry needed to be more than a beloved old British company. It had to develop into a great global luxury brand while competing against much larger rivals. Among luxury players, Louis Vuitton Moët Hennessy (LVMH) had almost 12 times—and Pinault-Printemps-Redoute (PPR) more than 16 times—Burberry’s revenue. We wanted a share of the disposable income of the world’s most elite buyers—and to win it, we’d have to fight for prime real estate in the world’s most rapidly growing consumer markets. In many ways, it felt like a David-and-Goliath battle.
One “Brand Czar”
On the surface, I might have seemed an unlikely CEO for a company that was considered quintessentially British. I was raised in a small town in Indiana and educated at Ball State University. I was a classic midwesterner—something the Financial Times had fun mocking when I first took the job. But I’d been fortunate enough to work with and learn from some of the most inspirational leaders in the fashion industry, from Paul Charron to Donna Karan. And I had 25 years of experience on my side.
I also clearly had one attribute that made me a good fit: I admire and respect great brands and helped to build some over the years. From Apple to Starbucks, I love the consistency—knowing that anywhere in the world you can depend on having the same experience in the store or being served a latte with the same taste and in the same cup. That’s great branding.
Unfortunately, Burberry didn’t have a lot of that. An experience in any given Burberry store in the world might be very different from the customer’s previous one. As part of my transition, I spent six months working closely with my predecessor, hitting the road to get a sense of Burberry worldwide. In Hong Kong, I was introduced to a design director and her team, who proudly showed me the line they were creating for that market: polo shirts and woven shirts and everything with the famous Burberry check, but not a single coat.
Then we went to America, where I was introduced to another design director and design team. This team was creating outerwear, but at half the price point of that in the UK. Furthermore, the coats were being manufactured in New Jersey. So we were making classic Burberry raincoats that said “Made in the U.S.A.” I later learned that we had outerwear licensees in Italy and Germany making trench coats that were even cheaper than those in the United States.
Great global brands don’t have people all over the world designing and producing all kinds of stuff. It became quite clear that if Burberry was going to be a great, pure, global luxury brand, we had to have one global design director. We had an incredible young designer named Christopher Bailey, with whom I’d worked at Donna Karan and who I knew was a sensational talent. So I introduced him early on as the “brand czar.” I told the team, “Anything that the consumer sees—anywhere in the world—will go through his office. No exceptions.”
viernes, 21 de diciembre de 2012
viernes, 7 de septiembre de 2012
How to Get Feedback When You're the Boss
How to Get Feedback When You're the Boss
by Amy Gallo | 9:55 AM May 15, 2012
Comments (55)
The higher up in the organization you get, the less likely you'll receive constructive feedback on your ideas, performance, or strategy. No one wants to offend the boss, right? But without input, your development will suffer, you may become isolated, and you're likely to miss out on hearing some great ideas. So, what can you do to get people to tell you what you may not want to hear?
What the Experts Say
Most people have good reasons for keeping their opinions from higher ups. "People with formal power can affect our fate in many ways — they can withhold critical resources, they can give us negative evaluations and hold us back from promotions, and they can even potentially fire us or have us fired," says James Detert, associate professor at the Cornell Johnson Graduate School of Management and author of the Harvard Business Review articles "Debunking Four Myths About Employee Silence" and "Why Employees Are Afraid to Speak". The more senior you become, the more likely you are to trigger this fear. "The major reason people don't give the boss feedback is they're worried that the boss will retaliate because they know that most of us have trouble accepting negative feedback," says Linda Hill, the Wallace Brett Donham Professor of Business Administration at Harvard Business School and coauthor of Being the Boss: The 3 Imperatives for Becoming a Great Leader. While you may be tempted to enjoy this deference, the silence will not help you, your organization or your career.
Acknowledge the fear
As the boss, you have to set the stage so people feel comfortable, says Hill. You need to break through their fear. Detert suggests being explicit. Tell them that you know everyone makes mistakes, including you, and that they should call out those errors without feeling embarrassed or threatened. Explain that you need their feedback to learn.
At the same time, you should recognize how hard it might be to hear this tough feedback. "It's human to feel bad when people criticize and no matter how senior you become, you're still human," Hill says. Still, you can't let that anxiety hold you back.
Ask for it, constantly
Ask for feedback on a regular basis, not just at review time. "You need to be the one who is actively collecting and soliciting information all the time," says Hill. You can say something like, "I know that these are the goals that we set together. What can I do to help you achieve those goals?" You shouldn't assume your team members will be upfront the first time you ask. "You have to do it for awhile and then the information will flow and you can ask more pointed questions," says Hill.
Request examples
In the same way that you want to give concrete examples when giving feedback, you should also request them when you are receiving it. When someone tells you, "You run our team meetings really well," or "You don't delegate enough," follow up by asking for an example. This allows you to better understand the feedback and ensures that what you're hearing is true. "I tend to think the more people can back up their assertions and input with concrete examples or numbers, the more it's probably honest," says Detert.
Read between the lines
Of course, you may not get honest feedback all the time. But it's your job to figure out what problems people are trying to help you identify. You may need to triangulate between several points of feedback. Hill suggests, for example, that you ask five or six people the same question. "You're trying to collect the data so you can you go back and put the story together about the impact you're having," she says. Detert agrees about casting a wide net: "If nothing else, it'll help you figure out whether there are gaps and inconsistencies in what you're hearing, and what you might need to do about it."
Act on it
If someone is brave enough to give you input, recognize it. "People hate feeling that speaking up was a complete waste of time," says Detert. "You have to actually thank people for doing it, and other employees have to see those people get promoted rather than fired or shunned." Show everyone that you receive feedback well and can change your behavior as a result. These examples will turn into "urban legends," encouraging more people to give you constructive feedback.
Find a few trusted people
If you suspect that most people in your organization aren't going to be honest with you, or feedback is just not part of the culture, Detert suggests finding one or two people you trust to tell you the truth. It could be someone on your team, a peer, a mentor, or a coach. Whoever it is, be sure he or she has access to the right data and is able to talk to the people who interact with you on a daily basis. Don't just turn to confidants who will tell you what you want to hear.
Start anonymously
It can be hard to get people to open up. One way to get around this is by doing a 360-degree review or using a coach to gather feedback anonymously. But then you should respond to it. According to Hill, if you talk openly about what you've learned it sends a signal that you're open to hearing criticism. "Once you've done that, people are more comfortable telling you to your face," says Hill. She shares the example of Vineet Nayar, the CEO of HCL Technologies, who posted his own 360-degree feedback on the company intranet and encouraged his senior team to do the same. It was a bold move, says Hill, but the result was that people felt much more comfortable giving Nayar feedback directly when they knew he took it seriously.
Principles to Remember
Do:
Always say thank you and explain how you'll respond to the feedback you've heard
Turn to a few people you trust who can tell you what others really think about your performance and ideas
If you think people won't open up, start by gathering feedback anonymously to show them you're receptive
Don't:
Wait for review time to ask for input
Assume you are going to get 100% honest feedback, especially at first
Rely on one source for feedback — triangulate between several points of data
Case Study #1: Find a champion on your staff
Michael Green, the founder and executive director of the Center for Environmental Health, knows that it's tough for his team — 23 full-time employees and another handful of interns — to give him candid feedback. "When I founded the organization 16 years ago, one of my board members told me that I needed to be aware of my privilege and position of power," he says. Since he knows that people take a risk whenever they do give him input, he is sure to respond appropriately. "Whenever possible, you have to do what they ask to prove that you're listening. You need to develop relationships with people so they know they can tell you the truth without getting anyone in trouble," he says.
He also takes every opportunity he can to tell his staff that he's open to feedback. In meetings, he regularly says, "If there's anyone who wants to talk with me about this offline, please do. You can also talk to Charlie about it." Michael relies on Charlie, the organization's associate director, to be candid with him and to serve as a sounding board for the staff. Michael knows that wouldn't work if employees perceived Charlie as "Michael's guy." Rather, the team sees him as an impartial leader who will give Michael their feedback, without naming names, and keep things to himself when it's appropriate. "They trust his judgment to know what to tell me. And I'm sure he doesn't tell me everything," Michael says.
He also says he encourages feedback by giving it. "There's nobody you can't find praise for, even an underperformer," he says. "When they get regular, positive feedback they feel like they are part of a team and they are willing to tell you more."
Case Study #2: Make feedback fun
Sunita Malhotra, the managing director of People Insights, a coaching and consulting firm based in Belgium, has earned the nickname "feedback monster." Thanks to a formative experience in her teens (a friend told her that her tone of voice was too sharp), she now goes out of her way to solicit opinions from colleagues and subordinates. "If someone doesn't tell you, you don't know," she explains. At first, she thought it would be easy. "I just thought people would walk into my office and tell me what they thought," she says. But she discovered that, as a boss seeking feedback, she needed to be quite deliberate. As head of human resources for the European division of a global company overseeing 7,500 people, she made three promises to anyone who joined her team:
She would always give positive and constructive feedback.
She always wanted feedback.
They would all try to have fun.
Sunita also solicited feedback in all her meetings. Whether they were one-on-ones with her 20 direct reports, larger staff meetings, or sessions with internal customers, there were always five minutes set aside on the agenda to gather input. "My aim was to create a feedback culture," she says. And it worked. Eventually, people stopped waiting for the designated time in the meetings and gave her input in real time. For those who were more hesitant, she used humor. Each person on her team was given a set of green, yellow and red cards — to reward or penalize behavior as a referee would in a soccer match. For example, if someone was listening well in a team meeting, a colleague lays a green card on the table and explains why. Similarly, if someone interrupted a co-worker, a third person would call out the behavior with a red card. Sunita made it clear she expected to get as many yellow and red cards as she deserved.
by Amy Gallo | 9:55 AM May 15, 2012
Comments (55)
The higher up in the organization you get, the less likely you'll receive constructive feedback on your ideas, performance, or strategy. No one wants to offend the boss, right? But without input, your development will suffer, you may become isolated, and you're likely to miss out on hearing some great ideas. So, what can you do to get people to tell you what you may not want to hear?
What the Experts Say
Most people have good reasons for keeping their opinions from higher ups. "People with formal power can affect our fate in many ways — they can withhold critical resources, they can give us negative evaluations and hold us back from promotions, and they can even potentially fire us or have us fired," says James Detert, associate professor at the Cornell Johnson Graduate School of Management and author of the Harvard Business Review articles "Debunking Four Myths About Employee Silence" and "Why Employees Are Afraid to Speak". The more senior you become, the more likely you are to trigger this fear. "The major reason people don't give the boss feedback is they're worried that the boss will retaliate because they know that most of us have trouble accepting negative feedback," says Linda Hill, the Wallace Brett Donham Professor of Business Administration at Harvard Business School and coauthor of Being the Boss: The 3 Imperatives for Becoming a Great Leader. While you may be tempted to enjoy this deference, the silence will not help you, your organization or your career.
Acknowledge the fear
As the boss, you have to set the stage so people feel comfortable, says Hill. You need to break through their fear. Detert suggests being explicit. Tell them that you know everyone makes mistakes, including you, and that they should call out those errors without feeling embarrassed or threatened. Explain that you need their feedback to learn.
At the same time, you should recognize how hard it might be to hear this tough feedback. "It's human to feel bad when people criticize and no matter how senior you become, you're still human," Hill says. Still, you can't let that anxiety hold you back.
Ask for it, constantly
Ask for feedback on a regular basis, not just at review time. "You need to be the one who is actively collecting and soliciting information all the time," says Hill. You can say something like, "I know that these are the goals that we set together. What can I do to help you achieve those goals?" You shouldn't assume your team members will be upfront the first time you ask. "You have to do it for awhile and then the information will flow and you can ask more pointed questions," says Hill.
Request examples
In the same way that you want to give concrete examples when giving feedback, you should also request them when you are receiving it. When someone tells you, "You run our team meetings really well," or "You don't delegate enough," follow up by asking for an example. This allows you to better understand the feedback and ensures that what you're hearing is true. "I tend to think the more people can back up their assertions and input with concrete examples or numbers, the more it's probably honest," says Detert.
Read between the lines
Of course, you may not get honest feedback all the time. But it's your job to figure out what problems people are trying to help you identify. You may need to triangulate between several points of feedback. Hill suggests, for example, that you ask five or six people the same question. "You're trying to collect the data so you can you go back and put the story together about the impact you're having," she says. Detert agrees about casting a wide net: "If nothing else, it'll help you figure out whether there are gaps and inconsistencies in what you're hearing, and what you might need to do about it."
Act on it
If someone is brave enough to give you input, recognize it. "People hate feeling that speaking up was a complete waste of time," says Detert. "You have to actually thank people for doing it, and other employees have to see those people get promoted rather than fired or shunned." Show everyone that you receive feedback well and can change your behavior as a result. These examples will turn into "urban legends," encouraging more people to give you constructive feedback.
Find a few trusted people
If you suspect that most people in your organization aren't going to be honest with you, or feedback is just not part of the culture, Detert suggests finding one or two people you trust to tell you the truth. It could be someone on your team, a peer, a mentor, or a coach. Whoever it is, be sure he or she has access to the right data and is able to talk to the people who interact with you on a daily basis. Don't just turn to confidants who will tell you what you want to hear.
Start anonymously
It can be hard to get people to open up. One way to get around this is by doing a 360-degree review or using a coach to gather feedback anonymously. But then you should respond to it. According to Hill, if you talk openly about what you've learned it sends a signal that you're open to hearing criticism. "Once you've done that, people are more comfortable telling you to your face," says Hill. She shares the example of Vineet Nayar, the CEO of HCL Technologies, who posted his own 360-degree feedback on the company intranet and encouraged his senior team to do the same. It was a bold move, says Hill, but the result was that people felt much more comfortable giving Nayar feedback directly when they knew he took it seriously.
Principles to Remember
Do:
Always say thank you and explain how you'll respond to the feedback you've heard
Turn to a few people you trust who can tell you what others really think about your performance and ideas
If you think people won't open up, start by gathering feedback anonymously to show them you're receptive
Don't:
Wait for review time to ask for input
Assume you are going to get 100% honest feedback, especially at first
Rely on one source for feedback — triangulate between several points of data
Case Study #1: Find a champion on your staff
Michael Green, the founder and executive director of the Center for Environmental Health, knows that it's tough for his team — 23 full-time employees and another handful of interns — to give him candid feedback. "When I founded the organization 16 years ago, one of my board members told me that I needed to be aware of my privilege and position of power," he says. Since he knows that people take a risk whenever they do give him input, he is sure to respond appropriately. "Whenever possible, you have to do what they ask to prove that you're listening. You need to develop relationships with people so they know they can tell you the truth without getting anyone in trouble," he says.
He also takes every opportunity he can to tell his staff that he's open to feedback. In meetings, he regularly says, "If there's anyone who wants to talk with me about this offline, please do. You can also talk to Charlie about it." Michael relies on Charlie, the organization's associate director, to be candid with him and to serve as a sounding board for the staff. Michael knows that wouldn't work if employees perceived Charlie as "Michael's guy." Rather, the team sees him as an impartial leader who will give Michael their feedback, without naming names, and keep things to himself when it's appropriate. "They trust his judgment to know what to tell me. And I'm sure he doesn't tell me everything," Michael says.
He also says he encourages feedback by giving it. "There's nobody you can't find praise for, even an underperformer," he says. "When they get regular, positive feedback they feel like they are part of a team and they are willing to tell you more."
Case Study #2: Make feedback fun
Sunita Malhotra, the managing director of People Insights, a coaching and consulting firm based in Belgium, has earned the nickname "feedback monster." Thanks to a formative experience in her teens (a friend told her that her tone of voice was too sharp), she now goes out of her way to solicit opinions from colleagues and subordinates. "If someone doesn't tell you, you don't know," she explains. At first, she thought it would be easy. "I just thought people would walk into my office and tell me what they thought," she says. But she discovered that, as a boss seeking feedback, she needed to be quite deliberate. As head of human resources for the European division of a global company overseeing 7,500 people, she made three promises to anyone who joined her team:
She would always give positive and constructive feedback.
She always wanted feedback.
They would all try to have fun.
Sunita also solicited feedback in all her meetings. Whether they were one-on-ones with her 20 direct reports, larger staff meetings, or sessions with internal customers, there were always five minutes set aside on the agenda to gather input. "My aim was to create a feedback culture," she says. And it worked. Eventually, people stopped waiting for the designated time in the meetings and gave her input in real time. For those who were more hesitant, she used humor. Each person on her team was given a set of green, yellow and red cards — to reward or penalize behavior as a referee would in a soccer match. For example, if someone was listening well in a team meeting, a colleague lays a green card on the table and explains why. Similarly, if someone interrupted a co-worker, a third person would call out the behavior with a red card. Sunita made it clear she expected to get as many yellow and red cards as she deserved.
miércoles, 16 de mayo de 2012
Why Strategies Go off the Rails
Why Strategies Go off the Rails
12:03 PM Tuesday May 15, 2012
Have you ever been in a situation where everyone seemingly agrees on a particular strategy, but somehow it never happens?
See if you identify with this example: A technology firm — with a number of different product areas, geographic units, and service functions — was figuring out how to integrate services for their largest global customers. After extensive planning, the senior management team decided to assign experienced executives to a dozen of these customers, and give them the authority to manage the accounts end-to-end. What they failed to address was that many of the best sales executives couldn't be released to take on these roles; the financial systems couldn't provide the right information on a customer-by-customer basis; compensation plans didn't support integrated selling; and research programs remained geared towards new technologies instead of integrated solutions. So while everyone agreed that an integrated approach was needed, very little change actually occurred.
The fascinating thing about this case, and many others like it, is that nobody took accountability for the lack of strategic execution. In other words, everyone felt individually successful, even though the company experienced a collective failure.
I recently saw this dynamic play out at a meeting of a large consumer products firm, where the top 100 managers were anonymously surveyed with two questions: How aligned are you with the company's ambitious change strategy; and how aligned do you think your peers are with the strategy? Over 90% of the managers said that they, personally, were aligned with the strategy — but 50% felt that their peers had doubts. In other words they were saying, "I'm fully on board, but many of the other people here are not."
Obviously something about these answers does not make sense. So to understand them, let me suggest three underlying psychological factors that often cause strategies to derail:
Passive aggressive disagreement: It's unlikely that everyone in an organization will agree with all of the nuances of a major strategic shift. Disagreement can be based on logic, experience, or (perhaps unconsciously) discomfort with change or loss of power. In any case, if the culture of the company does not encourage dissent, the resistance will go underground. People will voice their support but not actively do anything to make it happen. For example in our technology case above, the newly appointed account executives found that the finance function, while not standing in the way of the integrated customer approach, also was not doing anything to help.
Fear of confrontation: In most nice organizations where teamwork is encouraged, managers hesitate to confront colleagues who are not fully engaging in the strategic shift. They may not want to make waves or fear harming the relationship. So instead they try to work around it and end up sub-optimizing the strategy. Again, in our case, the account executives and their sales leaders didn't want to push too hard on finance for fear that it could make things worse for them later by damaging relationships.
Lack of persistent top-down demands: If the successful implementation of a strategy requires change across a number of functions, then a senior leader needs to get everyone on board. Without this explicit expectation — reinforced again and again — people will avoid taking action even though they will continue to smile, nod, and profess support. Many senior leaders are hesitant to push too hard for fear that they will have to take drastic action, like firing someone. So instead they just assume that the pieces will fall into place.
Obviously it's not easy to change these dynamics, especially when they are often invisible and rooted in long-standing cultural patterns. A good place to start is to point them out and provoke some dialogue, which was the purpose of that survey used at the consumer products meeting. Most people do not want to be part of a collective failure — so holding up a mirror can be a powerful way of helping managers realize when they are headed in the wrong direction.
What's your experience with the challenges of strategy execution?
by Ron Ashkenas
HBR
12:03 PM Tuesday May 15, 2012
Have you ever been in a situation where everyone seemingly agrees on a particular strategy, but somehow it never happens?
See if you identify with this example: A technology firm — with a number of different product areas, geographic units, and service functions — was figuring out how to integrate services for their largest global customers. After extensive planning, the senior management team decided to assign experienced executives to a dozen of these customers, and give them the authority to manage the accounts end-to-end. What they failed to address was that many of the best sales executives couldn't be released to take on these roles; the financial systems couldn't provide the right information on a customer-by-customer basis; compensation plans didn't support integrated selling; and research programs remained geared towards new technologies instead of integrated solutions. So while everyone agreed that an integrated approach was needed, very little change actually occurred.
The fascinating thing about this case, and many others like it, is that nobody took accountability for the lack of strategic execution. In other words, everyone felt individually successful, even though the company experienced a collective failure.
I recently saw this dynamic play out at a meeting of a large consumer products firm, where the top 100 managers were anonymously surveyed with two questions: How aligned are you with the company's ambitious change strategy; and how aligned do you think your peers are with the strategy? Over 90% of the managers said that they, personally, were aligned with the strategy — but 50% felt that their peers had doubts. In other words they were saying, "I'm fully on board, but many of the other people here are not."
Obviously something about these answers does not make sense. So to understand them, let me suggest three underlying psychological factors that often cause strategies to derail:
Passive aggressive disagreement: It's unlikely that everyone in an organization will agree with all of the nuances of a major strategic shift. Disagreement can be based on logic, experience, or (perhaps unconsciously) discomfort with change or loss of power. In any case, if the culture of the company does not encourage dissent, the resistance will go underground. People will voice their support but not actively do anything to make it happen. For example in our technology case above, the newly appointed account executives found that the finance function, while not standing in the way of the integrated customer approach, also was not doing anything to help.
Fear of confrontation: In most nice organizations where teamwork is encouraged, managers hesitate to confront colleagues who are not fully engaging in the strategic shift. They may not want to make waves or fear harming the relationship. So instead they try to work around it and end up sub-optimizing the strategy. Again, in our case, the account executives and their sales leaders didn't want to push too hard on finance for fear that it could make things worse for them later by damaging relationships.
Lack of persistent top-down demands: If the successful implementation of a strategy requires change across a number of functions, then a senior leader needs to get everyone on board. Without this explicit expectation — reinforced again and again — people will avoid taking action even though they will continue to smile, nod, and profess support. Many senior leaders are hesitant to push too hard for fear that they will have to take drastic action, like firing someone. So instead they just assume that the pieces will fall into place.
Obviously it's not easy to change these dynamics, especially when they are often invisible and rooted in long-standing cultural patterns. A good place to start is to point them out and provoke some dialogue, which was the purpose of that survey used at the consumer products meeting. Most people do not want to be part of a collective failure — so holding up a mirror can be a powerful way of helping managers realize when they are headed in the wrong direction.
What's your experience with the challenges of strategy execution?
by Ron Ashkenas
HBR
jueves, 1 de marzo de 2012
Chinas Share of Reserves in U.S. Dollar Dives
BEIJING—China has made a sharp shift away from purchases of U.S. securities, slashing the dollar's share of the country's foreign reserves in what may signal a change in strategy for managing the massive cash pile, Dow Jones calculations indicate.
The portion of China's reserves parked in the U.S. appears to have sunk to a decade-low 54% as of end-June from 65% in 2010 and 74% in 2006, according to the Dow Jones calculations. The calculations are based on data on China's holdings of U.S. securities from an annual U.S. Treasury survey, and China's own data on the value of its foreign-exchange reserves.
Reuters
Related Reading
Heard on the Street: China Shifts Out of Dollars, World Doesn't End
U.S. Treasurys Slip
The exact allocation of China's $3.2 trillion reserves—by far the world's biggest war chest—has always been a mystery. But the Treasury survey provides the best guide as to how much the State Administration of Foreign Exchange— the organization charged with managing those reserves—has invested in dollar assets.
Given the size of China's reserves, and the growing global importance of the world's second-biggest economy, Beijing's allocation of its reserves is both a key political issue and a potentially huge factor for foreign-exchange and sovereign-debt markets.
The U.S. data show China's holdings of U.S securities edged up $115 billion on-year to $1.726 trillion at the end of June, but this equates to a much smaller share of the total, as China's reserves were growing rapidly during the period. The purchases of U.S. securities equaled just 15% of the growth in China's reserves, a substantial fall from 45% in 2010 and an average of 63% over the last five years.
Calculating the dollar's share in the allocation of flows into China's reserves is complicated by the impact of currency movements on the value of China's reserves. But even accounting for valuation effects, the downshift in dollar purchases appears pronounced.
The new numbers lend credibility to hints from Chinese and European government officials over the last two years that Beijing is ramping up its purchases of European sovereign debt. In February, speaking at the EU-China summit, Premier Wen Jiabao said, "Europe is a main investment destination for China to diversify its foreign-exchange reserves."
As the euro-zone crisis rumbles on, it suggests that funds from China's reserves could be a critical factor in keeping a lid on rising bond yields in the debt-ridden euro-zone periphery, and in funding Europe's bailout facilities.
Analysts caution that the U.S. data need to be taken with a grain of salt. The Treasury International Capital system collects data on millions of records to calculate foreign holdings of U.S. securities. But correcting for biases in the data, in particular correctly identifying country ownership of securities held in custody in third countries, is difficult. Typically the result of this bias is to underestimate China's holdings of Treasurys.
Corrections & Amplifications:
U.S. data show China's holdings of U.S securities edged up $115 billion on-year to $1.726 trillion at the end of June. An earlier version of this article incorrectly said China's holdings of U.S securities totaled $1.726 billion at the end of June.
By Tom Orlik. WSJ 1/03/12
The portion of China's reserves parked in the U.S. appears to have sunk to a decade-low 54% as of end-June from 65% in 2010 and 74% in 2006, according to the Dow Jones calculations. The calculations are based on data on China's holdings of U.S. securities from an annual U.S. Treasury survey, and China's own data on the value of its foreign-exchange reserves.
Reuters
Related Reading
Heard on the Street: China Shifts Out of Dollars, World Doesn't End
U.S. Treasurys Slip
The exact allocation of China's $3.2 trillion reserves—by far the world's biggest war chest—has always been a mystery. But the Treasury survey provides the best guide as to how much the State Administration of Foreign Exchange— the organization charged with managing those reserves—has invested in dollar assets.
Given the size of China's reserves, and the growing global importance of the world's second-biggest economy, Beijing's allocation of its reserves is both a key political issue and a potentially huge factor for foreign-exchange and sovereign-debt markets.
The U.S. data show China's holdings of U.S securities edged up $115 billion on-year to $1.726 trillion at the end of June, but this equates to a much smaller share of the total, as China's reserves were growing rapidly during the period. The purchases of U.S. securities equaled just 15% of the growth in China's reserves, a substantial fall from 45% in 2010 and an average of 63% over the last five years.
Calculating the dollar's share in the allocation of flows into China's reserves is complicated by the impact of currency movements on the value of China's reserves. But even accounting for valuation effects, the downshift in dollar purchases appears pronounced.
The new numbers lend credibility to hints from Chinese and European government officials over the last two years that Beijing is ramping up its purchases of European sovereign debt. In February, speaking at the EU-China summit, Premier Wen Jiabao said, "Europe is a main investment destination for China to diversify its foreign-exchange reserves."
As the euro-zone crisis rumbles on, it suggests that funds from China's reserves could be a critical factor in keeping a lid on rising bond yields in the debt-ridden euro-zone periphery, and in funding Europe's bailout facilities.
Analysts caution that the U.S. data need to be taken with a grain of salt. The Treasury International Capital system collects data on millions of records to calculate foreign holdings of U.S. securities. But correcting for biases in the data, in particular correctly identifying country ownership of securities held in custody in third countries, is difficult. Typically the result of this bias is to underestimate China's holdings of Treasurys.
Corrections & Amplifications:
U.S. data show China's holdings of U.S securities edged up $115 billion on-year to $1.726 trillion at the end of June. An earlier version of this article incorrectly said China's holdings of U.S securities totaled $1.726 billion at the end of June.
By Tom Orlik. WSJ 1/03/12
sábado, 25 de febrero de 2012
Nine Things Successful People Do Differently
Why have you been so successful in reaching some of your goals, but not others? If you aren't sure, you are far from alone in your confusion. It turns out that even brilliant, highly accomplished people are pretty lousy when it comes to understanding why they succeed or fail. The intuitive answer — that you are born predisposed to certain talents and lacking in others — is really just one small piece of the puzzle. In fact, decades of research on achievement suggests that successful people reach their goals not simply because of who they are, but more often because of what they do.
1. Get specific. When you set yourself a goal, try to be as specific as possible. "Lose 5 pounds" is a better goal than "lose some weight," because it gives you a clear idea of what success looks like. Knowing exactly what you want to achieve keeps you motivated until you get there. Also, think about the specific actions that need to be taken to reach your goal. Just promising you'll "eat less" or "sleep more" is too vague — be clear and precise. "I'll be in bed by 10pm on weeknights" leaves no room for doubt about what you need to do, and whether or not you've actually done it.
2. Seize the moment to act on your goals. Given how busy most of us are, and how many goals we are juggling at once, it's not surprising that we routinely miss opportunities to act on a goal because we simply fail to notice them. Did you really have no time to work out today? No chance at any point to return that phone call? Achieving your goal means grabbing hold of these opportunities before they slip through your fingers.
To seize the moment, decide when and where you will take each action you want to take, in advance. Again, be as specific as possible (e.g., "If it's Monday, Wednesday, or Friday, I'll work out for 30 minutes before work.") Studies show that this kind of planning will help your brain to detect and seize the opportunity when it arises, increasing your chances of success by roughly 300%.
3. Know exactly how far you have left to go. Achieving any goal also requires honest and regular monitoring of your progress — if not by others, then by you yourself. If you don't know how well you are doing, you can't adjust your behavior or your strategies accordingly. Check your progress frequently — weekly, or even daily, depending on the goal.
4. Be a realistic optimist. When you are setting a goal, by all means engage in lots of positive thinking about how likely you are to achieve it. Believing in your ability to succeed is enormously helpful for creating and sustaining your motivation. But whatever you do, don't underestimate how difficult it will be to reach your goal. Most goals worth achieving require time, planning, effort, and persistence. Studies show that thinking things will come to you easily and effortlessly leaves you ill-prepared for the journey ahead, and significantly increases the odds of failure.
5. Focus on getting better, rather than being good. Believing you have the ability to reach your goals is important, but so is believing you can get the ability. Many of us believe that our intelligence, our personality, and our physical aptitudes are fixed — that no matter what we do, we won't improve. As a result, we focus on goals that are all about proving ourselves, rather than developing and acquiring new skills.
Fortunately, decades of research suggest that the belief in fixed ability is completely wrong — abilities of all kinds are profoundly malleable. Embracing the fact that you can change will allow you to make better choices, and reach your fullest potential. People whose goals are about getting better, rather than being good, take difficulty in stride, and appreciate the journey as much as the destination.
6. Have grit. Grit is a willingness to commit to long-term goals, and to persist in the face of difficulty. Studies show that gritty people obtain more education in their lifetime, and earn higher college GPAs. Grit predicts which cadets will stick out their first grueling year at West Point. In fact, grit even predicts which round contestants will make it to at the Scripps National Spelling Bee.
The good news is, if you aren't particularly gritty now, there is something you can do about it. People who lack grit more often than not believe that they just don't have the innate abilities successful people have. If that describes your own thinking .... well, there's no way to put this nicely: you are wrong. As I mentioned earlier, effort, planning, persistence, and good strategies are what it really takes to succeed. Embracing this knowledge will not only help you see yourself and your goals more accurately, but also do wonders for your grit.
7. Build your willpower muscle. Your self-control "muscle" is just like the other muscles in your body — when it doesn't get much exercise, it becomes weaker over time. But when you give it regular workouts by putting it to good use, it will grow stronger and stronger, and better able to help you successfully reach your goals.
To build willpower, take on a challenge that requires you to do something you'd honestly rather not do. Give up high-fat snacks, do 100 sit-ups a day, stand up straight when you catch yourself slouching, try to learn a new skill. When you find yourself wanting to give in, give up, or just not bother — don't. Start with just one activity, and make a plan for how you will deal with troubles when they occur ("If I have a craving for a snack, I will eat one piece of fresh or three pieces of dried fruit.") It will be hard in the beginning, but it will get easier, and that's the whole point. As your strength grows, you can take on more challenges and step-up your self-control workout.
8. Don't tempt fate. No matter how strong your willpower muscle becomes, it's important to always respect the fact that it is limited, and if you overtax it you will temporarily run out of steam. Don't try to take on two challenging tasks at once, if you can help it (like quitting smoking and dieting at the same time). And don't put yourself in harm's way — many people are overly-confident in their ability to resist temptation, and as a result they put themselves in situations where temptations abound. Successful people know not to make reaching a goal harder than it already is.
9. Focus on what you will do, not what you won't do. Do you want to successfully lose weight, quit smoking, or put a lid on your bad temper? Then plan how you will replace bad habits with good ones, rather than focusing only on the bad habits themselves. Research on thought suppression (e.g., "Don't think about white bears!") has shown that trying to avoid a thought makes it even more active in your mind. The same holds true when it comes to behavior — by trying not to engage in a bad habit, our habits get strengthened rather than broken.
If you want to change your ways, ask yourself, What will I do instead? For example, if you are trying to gain control of your temper and stop flying off the handle, you might make a plan like "If I am starting to feel angry, then I will take three deep breaths to calm down." By using deep breathing as a replacement for giving in to your anger, your bad habit will get worn away over time until it disappears completely.
It is my hope that, after reading about the nine things successful people do differently, you have gained some insight into all the things you have been doing right all along. Even more important, I hope are able to identify the mistakes that have derailed you, and use that knowledge to your advantage from now on. Remember, you don't need to become a different person to become a more successful one. It's never what you are, but what you do.
Heidi Grant Halvorson, Ph.D. is a motivational psychologist, and author of the new book Succeed: How We Can Reach Our Goals (Hudson Street Press, 2011). She is also an expert blogger on motivation and leadership for Fast Company and Psychology Today. Her personal blog, The Science of Success, can be found at www.heidigranthalvorson.com. Follow her on Twitter @hghalvorson
1. Get specific. When you set yourself a goal, try to be as specific as possible. "Lose 5 pounds" is a better goal than "lose some weight," because it gives you a clear idea of what success looks like. Knowing exactly what you want to achieve keeps you motivated until you get there. Also, think about the specific actions that need to be taken to reach your goal. Just promising you'll "eat less" or "sleep more" is too vague — be clear and precise. "I'll be in bed by 10pm on weeknights" leaves no room for doubt about what you need to do, and whether or not you've actually done it.
2. Seize the moment to act on your goals. Given how busy most of us are, and how many goals we are juggling at once, it's not surprising that we routinely miss opportunities to act on a goal because we simply fail to notice them. Did you really have no time to work out today? No chance at any point to return that phone call? Achieving your goal means grabbing hold of these opportunities before they slip through your fingers.
To seize the moment, decide when and where you will take each action you want to take, in advance. Again, be as specific as possible (e.g., "If it's Monday, Wednesday, or Friday, I'll work out for 30 minutes before work.") Studies show that this kind of planning will help your brain to detect and seize the opportunity when it arises, increasing your chances of success by roughly 300%.
3. Know exactly how far you have left to go. Achieving any goal also requires honest and regular monitoring of your progress — if not by others, then by you yourself. If you don't know how well you are doing, you can't adjust your behavior or your strategies accordingly. Check your progress frequently — weekly, or even daily, depending on the goal.
4. Be a realistic optimist. When you are setting a goal, by all means engage in lots of positive thinking about how likely you are to achieve it. Believing in your ability to succeed is enormously helpful for creating and sustaining your motivation. But whatever you do, don't underestimate how difficult it will be to reach your goal. Most goals worth achieving require time, planning, effort, and persistence. Studies show that thinking things will come to you easily and effortlessly leaves you ill-prepared for the journey ahead, and significantly increases the odds of failure.
5. Focus on getting better, rather than being good. Believing you have the ability to reach your goals is important, but so is believing you can get the ability. Many of us believe that our intelligence, our personality, and our physical aptitudes are fixed — that no matter what we do, we won't improve. As a result, we focus on goals that are all about proving ourselves, rather than developing and acquiring new skills.
Fortunately, decades of research suggest that the belief in fixed ability is completely wrong — abilities of all kinds are profoundly malleable. Embracing the fact that you can change will allow you to make better choices, and reach your fullest potential. People whose goals are about getting better, rather than being good, take difficulty in stride, and appreciate the journey as much as the destination.
6. Have grit. Grit is a willingness to commit to long-term goals, and to persist in the face of difficulty. Studies show that gritty people obtain more education in their lifetime, and earn higher college GPAs. Grit predicts which cadets will stick out their first grueling year at West Point. In fact, grit even predicts which round contestants will make it to at the Scripps National Spelling Bee.
The good news is, if you aren't particularly gritty now, there is something you can do about it. People who lack grit more often than not believe that they just don't have the innate abilities successful people have. If that describes your own thinking .... well, there's no way to put this nicely: you are wrong. As I mentioned earlier, effort, planning, persistence, and good strategies are what it really takes to succeed. Embracing this knowledge will not only help you see yourself and your goals more accurately, but also do wonders for your grit.
7. Build your willpower muscle. Your self-control "muscle" is just like the other muscles in your body — when it doesn't get much exercise, it becomes weaker over time. But when you give it regular workouts by putting it to good use, it will grow stronger and stronger, and better able to help you successfully reach your goals.
To build willpower, take on a challenge that requires you to do something you'd honestly rather not do. Give up high-fat snacks, do 100 sit-ups a day, stand up straight when you catch yourself slouching, try to learn a new skill. When you find yourself wanting to give in, give up, or just not bother — don't. Start with just one activity, and make a plan for how you will deal with troubles when they occur ("If I have a craving for a snack, I will eat one piece of fresh or three pieces of dried fruit.") It will be hard in the beginning, but it will get easier, and that's the whole point. As your strength grows, you can take on more challenges and step-up your self-control workout.
8. Don't tempt fate. No matter how strong your willpower muscle becomes, it's important to always respect the fact that it is limited, and if you overtax it you will temporarily run out of steam. Don't try to take on two challenging tasks at once, if you can help it (like quitting smoking and dieting at the same time). And don't put yourself in harm's way — many people are overly-confident in their ability to resist temptation, and as a result they put themselves in situations where temptations abound. Successful people know not to make reaching a goal harder than it already is.
9. Focus on what you will do, not what you won't do. Do you want to successfully lose weight, quit smoking, or put a lid on your bad temper? Then plan how you will replace bad habits with good ones, rather than focusing only on the bad habits themselves. Research on thought suppression (e.g., "Don't think about white bears!") has shown that trying to avoid a thought makes it even more active in your mind. The same holds true when it comes to behavior — by trying not to engage in a bad habit, our habits get strengthened rather than broken.
If you want to change your ways, ask yourself, What will I do instead? For example, if you are trying to gain control of your temper and stop flying off the handle, you might make a plan like "If I am starting to feel angry, then I will take three deep breaths to calm down." By using deep breathing as a replacement for giving in to your anger, your bad habit will get worn away over time until it disappears completely.
It is my hope that, after reading about the nine things successful people do differently, you have gained some insight into all the things you have been doing right all along. Even more important, I hope are able to identify the mistakes that have derailed you, and use that knowledge to your advantage from now on. Remember, you don't need to become a different person to become a more successful one. It's never what you are, but what you do.
Heidi Grant Halvorson, Ph.D. is a motivational psychologist, and author of the new book Succeed: How We Can Reach Our Goals (Hudson Street Press, 2011). She is also an expert blogger on motivation and leadership for Fast Company and Psychology Today. Her personal blog, The Science of Success, can be found at www.heidigranthalvorson.com. Follow her on Twitter @hghalvorson
Why We Dont Always Tell the Truth
When I was growing up, one of the principles in our house was that we had to tell the truth, no matter how painful it might be. Lying, we were taught, wasn't something you could get away with. Like Pinocchio's nose, it would be apparent to others.
Children of course need clear rules to learn the difference between right and wrong. However as we get older, the truth becomes more nuanced — and there are times when a little white lie or the absence of some key facts might be appropriate. The problem is that all of us have different standards for when, why, and how we shade the truth. These divergent 'shades of gray' then cause miscommunication, breakdowns of trust, and other dysfunctional behaviors. That's why, despite the inclusion of "integrity" in almost every value statement, some form of lying is common in most companies.
From my experience, there are three fundamental concerns that cause people to shade the truth, either consciously or not. Being aware of these "lying triggers" can sometimes help to improve communication and reduce the feelings of mistrust.
Impact of the truth on yourself: It's human nature to want people to think well of us, particularly those who have influence over our lives and careers. At the same time we all make mistakes, so we create justifications and excuses — many of which are at best half-truths. I recall a manager whose key project was behind schedule, largely due to his lack of discipline and follow-up. Yet when asked why the project was lagging, he blamed a snowstorm (from six months previously) for slowing down the work.
Impact of the truth on others: One way to gain others' approval is to avoid pointing out things that may damage their self-image. As a result, many people withhold some or all of their true thoughts about others. For example, a senior executive complained to me recently that one of his managers never gave her people negative criticism during performance reviews. To justify that behavior, she said that it was better to reinforce positive behaviors rather than point out weaknesses — a strategy that also happened to make her popular with her team. The senior executive however was convinced that her drive to be well liked was doing the team a disservice, because they didn't know what they could do to improve.
Impact of the truth on business success: To be successful almost every organization needs to sell — be it a product, a service, a story, or a promise. But much of that selling is done without truthful disclosure of what it will take to fulfill the sale. That's why product salespeople will often take an order without revealing to the customer that there may be supply problems, or why a CEO will tout the benefits of an acquisition without mentioning the challenges of integration. Showing customers or partners what's truly behind the curtain could undermine credibility and threaten the deal. The wiser course in many cases is to limit the truth and figure out how to "deliver" later.
It's easy to be judgmental about all these situations and to insist on absolute truth at all times. But people don't work that way, and neither do organizations. As managers, the best we can do is to be more aware of why we avoid or shade the truth — and make sure that it's an appropriate time to do so.
By Ron Ashkenas. HBR.org
Children of course need clear rules to learn the difference between right and wrong. However as we get older, the truth becomes more nuanced — and there are times when a little white lie or the absence of some key facts might be appropriate. The problem is that all of us have different standards for when, why, and how we shade the truth. These divergent 'shades of gray' then cause miscommunication, breakdowns of trust, and other dysfunctional behaviors. That's why, despite the inclusion of "integrity" in almost every value statement, some form of lying is common in most companies.
From my experience, there are three fundamental concerns that cause people to shade the truth, either consciously or not. Being aware of these "lying triggers" can sometimes help to improve communication and reduce the feelings of mistrust.
Impact of the truth on yourself: It's human nature to want people to think well of us, particularly those who have influence over our lives and careers. At the same time we all make mistakes, so we create justifications and excuses — many of which are at best half-truths. I recall a manager whose key project was behind schedule, largely due to his lack of discipline and follow-up. Yet when asked why the project was lagging, he blamed a snowstorm (from six months previously) for slowing down the work.
Impact of the truth on others: One way to gain others' approval is to avoid pointing out things that may damage their self-image. As a result, many people withhold some or all of their true thoughts about others. For example, a senior executive complained to me recently that one of his managers never gave her people negative criticism during performance reviews. To justify that behavior, she said that it was better to reinforce positive behaviors rather than point out weaknesses — a strategy that also happened to make her popular with her team. The senior executive however was convinced that her drive to be well liked was doing the team a disservice, because they didn't know what they could do to improve.
Impact of the truth on business success: To be successful almost every organization needs to sell — be it a product, a service, a story, or a promise. But much of that selling is done without truthful disclosure of what it will take to fulfill the sale. That's why product salespeople will often take an order without revealing to the customer that there may be supply problems, or why a CEO will tout the benefits of an acquisition without mentioning the challenges of integration. Showing customers or partners what's truly behind the curtain could undermine credibility and threaten the deal. The wiser course in many cases is to limit the truth and figure out how to "deliver" later.
It's easy to be judgmental about all these situations and to insist on absolute truth at all times. But people don't work that way, and neither do organizations. As managers, the best we can do is to be more aware of why we avoid or shade the truth — and make sure that it's an appropriate time to do so.
By Ron Ashkenas. HBR.org
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