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CEO Daily Brief – Jan. 14, 2011

Developing Countries Projected to See Higher Growth than Higher Income Countries: World Bank U.S. CEOs are well aware of the …

Developing Countries Projected to See Higher Growth than Higher Income Countries: World Bank

U.S. CEOs are well aware of the importance of international trade. But the increasing trend is that developing economies are having higher growth rates than higher income countries.

Based on studies by the World Bank, developing economies will increase by at least 6% during 2011. Forbes says that is over twice the growth projected for higher-income economies.

Growth is projected to slow during 2011 in developing economies because there are limits on capacity. In addition, “necessary restructuring and fiscal consolidation” will slow growth in high-income countries during 2011, according to Forbes’ Eva Pereira.

She points out that just nine countries got most of the “capital inflows” during last year. These are: China, India, Brazil, Indonesia, Malaysia, Thailand, Turkey, South Africa and Russia. Pereira adds that the nine countries saw “the most dramatic GDP growth in 2010, expanding by an average of 8.4%.”

The study by the World Bank suggests that leaders need to ask if “sufficient capital controls are being implemented to prevent overheating of their markets,” Pereira added.

The World Bank’s report “stresses” that these economies “enact policies that will promote fiscal sustainability, the re-employment of displaced workers, and the completed re-regulation of the financial sector,” according to Forbes.

The World Bank predicts that in the United States “domestic demand growth” will likely continue during 2011. GDP increases will be disappointing because of relatively high unemployment and the “unwinding of the housing bubble.” U.S. GDP is projected to increase 2.8% during 2011, with a slight increase, to 2.9%, during 2012. The World Bank suggests the United States:

  • Consider “long-term growth policies that would correct structural problems.”
  • Avoid investing “money into old industries.”
  • Enact reforms that promote “more responsible lending and risk-sharing.”
  • Regulate the “shadow banking system (hedge funds, OTC derivative markets).”

China’s GDP growth is expected to slow to 8.7% down from the 10% it saw during 2010, according to Forbes. As wages increase in China, jobs that require low-skilled labor will be outsourced to Africa. In addition, India’s GDP growth is expected to slow this year to 8.4% from 2010’s 9.5% because of constraints on capacity, says Forbes.

GDP in Europe is predicted to increase 1.4% during 2011, with a 2% increase predicted for 2012. “Modest growth” is predicted in some of the larger economies in the European Union.

GDP growth is predicted to come out at about 4% in Latin American & the Caribbean, with Argentina having the largest growth during 2011. The World Bank recommends this region promote “counter-cyclical fiscal tightening to reduce inflationary pressures and to provide a buffer to protect their economies from the effects of future downturns.”

In the Middle East and North Africa, growth in GDP is expected to come in at 4.3% during 2011. Egypt is expected to lead the region during 2011.

GDP growth for Sub-Saharan Africa is predicted to increase to 5.3% during 2011. The World Bank says that Nigeria will lead the region in growth. The force behind the growth is greater demand for commodities, according to the World Bank. Some of the economies are expanding into new industries, with the telecom and banking sectors as examples. The World Bank says that international capital is being increasingly sent to Sub-Saharan Africa.

It would be a serious mistake for CEOs to forget these developing regions when looking for markets for growth.

For more about the World Bank report, as reported by Forbes, please click here.


Asking Someone in a Polite, Public Way Can Work Marvelously

CEOs are well aware of the power of negotiating when trying to get employees, partners or customers into doing something. But business consultant Joseph Grenny offers a new way to get things done. He has noticed that people often do something just because they are asked to do so. For example, Bill Gates asked other wealthy people to give away most of their fortunes while they are still alive. He made a list on which he would include the names of the wealthy donors if they agreed to his proposal. The list would be released to the public. It worked. It illustrates the power of a “polite, public invitation,” Grenny said.

“A polite and public invitation transforms already-formidable social influence into a tsunami-like propulsion to commit,” he explained.

In addition, how someone makes the public invitation has an impact. Asking “honestly and gracefully” can work better than other approaches.

Grenny explains that human beings are “social animals.” That means “we want to fit in, be included, be well-thought-of, and stay connected,” according to Grenny. “When someone makes a request, even if we ultimately refuse it, we automatically feel obligated to consider it.”

Granted, sometimes it won’t work. But the message to chief executives, and the employees who work for them, is that this direct and positive approach is worth trying. For more from Bloomberg Businessweek about the power of asking, please click here.


Steps to Become a ‘Great Boss’

In a recent blog post on the Harvard Business Review site, Linda A. Hill, a professor of business administration at Harvard, and Kent Lineback, a former manager and an executive in business and government, ask if “Are you the boss you need to be?” It’s a powerful question.

They explain that most managers can “grow and develop to a certain point” and then the growth stops. They get to something the authors call a “plateau of good enough." They have become comfortable on how to do their jobs. But they are just comfortable rather than having competence.

This is marked by them asking themselves, “Am I good enough?" That is not the right question, say the authors. Instead, it should be, “Am I as good as I should be and want to be?"

Turning into a “great boss” takes many years “of learning and steady personal growth.” Learning often comes from personal experiences, they say.

Bosses require benchmarks from which they can measure themselves. The authors have come up with "3 Imperatives." These are: manage yourself, manage your network, and manage your team.

“The 3 Imperatives are the heart of management and leadership, an action-oriented framework that encompass everything essential to being a great boss,” the authors say.

Turning into a great boss requires constant self-assessment. That means great bosses need to admit and learn from mistakes, and the ability to look for and appreciate feedback, say the authors.

Their suggestions are just not suited for middle-level management. Higher-level managers need to ask themselves the same questions.

For more about the skills required to become a great boss, as reported by The Harvard Business Review, please click here.

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