The growth in the sustainable-building movement overall has been swift and also appears to be near a tipping point. In a 2012 Turner Construction survey of 718 U.S. real estate owners, developers and tenants, for example, 90% reported being committed to environmentally sustainable practices, and more than 50% were “extremely” or “very” committed to green principles. Another straw in the wind: a 2013 McGraw-Hill Construction global report, which found that 51% of architects, engineers, contractors, consultants and building owners surveyed in 62 countries say it’s likely that more than 60% of their work will be “green” by 2015.

And it’s not all about a hopeful future. Last year, for example, more than 13,500 commercial buildings won certification to meet the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) standards in the U.S. Another 30,000 applied, and LEED now has spread to 139 countries. This maturing of green building is particularly visible in American cities, which are developing innovative regulations to drive positive outcomes.

Even without new laws, however, forward-looking companies are finding options — such as the use of energy service companies, green leasing arrangements and affordable new financing arrangements for solar and other renewables.  There is also a “doing well by doing good” aspect to it all. Participants are finding that beyond “eco correctness,” adding sustainable features reduces operating costs and can also raise property values and the rents landlords can charge because of perceived benefits that tenants value. And while payback periods still can be long, innovative financing methods are increasingly bubbling up that could improve this critical measure of the return on investment.

The bottom line is that, over a short period, green building has been transformed from a feel-good exercise to an impending baseline for all construction. In an effort to understand this mushrooming movement, Knowledge@Wharton has collaborated with Wharton’s Initiative for Global Environmental Leadership (IGEL) to produce a special report, titled “The Rapid Rise of Green Building,” which is available for downloading here.

Pandit and his business partner, Hari Aiyar, are buying a 50% stake in a subsidiary of JM. This entity will be applying for the banking license. The two will also pick up a 3% stake in the group’s listed company. They will be paying $10 million for the stake and another $100 million for expansion of the business. Pandit will be the non-executive chairman of the proposed bank.

In addition, Pandit and his partner have been authorized by the JM Financial board “to purchase shares up to the amount prescribed by the [Reserve Bank of India] in this entity,” which clearly puts the two in the driver’s seat as far as the proposed bank is concerned. “I continue to believe in the long-term growth prospects of India,” Pandit said in a statement. According to JM Financial Group chairman Nimesh Kampani, Pandit will help bring to the new venture both global best practices and reach. Following the news, the JM shares reached a 52-week high on the Bombay Stock Exchange.

Meanwhile, Ajay Piramal has taken a 10% stake in Chennai-based Shriram Transport Finance. He acquired the shares from U.S.-based private equity firm TPG Capital in a deal valued at $300 million. Both Shriram and Piramal have officially said that there is no specific understanding on a banking license. But Shriram has already decided to make an application. Observers predict that things will start happening if Shriram’s application is cleared by the Reserve Bank of India. According to a report in The Times of India: “Both [Shriram and Piramal] are planning to apply for new bank permits. The probability of getting at least one license is comparatively higher. Once the outcome is clear, the nature of the relationship will undergo significant changes.”

Between the two, Shriram is more likely to get the license. It has been operating as a non-banking financial company since 1974. Piramal has been principally in pharmaceuticals. But he banked $3.7 billion when he sold his company to U.S. drug-maker Abbott Laboratories in 2010. Since then, he has become an investor in companies such as Vodafone India. That was a strategic investment; in Shriram, he is expected to be more hands on.

Other contenders for bank licenses are also readying their plans. Although observers initially expected there to be more than 100 applicants, that number is now settling down to less than two dozen. The chances are that only six to eight will get new licenses.

“To begin with, we have launched [M-Pesa] in the states of West Bengal, Bihar and Jharkhand,” says Suresh Sethi, business head for M-Pesa at Vodafone India. “A significant part of the population [of these states] migrates in search of livelihood and is still underbanked or unbanked. Our idea is to study their usage pattern, look at how customers adopt [M-Pesa], make it a success here, and then launch the service pan-India.”

To use the M-Pesa service, Vodafone customers need to visit an M-Pesa agent — at present, there are more than 8,300 specially-trained authorized agents — fill out the requisite form, submit proof of identity and address, and deposit a minimum amount to open their M-Pesa accounts. “The MCSL mobile wallet gets activated immediately and the customer can carry out a variety of transactions, such as deposit cash, transfer money, recharge mobiles and pay utility bills,” says Rajiv Sabharwal, executive director at ICICI Bank. Customers pay a minimum of $4, of which $2 is deducted as a one-time account activation fee. The remaining amount is credited to the customer’s account.

According to the “2012 Mobile Money Adoption Survey” by GSMA, a consortium of mobile operators, there are more than 150 mobile banking services across 72 countries and around 30 million active mobile money accounts in the world. The survey reports that in 2012 alone, 41 new mobile banking services were launched. In places like Kenya, Madagascar, Uganda and Tanzania, there are more mobile money accounts than traditional bank accounts. In Kenya, the total value of mobile money transactions is equivalent to 60% of the nation’s GDP.

The benefits of mobile money services in an infrastructure-constrained country such as India are immense. But can Vodafone replicate M-Pesa’s success in India? “M-Pesa’s deployment has been very successful in Kenya…. It’s a very simplistic model. [But], India is strongly governed by the financial regulator. We can therefore only issue a semi-closed wallet,” says Sethi. (Semi-closed wallets are payment instruments that are redeemable at a group of clearly identified merchant locations/establishments, which contract specifically with the issuer to accept the payment instrument. These instruments do not permit cash withdrawal or redemption by the holder.)

Sethi, however, points out that there has been progress on this front. “For instance, in December 2012, the Reserve Bank of India indicated that the Aadhaar [a unique identification number issued by the government] can be taken as a valid proof of both identity and address. So far, the [know your customer] norms has been the biggest challenge. Aadhaar can certainly tip the scales.”

Pointing to other mobile wallet services in India — Bharti Airtel’s Airtel Money and Idea Cellular’s mobile banking service with Axis Bank — Abhishek Chauhan, senior consultant and lead for mobile wireless, ICT practice at Frost & Sullivan, notes: “A mobile phone is the first multimedia device for many rural users. Moreover, India is one of those countries where banking penetration is very limited (less than 10% of the overall population) as compared to the mobile phone penetration. Service providers have begun to realize the significance and potential of these services and several have already started mobile wallet/banking services.”

According to M.S. Sriram, visiting faculty at the Centre for Public Policy at the Indian Institute of Management-Bangalore, mobile is a very powerful tool in financial inclusion as it serves as a channel for the poor to complete financial transactions. “It acts as the point-of-sale device, the cost of which is borne by the poor,” Sriram says. “However, it is still worth it because the financial transactions operate on a marginal cost.” He predicts that the mobile sector will become even more powerful if a significant part of the transactions are settled in cashless form.

Meanwhile, despite the immense opportunity in this space, not all mobile money ventures in India have found success. The Green Mobile Money Transfer, launched by PayMate, Corporation Bank and Tata Indicom in 2009, is one such example. “One reason why it didn’t really take off was the lag in opening a bank account,” says Ajay Adiseshann, founder and managing director of PayMate India. “We have drawn significant learnings from that experience and launched a similar service with a different approach in application.” The company recently launched a money transfer service in collaboration with Muthoot Finance, a gold financing firm in India. “Customers now no longer need to wait to open a bank account before transferring money, or form long queues outside financial institutions. Only the recipient needs to have an account,” says Adiseshann.

According to the “State of the Industry: Results from the 2012 Global Mobile Money Adoption Survey,” conducted by the group Mobile Money for the Unbanked, demographics and socio-economic forces have an impact on mobile money services, but regulation seems to be the only external factor that can keep a service from succeeding.

The dozen large global European and U.S. retailers that have signed on so far account for nearly 1,500 of Bangladesh’s 5,000 garment units. Large retailers like Walmart (which has already blacklisted close to 250 factories it found unsafe) and Gap — both of which source from that country — have stated they will develop their own factory safety plans.

 According to Janice Bellace, Wharton professor of legal studies and business ethics, multiple safety agreements could prove difficult to implement. Edwin Keh, a lecturer in Wharton’s operations and information management department, adds that retailers should slow down their business operations in Bangladesh and more thoroughly study the problems that industries there face. 

Bangladesh is the world’s second largest maker of outsourced garments after China, and its $20 billion garment industry accounts for four-fifths of its total exports. Yet, its four million garment workers earn an average $38 monthly and work in mostly unsafe buildings under deplorable conditions. Government fire safety inspectors recently determined that 943 of the 3,197 factories they visited are risky or substandard. 

Six months before the Rana Plaza tragedy, the International Labor Rights Forum had tried to persuade Western retailers to sign a fire and building safety agreement covering their outsourced factories. PVH, which owns the Calvin Klein and Tommy Hilfiger brands, and Tchibo of Germany signed at the time, but other retailers shied away. In recent days, many others have signed on, including H&M of Sweden, Marks & Spencer, Primark and Tesco of the U.K., Spain’s El Corte Ingles and Italy’s Benetton.

Under the legally enforceable agreement, retailers will finance independent factory safety inspections and mandatory repairs and renovations, make reports public, allow workers a say in safety conditions and stop sourcing from those factories that do not meet specifications.

Walmart’s safety plan, as described in an article in The Wall Street Journal, is one that “is billed as a commitment, but [that] is different from the legally-binding pact meant to prevent disasters” like last month’s building collapse. Wal-Mart’s approach, according to the article, includes hiring an outside auditor to inspect 279 Bangladesh factories and publish its findings by June 1. If violations are found, Walmart said “it will require factory owners to make necessary renovations or risk being removed from its list of authorized factories.” 

Split in the Ranks 

Some other U.S. retailers, including Sears, Macy’s and J.C. Penney, prefer their own safety plans or are undecided about an industry-wide agreement. The National Retail Federation, a trade group based in Washington, D.C., discussed a possible accord among its North American member retailers, according to a Reuters report.

 Multiple agreements would be “a major mistake,” according to Bellace. Small garment firms supply a significant number of retailers and would find it difficult to cope with many different agreements, she says. She advises retailers to form a consortium, create monitoring mechanisms, and hire and train inspectors. She doubts if many companies would have the resources of a large retailer to participate in factory safety agreements. PVH has agreed to contribute $2.5 million for factory safety improvements under the new plan, while Gap has separately promised $22 million for factory improvements.

 “The pact will have little impact unless a substantial percentage of retailers and brands sign on,” Bellace says. “Otherwise, the small garment companies will simply do business with those that are the easiest on them, [as in] not requiring much, and doing ineffective monitoring” or none at all. Scott Nova, executive director of the Washington, D.C.-based Workers Rights Consortium, a labor rights monitoring group backing the agreement, disagrees. “If you have a program on the ground with competent inspectors, it is absolutely possible,” he told Knowledge@Wharton Today. 

A Train Wreck Years in the Making 

Keh, who earlier headed Walmart Global Procurement, likens the Bangladesh tragedy to “a slow moving train wreck that has been years in the making.” His snapshot of the country’s problems: It is poor and agrarian, with underdeveloped infrastructure, an overstretched power grid and an unhelpful legal structure. Fire codes, building safety and working condition rules are inadequately addressed and not always enforced. Corruption is another factor. 

Bangladesh’s problems with factory safety may be the “unintended consequence of good intentions,” says Keh. Its apparel industry grew “too fast for its own good” as the European Union granted Bangladesh favorable duties for its exports. Its low wage levels lured U.S. brands, and rising wages in China helped it get even bigger volumes “as manufacturers chased the lowest needle,” he adds. 

Keh labels the latest safety agreements “stopgap” and calls for “a more complete code of conduct” for companies doing business in Bangladesh. He advises Western companies to slow down business volumes with Bangladesh to “a sensible level,” while they undertake a full assessment of the most serious issues. 

Bellace says the International Labor Organization can help set standards in Bangladesh’s garment industry, and employers could demand minimum standards and rigorous inspections. Labor unions have already helped regulate this “difficult-to-regulate industry.” She recalls the 1911 fire at Manhattan’s Triangle Shirtwaist Factory that killed 146 workers, mostly Jewish and Italian immigrant women. The outrage that followed led to a push for new legislation from the International Ladies Garment Workers’ Union.

Karen A. Campbell is a senior economist at the World Economic Forum and a research fellow at the Wharton Risk Management and Decision Processes Center. Her team at the Forum — the risk response network — produces the annual global risk report, now in its eighth year. The Forum also gauges global confidence on a quarterly basis and constructs an Index of Global Confidence. Below is Campbell’s analysis of the latest changes in the Index.  

The World Economic Forum’s Global Confidence Index rose to 0.48 in the second quarter from 0.43 in the previous quarter. Although this is a significant improvement over the previous quarter, it is still just below neutral to positive territory (a reading equal to or above 0.5). Confidence on the negative side indicates that there is still a perception that the global economy faces significant risks in the next 12 months as evidenced by the increases in the perception of the likelihood of a major disruption in three of the five risk categories this quarter. And indeed, it seems that there is daily news of slowing economies, geopolitical conflicts and cyber attacks. 

Despite the seemingly dire news, the upward trend in the Confidence Index gives an indication that some of the uncertainties surrounding the risks are becoming clearer. For example, uncertainties surrounding the outcome and impact of the sequester battle in the U.S. have largely been resolved. The bailouts in the Eurozone continue to pose serious threats to the economy, but these too are more identifiable versus jittery speculations. Another indication of this: The VIX volatility index (also known as the “fear index”) is near its lowest level in five years (the low was reached on March 29th, 2013).   

Four years after the financial crisis and recession, the changed environment that is emerging is perhaps becoming better understood. There is a greater appreciation for the interconnections of risks, which not only helps individuals and businesses manage these risks, but also reveals where new opportunities for strategic investment might be afforded. Furthermore, there is a growing sense that we are finally learning to harness the flood of information that ushered in the information age. We can thus reap greater productivity and development benefits from the digital revolution that aren’t yet fully captured in our current GDP numbers. A look at Google trends of the phrase “Big Data” shows the number of searches skyrocketing after a small dip in December 2012, but the trend really started steepening in late 2011. The highest search volume, which is set to 100%, was hit in April.  Similarly, interest in the term “crowdsourcing” has been increasing since 2006, with the trend sharply rising in mid-2008.  

While the information age will bring new risks, it also offers many new ways to deal with risks — from climate change with better energy efficient technologies, to income disparities through new mobile financial products that can provide greater financial access to millions still in poverty. It is also allowing many people to collaborate on finding solutions. Thus while the public sector is bogged down with legacy costs of the industrial age and geopolitical issues that continue to pose threats, the private sector is finding ways to partner on solving problems. (Note that the two risk categories that decreased in likelihood of disruption this quarter were social risks and environmental risks.) 

A Factiva search of all news articles mentioning the word “entrepreneurial” shows that the average number of mentions per year from 2008 to 2012 was 51,013. Yet, in just the five months of this year, there have already been 42,648 articles mentioning “entrepreneurial,” or 84% of the average annual total over the past five years. This is almost to the level of mentions for all of 2007. 

On the policy front, in Japan the structural reforms and determined monetary policy to end the third largest economy’s chronic deflation should give a boost to the global economy, particularly if new trade deals are forged that lower tariff barriers. There is also the enormous potential of younger populations in the emerging economies. Many have weathered the crisis and recession relatively better than the developed world, and their leaders are now looking to capitalize on these strengths through prudent governance strategies. The energy boon of shale gas for developed countries as well as increased energy generation from renewable sources in many developing countries is another potential boost to the engine of global growth. 

Lastly, a look at the trend for “job interview” search interest may be offering another hint at the confidence reading. While search interest is seasonal, peaking in the spring and ranking lowest in December, this past December was the highest low since 2006. April 2013 search interest is at 81 — above where it was in April 2007 (77) and near its May 2007 peak (82).   

Too be sure, many of the traditional macroeconomic indicators are still in the unhealthy range (e.g., high unemployment, high debt-to-GDP ratios, slow GDP growth rates, historically low interest rates), which means the potential negative impacts to the global economy are still weighing on confidence. Yet the upward movement in the index suggests that we may be gaining some traction on reducing uncertainties by finding the growth opportunities for strategic investments, which are now coming into focus.

A note by Economic Laws Practice (ELP), a Mumbai-based law firm, points out that “examining the existence of a virtual [permanent establishment] in the case of websites … has always been a challenge. The experts and courts have generally linked this to a tangible form, which is generally the server or the hardware, where these websites are hosted.”

But the respite for these firms may be short-lived if the tax department appeals to a higher court and gets a ruling in its favor.

The specific case involves Google Ireland Ltd, Overture Services Inc. U.S.A (a Yahoo company), and their Kolkata-based client, Right Florists Pvt. Ltd, for the financial year 2004-2005. Right Florists used advertising on the search engines of Google and Yahoo to generate business and paid Rs. 3.04 million ($67,650 at the average exchange rate of Rs. 45 to a dollar in 2004-2005) for the service. It did not withhold tax on that payment.

At the core of the dispute are differing interpretations of tax laws, the double tax avoidance agreement that India has with the U.S. and Ireland, and the Organisation for Economic Co-operation and Development’s model tax convention on income and capital.

According to India’s tax department, Right Florists should have withheld tax on the payment, and since it didn’t, the company was not entitled to claim a deduction for advertising expenditures from its income. Right Florists contended that it was not required to withhold tax as neither Google nor Yahoo have a fixed place of operation in India and therefore, their income was not subject to tax in the country. The tax department did not agree with this reasoning; it maintained that the Indian company should have sought the opinion of the tax department before remitting the payment.

The commissioner of income tax in charge of appeals ruled in favor of Right Florists. The tax department then approached the Kolkata bench of the Income Tax Appellate Tribunal. The tribunal upheld the earlier ruling. In its order, the tribunal said: “The receipts in respect of online advertising on Google and Yahoo cannot be brought to tax in India under the provisions of the Income Tax Act, as also under the provisions of the India-U.S. and India-Ireland tax treaty.” The tribunal also noted that the tax department had not brought anything on record, either at the assessment stage or even before the hearing, to suggest that Google or Yahoo had a permanent establishment in India. The body added that the servers on which the advertisements were hosted were not located in India and presence in India through a website cannot be said to constitute a permanent establishment.

According to the tribunal’s order: “There is nothing on record to demonstrate or suggest that the online advertising revenues generated in India were supported by, serviced by or connected with any entity based in India. It is only elementary that when the recipient of income does not have the primary tax liability in respect of an income, the payer cannot have vicarious tax withholding liability either.”

The tribunal also stated that the payment for online advertising cannot be taxed as a technical service, as the reading of law requires human interface in a technical service. The display of online advertisements on a search engine results page is determined by algorithms — there is no human intervention and so in that sense, it is not a technical service.

But what if a foreign company that provided a service had an Indian subsidiary, like in the instance of Google? “No double tax avoidance treaty that India has signed with other countries states that mere presence of a subsidiary of a foreign company in India is equivalent to having a permanent establishment in [the country],” says Pranay Bhatia, a partner at ELP. Further, if retroactive amendments are brought by the government, they cannot override existing bilateral treaties and the income cannot be attributed to the Indian subsidiaries of these online search companies without there being a permanent establishment in India, he adds.

While the tax tribunal’s order provides relief for advertisers on websites that have no permanent establishment in India, Bhatia cautions that the tax department could upend the issue once again through amendments to the Income Tax Act of 1965.

The article notes that white Americans tend to get the edge in seeking certain jobs by accessing social networks that black Americans are not part of. Disturbing as this trend is, it stems from referrals that may seem innocuous to the people making them, say Wharton professors Janice Bellace and Katherine L. Milkman.

One stark fact: The U.S. civilian unemployment rate as of April 2013 is 6.7% among whites and 13.2% among blacks, according to the U.S. Department of Labor. Even as the economy improves, African American workers continue to be worse off than the country as a whole, writes Rutgers professor Nancy DiTomaso in the Times. She sees the culprit as favoritism with a strong racial component, arguing that whites are more likely to help other whites and that the social connections that could give someone an “in” to good, high-paying professional jobs are concentrated among whites. DiTomaso bases her findings on interviews she conducted with candidates for 1,463 jobs.

“Most Americans do not think of themselves as living in segregated communities, but they do,” says Bellace, a Wharton professor of legal studies and business ethics. She notes that much of this segregation resulted from zoning laws dating to the early 20th century that sought to keep suburbs free of the diverse mix of residences, commerce and people found in cities. “The result was diverse cities — in terms of race, ethnicity and household income — surrounded by white suburbs with income homogeneity,” she says. That housing pattern persists today, in part because public transportation in the suburbs is poor, she adds.

Bellace notes that similar forces have contributed to social networks that unwittingly worsen opportunities for black workers. Today’s college students know that the best way to land a coveted job is to obtain an unpaid internship, and the best route to doing that is to know someone. “White, upper middle class students are much more likely to be included in the social circles that will help them,” she says.

How Bias Hurts Businesses

Businesses hurt themselves with favoritism or discrimination in hiring, notes Milkman. When company leadership does not hire the best-qualified candidates because they fail to recruit minorities, they hurt themselves by not getting the best talent and fail to reach their “full potential,” she adds. “Teams that lack a diversity of perspectives also tend to be less creative,” she says, citing academic research on the subject.

Companies could overcome those problems in many ways, according to Milkman. Managers could be “more systematic about highlighting some of the uglier implications of what most employees view as a good deed — helping a friend make a connection.” She also calls for a “crackdown” on nepotism, which she describes as “an extreme form of the type of social networking that can harm minorities.”

For Chennai-based Vortex Engineering, this makes for a huge business opportunity. Backed by investors like Tata Capital, Aavishkaar, Ventureast, Oasis and IFC, Vortex, with its portfolio of innovative automated teller machines (ATMs), is all set to aid banks in reaching out to unbanked and under-banked regions.

Vortex’s Gramateller ATM, for instance, can run on solar power, has a built-in uninterrupted power supply (UPS), doesn’t need air-conditioning, prints receipts in regional languages, is designed to work in extreme temperatures and can operate through biometric authentication. Its Ecoteller model is a low-cost, low-power-consuming machine.

“Conventional ATMs are designed [for] a developed-world scenario — they require air-conditioning and consume 1,500 to 2,000 watts of power. It is an unviable and expensive proposition to install them in rural or semi-urban areas [in India] where the transaction amounts are low and operational costs are high. The people in these areas, therefore, end up traveling 15 to 30 miles to access banking services,” says V. Vijay Babu, CEO of Vortex. According to Babu, the overall cost (installation, operations, etc.) of Vortex ATMs works out to 35% to 50% less than conventional ATMs, which typically cost around US$6,000.

Vortex currently has more than 800 ATMs deployed in the country. Of these, over 300 are solar. “We have orders to set up 9,000 ATMs in the next two years. We opened our second manufacturing facility in January this year, upgrading our capacity from 100 ATMs to 900 ATMs per month. We closed last fiscal [year] with a turnover of US$2 million and are targeting US$7 million this year,” adds Babu. The company also has been exporting its machines to SAARC (South Asian Association for Regional Cooperation) nations and a few African countries over the past six months.

Babu’s optimism is rooted in pure numbers. “Though India has seen a four-fold increase in the number of ATMs in the past four years — from 25,000 in January 2008 to 100,000 in December 2012 — [the country's] ATM industry is largely underdeveloped. It is also the fastest growing ATM market in world … expected to touch 250,000 by 2015.”

Other players, too, are busy creating a product portfolio to grab the opportunity. For instance, Georgia-based NCR Corporation has rolled-out a host of new ATMs with features including solar power, biometric readers and a text-to-speech engine that provides detailed instructions for the visually challenged user. Ashok Shankar, solutions deployment manager for NCR India, notes: “The market dynamics have changed significantly in the last year.… As part of the new announcement by the ministry of finance, PSU [public sector undertaking] banks will roll out over 60,000 ATMs in rural India by 2014. Our new ATMs particularly address the challenges that banks could face in rural India.”

The opportunity comes with its set of challenges, though. “Unless financial literacy is in place, chances of people adopting these modes of technology seem bleak. RBI is taking proactive steps in this direction, which will hopefully address the behavioral and psychological barriers that people have,” says Bharat M., research analyst, business and financial services at Frost & Sullivan.

According to Babu of Vortex, loading cash in ATMs that are geographically dispersed in semi-urban and rural areas is a huge logistical challenge. But he believes that it is a short-term concern. “As the ATM density increases, this problem will get addressed automatically.”

For more from this interview with professor Herring, see:

Big Banks Keep Watering Down Global Reserve Rules

The Global Bank Regulatory System Remains Crippled

According to the Times, big-data analytics promises to find hidden jewels like 26-year-old Jade Dominguez, an “average” high school student who did not attend college but taught himself computer programming. Dominguez was discovered by Gild, a San Francisco-based startup that is among a growing number of companies harnessing multiple data sources, including social networks, to automate parts of the hiring process and spot the right candidates. Gild claims it has developed a “technology that finds the people out there [and] tells you who’s good (and at what) and how to engage them.”

Gild crunches thousands of bits of information around 300 larger variables, including the web sites a person frequents, the language he or she uses to describe technology, the skills reported on LinkedIn and projects worked on, among other criteria, according to the Times article. Other firms that have developed technology to spot talent through social networks include TalentBin and Entelo of San Francisco, and RemarkableHire of McLean, Va.

Algorithmic hiring may be an innovative way to help companies hire faster and better for certain positions, but is it more than a passing technological fad? “This kind of hiring may be on the rise in jobs where the skills needed are clearly tied to performance,” says Wharton management professor Nancy Rothbard. “This means that the performance metrics also need to be clear and tangible. However, [algorithmic hiring] may be difficult to get right in the many jobs where there is less clarity” regarding metrics.

With such hiring techniques, companies could end up shifting the emphasis disproportionately towards social traits and away from the tried-and-tested attributes of good resumes — strong academic careers, demonstrated skill sets, etc. Rothbard suggests ways to get around those obstacles. “At the end of the day, getting the algorithm to reflect the desired attributes of the company is going to matter a lot with this technique,” she says. “Having checks and balances in the system is important. Moreover, with this type of an approach, experimentation, testing and follow up measurement are likely to matter a lot.”

In the Times article, Vivienne Ming, chief scientist at Gild, noted that talented people are ignored, misjudged or fall through the cracks all the time. The “traditional markers” people use for hiring “can be wrong, profoundly wrong,” and big-data technology can spot “wasted talent” and eliminate human bias, she said. Ming should know: Born male, she noticed how people began treating her differently after her gender change — in both good and negative ways. According to Ming, using algorithmic hiring is a way to “let the data speak for itself.”

According to Wharton post-doctoral fellow Jessica Kennedy, one possible explanation might be women’s perceptions about the ethical compromises that have to be made to achieve results in certain careers — whether those outcomes are monetary gains or a rise in social status. Kennedy and co-author Laura Kray of the University of California, Berkeley detail the results of three studies looking at this phenomenon in a recent paper, titled “Who Is Willing to Sacrifice Ethical Values for Money and Social Status? Gender Differences in Reactions to Ethical Compromises.”

“There is a lot of debate out there about whether businesses can do well and do good at the same time. Our research suggests that doing business ethically could help businesses retain talented women,” Kennedy says.

The first study found that women on average felt more moral outrage than men when confronted with decisions that went against their values, and also thought those decisions made less practical business sense. They felt this way no matter what the motivation for the decision: “When ethical values were compromised, people were as outraged when social status was gained as when money was gained,” Kennedy says. Social status gains included a boost in respect or admiration from others, or increased chances for a promotion, she adds.

Moreover, when presented in the second study with simulated job descriptions in the fields of consulting, private equity and wealth management, women only reported less interest than men when the blurbs stated that the firms required employees to prioritize profits or status over ethics when they conflicted.

But when the position outlines indicated that a company valued ethics, or when they simply didn’t mention ethics at all, women expressed as much interest in the jobs as male participants, “suggesting it was not the mere presence of a conflict between ethical and secular values, but the forfeiture of ethical values, that caused women’s reactions,” the researchers write.

Kennedy and Kray found that these perceptions still held true even when women weren’t prompted by discussion about what role ethics or values would play in a particular decision or career. In the final study outlined in the paper, the researchers asked men and women to classify words they associated with either business or law. Women’s reaction times showed they were more likely than men to correlate words like “wrong” or “unethical” with business, even though the legal field typically isn’t devoid of ethical dilemmas.

“The research doesn’t clearly say that women are more ethical than men … and it doesn’t say that business actually is more unethical than law or medicine. It says that women perceive it to be more unethical,” Kennedy notes.

Since certain industries or jobs may be consciously or unconsciously tarnished by these perceptions in the minds of female job candidates, Kennedy says that firms can respond by being upfront about how they deal with questions of ethics.

“I think the research suggests that, to the extent that businesses want to retain talented women, they should be holding ethics training, selecting leaders who have high ethical standards and emphasizing ethics within the core culture of the company,” Kennedy notes.  “It could also be a good reason to encourage all employees to voice ethical concerns when they have them.”

She adds that women, too, should keep the research in mind when charting their career paths and researching companies they may want to work at in the future. Even if ethical compromises aren’t a challenge they face in the present, the studies indicate that “women may care about this more than they initially appreciate, and more than some of their male colleagues might,” Kennedy says.

For more from this interview with professor Herring, see:

Big Banks Keep Watering Down Global Reserve Rules

Show Me the Money

“This represents a further step in Unilever’s strategy to invest in emerging markets,” Unilever CEO Paul Polman said in a statement. “The long heritage and great brands of Hindustan Unilever and the significant growth potential of a country with 1.3 billion people make India a strategic long-term priority for the business.”

The cash offer, announced on April 30, has been made at Rs600 (US$11.18) per share. This is at a premium of around 20% to the past week’s average trading price. Expectedly, HUL rose 17% on the Bombay Stock Exchange (BSE) after the announcement. Unexpectedly, analysts are advising investors that they stick to their portfolio. “Hold,” says Raamdeo Agrawal, director and co-founder of Motilal Oswal Financial Services. He feels that there are better days ahead for the company.

Equity analysts have not been so charitable to HUL for a long time now. The company has underperformed in the market place. On April 3, Edelweiss Research had given a “reduce holding” recommendation. “The next two quarters will be challenging,” said the Edelweiss report. “However, we remain positive on HUL’s business from a longer-term perspective.”

Unilever’s stake hike bid is aimed at bringing India in line with its strategy in other emerging economies and further integrating the US$4 billion fast moving consumer goods (FMCG) major with its global network. A few years back, the Indian company changed its name from Hindustan Lever and also adopted a new global logo. If the Unilever open offer succeeds, its holding will reach the level of its subsidiaries in Pakistan and South Africa. In some bigger markets – China, Brazil, Mexico and Russia – the company has wholly-owned subsidiaries.

Unilever is not alone in trying to increase its stake in a local subsidiary. Late last year, GlaxoSmithKline had made an open offer to increase its stake in its consumer health care subsidiary in India — GlaxoSmithKline Consumer Healthcare — from 43.2% to 75%. “This transaction represents a further step in GSK’s strategy to invest in the world’s fastest growing markets,” GSK chief strategy officer David Redfern had said in a statement.

The Unilever offer underlines the “fastest-growing market” theme which had taken a back seat in recent times. India’s GDP growth in 2012-2013 is expected to be only 5%. The current year should, however, show an improvement. The World Bank and the IMF have lowered their original estimates, but they are still optimistic with figures of 6.1% and 5.8% respectively. A recent review by the Prime Minister’s Economic Advisory Council (PMEAC) puts GDP growth even higher at 6.4%. The PMEAC has projected increased inbound foreign direct investment at US$36 billion during 2013-2014 against US$26 billion in 2012-2013. But this projection does not take into account the US$5.4 billion proposed investment by Unilever and the US$0.4 billion inflow that will result from the Jet-Etihad deal announced a week ago.

For more from this interview with professor Herring, see:

The Global Bank Regulatory System Remains Crippled
Show Me the Money

The ads are typically released in an obscure publication or television channel; sometimes, the product itself may not actually exist. At Goa, a poster campaign for the Ford Figo was hurriedly withdrawn by JWT India, a part of the world’s largest marketing communications group WPP, amid complaints that the ad, which depicted three women bound and gagged sitting in the trunk of a hatchback, was offensive.

Although the ad was submitted for Goafest with a letter of approval from the client, it is unclear whether Ford was aware of its content, Advertising Age reported. As the controversy grew, other agencies withdrew prize-winning ads amid charges that they were not legitimately released. “Advertising has never been less trusted than now,” Nitin Paranjpe, chairman of Hindustan Unilever, the country’s biggest advertiser, said during the Goa meeting.

On the sidelines, there was another debate going on about the ethics of surrogate advertising. For example, liquor cannot be advertised in India, so companies try to circumvent the rules by launching eponymous lines of unrelated products, such as playing cards, soda or aftershave, that are heavily advertised. Bacardi, for instance, markets branded soda and music CDs.

The rules can sometimes give rise to “products of regulation.” In the late 1980s, liquor manufacturer Jagatjit Industries, which has brands such as Binnie’s whisky and rum, launched Binnie’s potato chips. The campaign for the snacks went on to win several awards, though the company wasn’t prepared to meet the demand generated for the product.

Cigarette and tobacco advertising is also banned in India. Some companies have been pro-actively launching products to keep their key brands top of mind. ITC (formerly Indian Tobacco Company) extended its Wills cigarettes franchise to Will Lifestyle, a chain of exclusive specialty stores. Then it launched Essenza Di Wills, a line of premium personal-care products. More recently, the firm has rolled out Fiama Di Wills, another personal-care brand. In fairness to ITC, however, all these lines have been successes and are part of the company’s plans to convert from being primarily a cigarette manufacturer to a fast-moving consumer goods company.

There are other products that tobacco companies have launched in the face of regulatory changes. A few years back, the government decided to shift the basis of charging excise on cigarettes from value to length. (The rationale was that king-size cigarettes are luxury products and should be taxed more.) Several firms — ITC (Hero), GTC (Blue Bird) — subsequently launched micro-cigarette brands. When excise duties went back to being ad valorem, these products were abandoned.

Prior to the liberalization of India’s economy, “scam” products were even more prevalent because of import restrictions. Many of them came from the Sindhi business community in Ulhasnagar, a suburb of Mumbai. There was a huge demand for products carrying a “Made in U.S.A.” label, but they were available — in limited quantities, at exorbitant rates — only with the neighborhood smuggler. Items carrying a “Made by U.S.A.” label filled the breach. Even the fine print didn’t expand it to “Made by the Ulhasnagar Sindhi Association.”

On April 4, 2013, the Consumer Financial Protection Bureau (CFPB)

In the following paragraphs, Wharton emeritus finance professor Jack Guttentag, who runs a website called The Mortgage Professor, critiques this recent enforcement action by the Consumer Financial Protection Bureau. 

The CFPB is right that mortgage reinsurance arrangements are really kickbacks for the referral of business, but it is wrong to suggest that eliminating them will reduce costs to borrowers. In my view, it is just as likely, perhaps more likely, that the cost to borrowers will increase. 

Borrowers have been over-paying for mortgage insurance over the years and also for title insurance and property appraisals. The underlying reason is the same. In all three markets, the seller of the service is selected by the lender, but the cost is paid by the borrower. This situation inevitably raises prices to borrowers relative to what they would be if the sellers had to compete directly for the patronage of the borrowers who pay for the services. 

When sellers are selected by borrowers, selection is largely based on the price of the service. When sellers are selected by lenders, selection is based on whatever things of value the seller can bestow on the lender, who is largely indifferent to the price paid by the borrower.   

Payment of dividends from a reinsurance affiliate is only one method used by mortgage insurers to compensate lenders for referrals. Smaller lenders are compensated by free services, including free loan underwriting, which can be justified on the grounds that the insurer has to underwrite for its own protection. 

In the case of title insurance and appraisals, the most common device used to compensate lenders for the referral of business is shared ownership of the title agency or the appraisal management company to which the lender refers its business. If done by the book, meaning that the affiliate does the work of such an agency and is not a sham, these arrangements are legal. 

From the standpoint of the service sellers, all such arrangements are marketing expenses, which must be covered by the prices they charge borrowers. Shutting down one particular method of compensating lenders for business referrals forces them to adopt other devices which could well be more costly. If so, prices will rise rather than decline. 

The key to price reductions for borrowers is to force service providers to compete in terms of the price paid by borrowers, as opposed to competing in terms of bribes paid to the lenders who select them. There is a little bit of price competition going on now in the title insurance market, where astute borrowers are shopping for their own deals online. In the mortgage insurance and property appraisals markets, however, there is nothing happening and little prospect that anything will happen without a major change in the rules. 

The needed rule change is extremely simple and also extremely logical. The rule should be that any service required by lenders as a condition for the granting of a mortgage should be paid for by the lender, with the cost embedded in the price of the mortgage. In one swoop, this rule would replace competition in the bribes paid to lenders with competition in the prices paid by lenders.   

If you are not convinced that this rule change would benefit borrowers, consider this hypothetical: Suppose new automobiles were sold without tires, and that to get tires you were directed to a tire agency approved by the dealer, who would add the price of the tires to his bill. Is there any doubt that the price of the car plus tires would be higher than the price that now includes the tires?   

And don’t overlook the free bonus. The existing set of complicated rules establishing the legality or illegality of various ways that lenders compensate service providers would be eliminated.  

I doubt that the CFPB has the legal authority to make this change now, but it can and should ask Congress for the authority it needs to do the job for which it was chartered.

However, the bigger picture eclipses those gains. Once the leading smartphone maker, Nokia is today a tiny player in that market, compared to Apple and Samsung’s combined sales of more than 100 million devices last quarter. Last quarter’s bad news for Nokia included a 20% revenue drop to 5.85 billion euros ($7.6 billion) as sales of its basic mobile phones – its mainstay – dropped by more than a fifth.

How can Nokia build on its strengths to regain lost ground? The firm’s top priority should be to focus on pushing sales of its smartphones in emerging markets, according to Kartik Hosanagar, Wharton professor of operations and information management. “Nokia already enjoys good brand recognition in those markets,” he says. Because low-cost Android phones have eaten into the company’s basic phone sales, it should look to sell lower-cost versions of its Lumia range there, he adds.

Hosanagar notes that Nokia “made a bit of a mistake by overlooking Android” and pegging its entire smartphone fortunes to the Windows 8 operating system. “Given its decision to focus on hardware, it need not have locked itself into one specific software. Having Android would have helped Nokia.” Google’s Android and Apple’s iOS power 90% of the world’s smartphones, followed by BlackBerry (5.9%) and Microsoft’s Windows 8 (3.1%).

Not surprisingly, the Apple and Android operating systems also have the highest number of smartphone applications. “Hardware companies often end up at the bottom of the food chain in a sector like smartphones, where software and an ecosystem of developers and applications are ways that different players set themselves apart,” Wharton management professor Saikat Chaudhuri noted in a Knowledge@Wharton article last August on the shakeout in the smartphone market.

However, Nokia has some untapped potential in its partnership with Microsoft, which is well positioned in the enterprise market made up of business users. “That is a market where Microsoft has continued to remain strong,” Hosanagar notes. “Nokia should look to leverage Microsoft and push enterprise sales some more.”

The Nokia-Microsoft partnership works well for both parties, says Hosanagar. For Microsoft, the deal with Nokia was “a really good one. Microsoft has not been historically strong with hardware, so it didn’t make sense for Microsoft to own both hardware and software the way that Apple does. And given that its old partner, Samsung, had started to go the Android route, Microsoft needed a strong hardware partner and found that in Nokia.”

According to Hosanagar, Nokia and Microsoft have enough incentives to work closely together. “I suspect they [will] leverage each other’s strengths and will get some growth for Lumia,” he says.

The Aite Group projects that, with rising smartphone use driving more consumers to mobile banking in the U.S., the number of people who will tap their bank account with a mobile device will rise from 33 million in 2012 to 96 million by 2016 – a 30% annual growth rate. The number of mobile bank customers will double over the next two years alone.

Mobile money is “not the next big thing — it is already a big thing,” says Tracey Weber, Citigroup’s managing director for consumer Internet and mobile banking in North America.

In developed countries, where smart phones increasingly prevail, banking and related services can go beyond simple transactions to include managing portfolios, retirement accounts and the like. What’s more, in the United States alone there are some 75 million people who either have no bank account or rely on nonbank services (such as pawn shops and payday loans) to get by. Many have some kind of mobile phone and so are potential mobile banking customers.

Yet, some of the most profitable gains for mobile banking will come in the developing world. In some countries, notably in Kenya, basic mobile phones have leapfrogged the substandard physical branch-banking system.  “We’ve gotten to the point where, in some countries, more people use phones for banking than use banks,” says Mauro Guillen, a management professor at Wharton. Kenya is one of them. More than half of the country’s 22 million adults use phone apps to do banking — twice as many as have bank accounts.

According to the World Bank, worldwide there are 1.8 billion people who have a mobile phone but no bank account. Millions of these people will be linked for the first time to the financial system by mobile-money applications. Notes Steven Lewis, lead analyst for Ernst & Young’s global banking and capital markets team, many millions of people in the emerging world are expected to join the middle class in the next few decades. The company — bank or telecom, or partnership — that brings them into mobile banking today stands to gain a long-term payoff in the future. “I would bet money that many will be upgrading to a smartphone before they get a bank account.”

As with any revolution, the old order is giving way to a new one, and banks are just one group of players on the mobile-money battlefield. Telecommunication companies, Internet and technology firms, retailers, and others are also in this fight. Factor in the marketing value of the data that can be gleaned from mobile transactions, and it’s clear why the new players could compete and win in this disruptive new digital space.

To delve into the future of mobile banking in more depth, Knowledge@Wharton this week published a free e-book (enhanced with videos), titled Mobile Banking – Financial Services Meet the Electronic Wallet. The book, sponsored by Ernst & Young, is available through Amazon Kindle, iBookstore, Nook and the Samsung Hub.

The new government rules allow a foreign entity to take a 49% stake in an Indian scheduled airline. By buying just 24%, Etihad stays above the Securities & Exchange Board of India’s (SEBI) radar. SEBI regulations would have required Etihad to make an open offer — Jet is a listed company — if the acquired holding was to be above 25%.

The minority holding in India’s largest private sector carrier is valued at $379 million at Rs. 754.74 ($13.90) per share. Etihad will also inject another $220 million  into the deal “to create and strengthen a wide-ranging partnership between the two carriers.” The UAE group has already paid Jet $70 million for the sale and lease back of the latter’s slots at London’s Heathrow airport.

“The Indian market is fundamental to our business model of organic growth partnerships and equity investments,” Etihad president and CEO James Hogan said in a statement. “This deal will allow us to compete more effectively in one of the largest and fastest-growing markets in the world.”

“This is a win-win situation,” adds Jet founder and chairman Naresh Goyal. “This transaction further strengthens the balance sheet of Jet Airways and, more importantly, underpins future revenue streams, which will accelerate our return to sustainable profitability and liquidity.”

The Jet-Etihad deal is likely to catalyze dramatic changes in the Indian aviation sector. The Jet group will further consolidate its position as market leader. According to the Directorate General of Civil Aviation (DCGA), Air India (domestic) has a market share of 20.7%, and Jet is second with 18.3%. However, when combined with with Jetlite, the budget airline that is part of the group, its market share rises to 25.2%.

Air India’s leadership has already begun complaining about “unfair competition.” Others have sounded warning notes as well. “Instead of giving Air India the time it needs to consolidate as well as expand its network, [the Jet-Etihad deal] will only hasten its demise,” said former federal railway minister Dinesh Trivedi in a letter to the prime minister. In a previous article, Wharton management professor Saikat Chaudhuri told Knowledge@Wharton that “external shocks” could derail the initial signs of a turnaround at Air India. “I have been a vociferous supporter of government backing for Air India,” he noted.

Critics, however, say that a turnaround at Air India is an oft-repeated story. “It is no longer credible,” says Jitender Bhargava, a former Air India executive director who is writing a book about the airline.

And the national carrier is likely to face even more competition soon. The Foreign Investment Promotion Board has already cleared a joint venture proposal between the Tata conglomerate and Kuala Lumpur-headquartered budget airline AirAsia. AirAsia would hold a 49% stake, Tata Sons 30% and Arun Bhatia of Telestra Tradeplace the remaining 21%. Bhatia runs Hindustan Aeronautics and is related by marriage to L.N. Mittal of ArcelorMittal.

Apart from Air India, the other loser in this deal is Vijay Mallya’s beleaguered Kingfisher Airlines. Etihad was negotiating with Mallya to pick up a stake in Kingfisher. But the airline — which has lost its license — may have been too big a risk.

The markets and analysts have welcomed the deal. “It is a game changer not only in terms of what it gives to Jet Airways but for Etihad as well, which has big plans for India,” Kapil Kaul, South Asia CEO of the Centre for Asia Pacific Aviation, told The Economic Times.

“I don’t see this as a game changer, but it is certainly very good for the sector. It will bring in cheer and optimism and may open up one or two similar deals, which will be good in the long term,” Captain G.R. Gopinath, the founder of Air Deccan, told Knowledge@Wharton. “For Jet, it is a very good deal…. It will bring in the much-needed cash infusion and will allow it to dovetail into Etihad’s network. For Etihad, it gives access to the inexhaustible Indian market…. For consumers, it will mean better connectivity, better prices and better service.” Gopinath adds that “India needs to wake up and figure out what kind of policy framework it needs to make the country an aviation hub.”

The $13.90 Etihad is paying per share is at a premium of 31.55% to Jet’s closing price on the Bombay Stock Exchange on Tuesday. (Wednesday was a market holiday.) The scrip was trading 13% up on Thursday. It has risen 15% since April 17.

In other words, profits are down — the first time in a decade — and demand for its products, specifically its iPhones and iPads — was up. (Sales of Macs were slightly below last year’s numbers.)

CEO Tim Cook’s message on Apple’s website is that “our teams are hard at work on some amazing new hardware, software and services and we are very excited about the products in our pipeline.” Yet in a conference call with analysts, he declined to give specific dates for those new-product rollouts, noting only that they will be coming out in the fall and into 2014, according to a report in The Wall Street Journal.

Apple also announced a big increase in the company’s program to return capital to shareholders — $100 billion in cash by the end of 2015, and plans to increase its quarterly dividend by 15%. Meanwhile, its shares have plummeted approximately 40% from their peak last fall.

This set of mixed messages from Apple raises a number of questions about expected performance in the coming year.

Operations and information management professor Kartik Hosanagar says that Apple’s earnings “were more or less what I’d have expected. Strong sales with clear pressure on margins, lower growth and a strong dividend plan. I think these four — strong sales, slowing growth, lower margins, good dividends — are a blueprint of the future for Apple.”

In terms of sales, he says, “there is no doubt that Apple has a strong brand and that its iPhone and iPad lines will continue to sell well. At the same time, one has to acknowledge that the kind of growth Apple saw for the past decade is really hard to sustain for very long for any company. So, we should expect that growth will slow down unless Apple is able to come up with a completely new product line — which it has done consistently in the past,” but which is harder to do now.

As for margins, “Android smartphones are a genuine threat and will place pressure on Apple’s pricing,” Hosanagar notes. “Further, Apple will have to seek growth by partnering with all the carriers around the world that do not currently support iPhones on their network. Apple cannot expect the carriers to subsidize the phone for consumers as U.S carriers have done for Apple.” In addition, “price sensitivity is higher in these markets. And Samsung and HTC will be major competitors in these new markets. So Apple will face pricing pressure as it seeks to expand. I think lower margins are here to stay.”

According to Hosanagar, the question is, “if growth stalls and margins decrease, how does Apple deliver value to shareholders? That’s where the dividends come in, and I think they are here to stay.”

Overall, Hosanagar contends that Apple “has been getting the wrong kind of attention lately. The company has solid sales and is highly profitable. Wall Street should stop looking for growth and margins of 2010′s Apple in the Apple of 2013. The market has changed, as has the company. Apple is highly profitable, and dividends are a great way to return money to shareholders.”

Hosanagar says he would be “happy to see Apple continuing to innovate and producing good products at lower margins even if that means Apple can now be seen as a mature company. Also, I think Apple is currently underpriced by at least 10%-20% relative to other players in the market. The market has over-reacted to recent news.”

Management professor David Hsu suggests that the Apple news “reflects both successful competitor entry into smartphones and tablets as well as Apple’s own slower pace of innovation. Part of the issue is that consumers have been trained to wait for periodic but somewhat predictable product release times. Most of these have been incremental rather than revolutionary advances in its existing product portfolio. Cook is probably right to delay product introduction in new categories, such as smartwatches and TVs, until they are very good, but the competitive landscape in all of these areas is heating up.”

Cook could possibly consider “more unpredictable product introductions, ideally in categories which reinforce Apple’s strength in its established platform — and which enhance the value of its existing product lines,” he says.

Lawrence Hrebiniak, emeritus professor of management, sounds a slightly more cautionary note. “When a giant shows signs of weakness, there should be concern,” he says. “Consider the facts. The company’s year-over-year quarterly earnings declined, the first time in a decade. Profit margins are down significantly. Stock price has fallen. Customers are buying cheaper iPhones that still do a decent job. Competition is heating up, with companies like Samsung and its Galaxy S4 putting pressure on Apple. Higher dividends and stock buy-backs may calm things a bit, but the fact is that Apple indeed is under competitive pressure.”

The necessary strategic thrust for Apple, he suggests, “centers on one word: innovation. Cook has promised that new and exciting hardware and software are on the near horizon. These innovations had better be. Apple’s edge has always been innovation and revolutionary new ideas and products. Investors and customers still demand and expect this. If Apple regresses to the mean and hints at becoming another ‘okay’ company short on innovation, new ideas, and the resultant profits that have always followed, things will surely get worse for the company.”

Meanwhile, “if other companies like Samsung take on the new innovation mantel,” Hrebiniak adds, “Apple will face a tough uphill battle to regain its prior glory and position as leader of the pack. The problem with being a great company is that management must keep proving it. Hopefully, the proof is in the offing.”