Assessing financial similarity, the big theme of the Republican tax reform bill, and why GE board members could be on the chopping block.
GE Board on the Chopping Block?
With 18 members, GE’s board is the second largest among S&P 500 companies. CEO John Flannery, who replaced Immelt in August, isn’t ruling out a board shake-up, saying “The Board is big at 18 people. There's no doubt about that and that's one of the topics being discussed. So I would put it in the bucket of all things being examined right now.” GE is set to meet with investors on Monday.
Will There Be an AI C-Suite in the Future?
Though automation is indeed the future, companies always will need leadership, strategic thinking, judgment and experience -- all human traits. Soft skills are difficult to automate, humans prefer dealing with real people, and machines can't easily adapt.
The Risks of Financial Dissimilarity
McKinsey & Company
Executives often underestimate the difficulty of managing businesses with fundamentally different economic characteristics—including revenues, margins, capital intensity, and revenue growth. A recent survey showed that executives managing portfolios of financially similar businesses are 20 percent more likely than those managing financially dissimilar portfolios to describe themselves as more profitable and faster growing than their peers.
The Republican Tax Reform Bill: Simplicity is Key
At the core of the bill is a dramatic reduction in business income tax, cutting corporate tax rates to a flat 20 percent from 35 percent. Likewise, the plan also calls for tax cuts on pass-through business income, taxing this income at a flat rate of just 25 percent. The plan also calls for a repeal of the Domestic Production Activities Deduction which incentivizes businesses who produce within the United States. However, tax credits like the Research and Development Credit would remain under the plan.
How to Evaluate Success Without Bias
When our brains encounter a difficult question like, “How well is my company doing?,” they use shortcuts to estimate the answer, called heuristics. "Availability heuristic" causes us to reach into our memories and pull out examples of good things and bad things that have happened recently when asked how well things are going. To avoid this bias, the most effective thing to do is to use data to replace our brain’s automatic reactions.