Here’s how workers would spend the corporate tax cut – if they had a voice – Thomas Kochan

MIT Sloan Prof. Thomas Kochan

From The Conversation

Over 200 CEOs have said they will raise wages or give bonuses as a result of the large corporate income tax cut passed late last year by Congress.

Some view their plans as simply a public relations move, others as a response to tighter labor markets or worker pressures. Pretty much everyone hopes that it might signal a new era in which corporate leaders share earnings with workers in ways they have not done in the past.

I’m among those who hold such a hope. Only if such profit sharing becomes the norm will the long-term trends in widening income inequality and wage stagnation be reversed.

But why should this decision be left to CEOs? Don’t workers have a legitimate claim and stake in what is done with the profits they help produce? New research I’ve been leading at MIT finally gives workers a voice on these issues and many others. Read More »

Viewpoint: How can department stores survive in the digital era? – Sharmila C. Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

From Boston Business Journal

How can a department store survive in the age of digital shopping carts and free home delivery? It’s a question that some of even the most iconic retailers struggle to answer.

As a result, many are closing up shop. Last month, for instance, Macy’s identified seven stores for closure as part of its previously announced plan to shutter 100 locations nationwide. In November, Sears said it would close 63 stores on top of the 350 that it announced would shut earlier in the year. And last summer, J.C. Penney closed about 140 of its stores around the country.

Closing less-profitable locations makes a lot of sense, but that alone is not enough. What’s needed is a reinvention of the traditional bricks-and-mortar model. Stores must rekindle the magic of department store shopping by providing a holistic customer experience, one that’s efficient and satisfying from a purchasing point of view, but also engaging and exciting.

For starters, brick-and-mortar stores need to change how they view their online counterparts: digital stores should be seen as complementary forces rather than competitive ones. Shopping in the future will be a blend of the electronic and physical realms. Read More »

Join the #MITSloanExperts “Superminds: The Surprising Power of People and Computers Thinking Together” Twitter chat, June 26

Superminds: The Surprising Power of People and Computers Thinking Together

MIT Sloan’s Thomas Malone and Brian Moran, CEO of Brian Moran & Associates, dedicated to helping small business owners and entrepreneurs run better businesses, and previous Executive Director of Sales Development at the Wall Street Journal, will discuss Malone’s new book, Superminds: The Surprising Power of People and Computers Thinking Together, which shows how groups of people working together in superminds have been responsible for almost all human achievements in business, government, science, and beyond., during a Twitter chat on June 26th at 2 p.m. EDT.

Thomas W. Malone is the Patrick J. McGovern (1959) Professor of Management at the MIT Sloan School of Management and the founding director of the MIT Center for Collective Intelligence. At MIT, he is also a Professor of Information Technology and a Professor of Work and Organizational Studies. Previously, he was the founder and director of the MIT Center for Coordination Science and one of the two founding co-directors of the MIT Initiative on Inventing the Organizations of the 21st Century. Malone teaches classes on organizational design, information technology, and leadership, and his research focuses on how new organizations can be designed to take advantage of the possibilities provided by information technology.

Malone will discuss his work with host Brian Moran, the CEO of Brian Moran & Associates, dedicated to helping small business owners and entrepreneurs run better businesses. Previously, he was the Executive Director of Sales Development at the Wall Street Journal, and was President of Veracle Media and Moran Media Group, two companies that provided guidance to business owners to help them start, manage and grow their companies.

Join us on Twitter on June 26 at 2 p.m. ET, follow along using #MITSloanExperts, and potentially win a free copy of Superminds: The Surprising Power of People and Computers Thinking Together.

Public companies are about to be flooded with cash, how will they spend it? – Robert Pozen and Robert Steel

MIT Sloan Senior Lecturer Robert Pozen

MIT Sloan Senior Lecturer Robert Pozen

From Fortune

U.S. companies will soon experience a tsunami of free cash flow. Because of the new Trump-GOP tax plan—the Tax Cuts and Jobs Act—we estimate American companies will have over $2.6 trillion of additional cash over the next five years. This will come from three sources: repatriated overseas cash, future foreign earnings, and lower corporate taxes on domestic profits. The critical question is: What will companies do with this inpouring of cash?

For years, many CEOs of public companies have complained of pressure by analysts and activists to focus on short-term profits rather than long-term growth. Now each CEO has a great chance to put their money where their mouth is.

CEOs have two main alternatives for this incremental cash flow; they can boost short-term returns to shareholders through higher dividends and share repurchases, or they can augment long-term growth by investing in plants, people, research, and technology acquisitions.

For the sake of their credibility and the American economy, we urge CEOs to invest in long-term growth, and not in share buybacks as they did in 2004.

Read More »

China, the innovation dragon – Simon Johnson and Jonathan Ruane

MIT Sloan Professor Simon Johnson

From Project Syndicate

China has achieved much since 1978, when Deng Xiaoping initiated the transition to a market economy. In terms of headline economic progress, the pace of China’s transformation over the past 40 years is unprecedented. The country’s GDP grew by nearly 10% per year on average, while reshaping global trade patterns and becoming the second-largest economy in the world. This success lifted 800 million people out of poverty, and the mortality rate of children under five years old was halved between 2006 and 2015.

The question now is whether China, well positioned to become the world’s innovation leader, will realize that opportunity in 2018 or soon after.

China’s transformation has been underpinned by an unprecedented manufacturing boom. In 2016, China shipped more than $2 trillion worth of goods around the world, 13% of total global exports. It has also pursued economic modernization through massive infrastructure investment, including bridges, airports, roads, energy, and telecoms. In less than a decade, China built the world’s largest bullet train system, surpassing 22,000 kilometers (13,670 miles) in July 2017. Annual consumption is expected to rise by nearly $2 trillion by 2021, equivalent to adding another consumer market the size of Germany to the global economy.

Earlier this month, Apple CEO Tim Cook declared that, “China stopped being a low-labor-cost country many years ago, and that is not the reason to come to China.” The country’s manufacturing strengths now lie in its advanced production know-how and strong supply-chain networks. Understandably, China’s leadership wants to increase productivity and continue to move further up the value chain.

Read More »