Debt

Debt

 

Tobias Baer shares an article that questions the current, popular credit strategy of instant gratification with delayed payments. 

Buy-Now-Pay-Later (BNPL) is hot – and that makes it increasingly controversial, as it was made clear by Monday’s article in the Financial Times. Retailers love it as a way to increase sales, FinTechs as a way to build new, appealing lending propositions. But from a consumer’s perspective, is it good or evil?

The question whether BNPL is good or evil obviously would inform the regulatory stance as to what extent it should be regulated and even curtailed. Nevertheless, I believe that it is the wrong question. Very often, not least when it comes to regulating the financial industry, we pretend that the product is the problem. What if the problem is the consumer – or more precisely, the consumer choosing the wrong product? In the following, I will briefly argue the good and bad sides of BNPL before suggesting a better approach for regulating financial products.

Good arguments exist to let BNPL prosper

In the ideal case, BNPL creates a clear and positive effect for consumers. For some, BNPL allows to get the benefits of a certain acquisition earlier (e.g., the earlier you upgrade to a safer motorbike helmet, the lower is the risk of a debilitating injury). There even can be a good business case to use BNPL for certain groceries (e.g., it can enable a cash-strapped family to save money by buying certain items in bulk even though the family needs 100% of its current income to feed itself).

 

Key points include:

  • Regulations curtailing access to BNPL
  • Four reasons why some view BNPL critically
  • A better approach to regulating consumer finance

 

Read the full article, Is Buy-Now-Pay-Later Good or Evil?, on LinkedIn.

 

 

As both people and businesses begin to feel the economic impacts of the Coronavirus, Tobias Baer provides clear steps that can help your business deal with delinquent accounts.

Many of my clients so far have experienced less delinquencies on consumer debt than I had feared. Unfortunately I don’t think that I can claim that this is only because I’ve helped them draw up extraordinarily effective credit policies and scoring systems – instead, this time around delinquencies themselves might be delayed, and lower balances today may be the receding water levels we observe before a tsunami. A welcome side-effect of lockdown measures across the world was that many consumers had a lot less opportunity to spend – discretionary spending has nose-dived by 30-60% in many markets and card portfolios. And those who were robbed of their income sources by Covid-19 often had some buffers (cash and credit lines) that they could draw upon.

 

Advice included in this article:

  • How to segment delinquent accounts
  • Build an economic model
  • Reassign accounts to dedicated team

 

Read the full article, Three Tools You Need to Stem the coming Tsunami of Bad Debt, on LinkedIn.

 

 

Andrew Hone’s company blog explains why cost reduction programs often fail. 

Although cost reduction programs can deliver a powerful mix of financial, strategic, and organisational benefits, the failure rates of these types of programs are very high. A recent survey of C-Suite executives, for example, found that while 90% of businesses had attempted to implement a cost reduction program, 75% failed to meet their targets, and 44% missed them by more than half.

Drawing on some of the key insights from our new report, the Agile Cost Advantage, in this article we consider some of the main reasons why cost reduction programs are so difficult to get right.

The reasons for cost reduction program failure can be complex, and of course depend of the specific circumstances of each cost reduction program. In general though, we see a number of recurring themes behind these causes of failure.

 

Points covered in this article include:

  • Unrealistic targets
  • Cost cuts
  • Execution challenges
  • Loss of momentum

 

Read the full article,  Why do cost reduction programs fail so often? on the Zenith Strategy Associates website. 

 

 

Amanda Setili shares a post that identifies a few ways we can take positive action during the current crisis.

Billions of us worldwide are altering our behaviors during the covid 19 crisis, so that as many people as possible remain safe.

When faced with a tough situation—even something big, like the coronavirus situation—I always ask: how can we mitigate the downside, and create some good?

We are living in strange times, and things are changing every day. Schools are closed and colleges have sent students home; flights, conferences and events have been cancelled; millions of employees are suddenly working remotely. Events this spring are likely to change the way we think, plan and do business for years to come.

 

Areas covered in this article include:

  • Customers
  • Employees, process and finance
  • Suppliers
  • Community
  • Innovation and agility

 

Read the full article, Finding the Positive, Even in Challenging Times, on the Setili website.

 

In this TEDX talk at Columbia University, Kaihan Krippendorff discusses employee innovation within the model of disruption, and how it helps activate lean, agile innovation and growth in your organization. 

 

“Employees are the number one source of innovative growth options and the only remaining source of true competitive advantage. Arming them with the skills and tools necessary to innovate on a continual basis is of paramount importance to organizational survival.”

 

Points covered in the talk include:

-The path of the entrepreneur

-Disruptive innovation

-The innovation myth

 

Watch the Ted Talk, Change the World without Quitting Your Job, on Youtube.

Three key points in ninety seconds from Amanda Setili on how to avoid strategy execution melt down.Strategy execution is where everything goes haywire.

 

We can always come up with a good strategy, a good plan for what we want to do, but when the rubber meets the road and you’re actually implementing, that’s where you find out all the things that you maybe didn’t plan for. Frankly, it’s impossible to anticipate everything. One of the keys to effective strategy execution is having clear goals in mind, but also having people empowered to make decisions along the way because you got to enable yourself to adjust course. It used to be that you could plan strategy cycles, every five years, or at least every year. Now you need to be continuously adjusting your strategy. At least every quarter you should be having strategic discussions about what have we done so far, what have we learned, what do we want to change? That process of constantly adjusting course is essential and it’s also essential to make sure that everyone understands where you’re headed so that they can all contribute because frankly, with the speed of change today, you can’t possibly tell everyone what to do. You need to have them clear about what the goal is so that they can anticipate on their own for their own part of the business, how they need to adjust.

 

Watch the video, How to Prevent Strategy Execution Meltdowns, on Youtube.

Kaihan Krippendorff provides three signposts that can direct your organization towards a successful pivot.

 

If people try to tell you that pivoting is the new thing, that it’s the fresh Silicon Valley approach to business designed for today’s fast-paced digital world, don’t believe them. Consider Fairfield University, a private school founded just outside of New York in Fairfield, Connecticut, by the Catholic Church – a 2,000-year-old organization.

In 1941, the society that runs the Jesuit school system had acquired two properties and were finishing renovations on them. One would become a university for college students and the other a preparatory school for younger boys, both on the site of what would become Fairfield University. The plan was to open the university first while renovations on the prep school were still underway.

But then, on Dec. 7, just before the university was scheduled to open, Pearl Harbor was bombed, pulling the United States and nearly all of its college-age men into war. Concerned that they would have a school with no students to fill it, the priests engineered a classic, Silicon Valley-style pivot. They moved the prep school (for younger boys) into the finished building and opened it first.

 

The signposts are:

-Have a purpose

-Create optionality

-Encourage proactivity

 

Read the full article, If a 2,000-year-old Organization Can Pivot… So Can You, on Kaihan’s website.