NAFTA’s “poison pill” problem

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Good morning! Here’s what’s on our radar at the moment:

NAFTA’s “poison pill” problem

This week U.S. negotiators party to the NAFTA talks floated the idea of a “sunset clause” that would wind down the continent-wide free-trade agreement within five years—unless the three countries involved can agree on the terms to extend it. It’s a bit of a strange gambit for a treaty that has a six-month escape clause for any participant; while all parties currently seem reluctant to make any hasty decisions, the idea of tearing the bandage off over five excruciating years doesn’t seem to hold much appeal either:

Mexico’s Ambassador in Washington Geronimo Gutierrez has said a termination clause would erode business confidence in the region, while his Canadian counterpart has said the Trump administration probably wouldn’t find much domestic support for the proposal. “If every marriage had a five-year sunset clause on it, I think our divorce rate would be a heck of a lot higher,” Canada’s Ambassador to Washington David MacNaughton said last month. “We can have that discussion, but I really do think it won’t be Mexico and Canada that are pushing back against the secretary, it will be a lot of Americans.”

Link: Bloomberg

When should you (not) re-brand?

Branding is the most publicly visible face of a company, so it’s only natural that management groups want to take control of it. Changing up the brand feels like an easy win. And yet, if there hasn’t been a major strategic change, the advent of a new hand at the tiller might be exactly the wrong time to switch up the brand identity:

When the original commissioning team moves on, branding’s biggest problems arrive. The first issue is boredom. After about three years, an internal team, their agencies, their advisors – everyone – has had enough, and people start to tinker. Yet, paradoxically, about two-to-three years in is precisely when a new brand has just started to seep into the public consciousness, and arguably that’s exactly when a brand should become more consistent, not less.

Link: Johnson Banks

How leaders outmaneuver managers

People who study organizations these days are making a key distinction between “leaders” and “managers”—the former being those who interact primarily with high-level executive managers, the latter being those who concern themselves with front-line operations like sales or supply chain management. Neither one is necessarily better than the other, but it depends a lot on the company, its industry and its growth stage. Still, new research shows that productivity and profitability more often follow those leaders who don’t sweat the small stuff and focus more on guiding the highest-level vision and strategy for the company:

When we analyzed CEO type and companies’ financial performance, accounting for other variables including industry, country, and firm size, we found that CEOs who tilt more toward “leader” than “manager” run more-productive and more-profitable companies. And, to our surprise, these previously ignored behavioral differences across CEOs have quite a large association with firm productivity, about one-fifth as big as the impact of a firm’s capital inputs (machinery, equipment, buildings, and so on). Do leader CEOs just happen to work at better companies? We looked at before and after data for firms where a new CEO was appointed, and we found that the appointment of a leader CEO was followed by higher productivity. The effect showed up three years later, which suggests that leaders are doing the hard work of changing companies.

Link: Harvard Business Review

WATCH: The world of Soviet video games

In the mid 1980s, as seemingly every kid in the West was mashing buttons on video-game classics like Super Mario Bros., Donkey Kong, and Duck Hunt, the citizens of the Soviet Union were wondering which pair of shoes they might have to boil for their nutrients first. It was, in a way, worst for people in East Germany, who lived tantalizingly close to their wealthy European cousins, where radio and TV signals easily carried information about the latest consumerist luxuries. Prominent amongst these were early video games, and since computer technology was subject to strict embargoes, citizens of the German Democratic Republic did their best to have equivalent fun with Soviet replicas of popular Western games. This short documentary goes into the surprisingly deep history of Soviet video game clones, most of which have today been lost to history. Think on this next time you strap a miniature supercomputer to your face.

Link: YouTube

Earnings reports today

Canadian publicly traded companies of note scheduled to report quarterly earnings today:

Aphria Inc (APH)

Thanks for reading! Have a truly excellent day.