Dominic Barton writes:  Technological change has always posed a challenge for companies. But, as we saw once again in 2015, it has never occurred as rapidly, or on as large a scale, as today. As innovation sweeps across virtually every sector, from heavy industry to services, it is transforming the competitive landscape, with the most advanced companies – rather than the largest or most established players – coming out on top.

For incumbents, the threat of displacement is very real. The average tenure of a company on the S&P 500 has fallen from 90 years in 1935 to less than 18 years today. Disruptive new players like Uber, which has upended the taxi industry, are tough competitors, often staking out market share by shifting more surplus to consumers. This is part of a broader trend of intensifying competition that, according to recent research from the McKinsey Global Institute, could reduce the global after-tax profit pool from almost 10% of global GDP today to its 1980 level of about 7.9% within a decade.

The effect of technology on competition arises largely from the power of digital platforms and network effects. New digital platforms reduce marginal costs to nearly zero. Adding, say, a Google Maps user carries negligible costs, because the service relies on GPS location data that is already stored on a user’s phone.

A handful of leading firms in practically every industry are deploying digital technology in increasingly sophisticated ways – and seeing huge benefits. The use of sensors to monitor livestock, for example, has far-reaching implications for the food industry.

But the most digitally advanced sectors show the greatest progress. Indeed, over the last 20 years, profit margins in these tech-infused sectors have grown 2-3 times faster, on average, than in the rest of the economy. The retail offerings of digitally advanced multinational banks far outstrip those of local credit unions.

Already-proven technologies could automate as much as 45% of the tasks individuals are currently paid to perform. In the United States alone, that is the equivalent of about $2 trillion in annual wages.

Workers gain time to pursue more valuable tasks involving critical thinking and creativity. Financial advisers can spend less time analyzing financials and more time developing solutions that meet clients’ needs.

New information-sharing technologies deliver greater transparency, making organizations more efficient and, in many cases, less hierarchical.

For example, the CEOs of Apple, Inditex (a multinational clothing company), and Zappos (a large online retailer) have adopted broad spans of control (the number of subordinates directly reporting to a manager) that far exceed the traditional model of “one to four to eight.” Haier, the Chinese white-goods manufacturer, reorganized its 80,000-person workforce into 2,000 independent units, each responsible for managing its own profits and losses. Since the move, its market capitalization has soared, tripling from 2011 to 2014.

Moreover, digitization allows companies to operate as “platforms,” not structures, and make greater use of resources outside their company. The insurance company Allstate used the crowdsourcing platform Kaggle to invite programmers to develop a new car accident injury algorithm; the eventual “winner” was 271% more accurate than its existing model.

Likewise, China’s DJI became the world’s largest drone manufacturer by focusing on its products’ core technology.

Similar technology-driven innovations in thought processes and business models can be seen across the economy.  Companies creating separate business plans with two-month and 20-year views, reallocating their resources more aggressively, and using new analytical techniques to identify, attract, develop, and retain talent.

Catching this fast-moving – and rapidly growing – “digital wave” is the only way to avoid getting left behind.

Liu Mingkang and Wenzhi Lu write:   China, as the leading promoter of the “one belt, one road” initiative, must take steps to ensure that businesses act responsibly. The central government will have to regulate and coordinate sub-national governments effectively, while working to ensure that competition is fair and constructive. At the same time, China should implement a well-designed training program that provides officials at all levels of government and entrepreneurs with basic information about operating abroad. And it should do more to spur the involvement of Hong Kong – which possesses major advantages in finance and logistics, information accessibility, talent recruitment, and implementation of the rule of law – in the initiative. Last but not the least, the central government needs to strengthen the guidance of crisis management and exit strategies.

Realizing the “one belt, one road” initiative will not be easy. But China has all of the tools it needs to succeed. As long as it uses them in a way that is clean, green, and transparent, China and its neighbors will reap vast rewards.  China’s New Silk Road

Andrey Ostroukh and Andrey Ostroukh write:  Russia’s government is considering swingeing budget cuts and the sale of stakes in state companies as it grapples with a plunge in the price for crude oil, its main export, that the prime minister said could cause “prolonged stagnation.”

Russian Economy Minister Alexei Ulyukayev said Wednesday that Russia would have to adjust to a “new normal” of low prices for crude, which will last for a “very lengthy” period. Finance Minister Anton Siluanov said the government would propose a 10% cut to spending from a budget that was based on an oil price of $50 a barrel, nearly $20 higher than the current level.

“We need to prepare for the worst scenario,” Prime Minister Dmitry Medvedev said in a speech at an economic conference in Moscow Wednesday. “We need to live according to our means, including by reducing budget expenditures, decreasing spending on the state apparatus, the privatization of part of state assets.”

The suggestion of potential state-asset sales—often touted in recent years, but hardly ever executed—shows how wide Russian officials are casting the net for ways to shore up a federal budget that receives half its revenue from the oil and gas sector. High oil prices had been the cornerstone of President Vladimir Putin’s 15-year rule, allowing him to boost social spending and raise living standards. But the fall in the oil price and sanctions over the Kremlin’s interventions in Ukraine brought about a 3.7% economic contraction last year, accompanied by a slide in real incomes. Officials say the economy will grow this year, but the World Bank forecasts a 0.7% contraction.

“Many became poorer; the middle class suffered. That’s the most painful consequence of last year’s economic blows,” said Mr. Medvedev.

Still, there appear few threats to Mr. Putin’s rule. His approval rating has risen above 80% in the last two years, pollsters say, since Russia seized Crimea and has presented itself as being under siege from the West.

Mr. Putin has said repeatedly that Russia’s economic slide has bottomed out, but late last year he indicated that budget cuts could be necessary. Mr. Siluanov said spending reductions could be as high as 10%, or 500 billion rubles ($6.5 billion), to meet Mr. Putin’s demand that the budget deficit be kept under 3% of gross domestic product. Mr. Siluanov, whose ministry has long pushed for tighter spending, said the government shouldn’t rapidly increase borrowing.

Mr. Ulyukayev, the economy minister, said Wednesday that the government could sell stakes in the two largest state banks, Sberbank and VTB, in part to inject funds into them. The Russian banking system needs new funds, he said, as Western financial markets have remained closed to them due to sanctions.

Russian officials have in recent years repeatedly floated the idea of selling stakes in state giants such as oil producer OAO Rosneft, but the plans were never realized as officials said they shouldn’t be sold on the cheap.

Mr. Medevedev described Russia’s economic situation as “difficult, but manageable.” He warned that a return to growth wasn’t assured and that the government needed to act to stimulate investment and head off an “economic depression (that) could last for decades.”

The slide of the oil price to $30 has hammered the Russian ruble, sending it to its lowest-ever closing level of 77 to the dollar Tuesday. The weakening currency spurred an increase in consumer prices of 12.9% last year, and analysts say further weakness limits the room for the central bank to cut interest rates to help drag the economy out of recession. The ruble recovered almost 1% Wednesday as the crude price edged upward.

Former Finance Minister Alexei Kudrin, a confidant of Mr. Putin, said Wednesday that Russia should raise the retirement age, something that the Kremlin has previously ruled out, and that the economy needed to grow by around 5% a year before social spending could be increased. Mr. Kudrin, a favorite of Western investors for his commitment to fiscal discipline and market reforms, was in talks late last year with senior officials on a possible return to a top government post, but such a move isn’t imminent, according to a person familiar with the matter. A spokesman for Mr. Kudrin confirmed he had met with Mr. Medvedev at the end of last year to discuss economic issues, and said the former minister hadn’t been offered a government post.

The strengthening US dollar will impact on emerging economies who have essentially ‘borrowed’ dollars with capital inflows.

Yuhua Zhang writes: The US dollar index growth in 2015 was about 9% which is the most rapid appreciation since 1985. With the Federal Reserve’s forward guidance of continuing rate increases, it is not a stretch to believe that the US dollar will continue to appreciate against other main currencies.

Particularly, currencies of emerging economies will sustain intense impact by stronger US dollar. The Chinese Yuan, as a typical instance, depreciated to a five-year high of 6.64 against USD in January. The stronger US dollar likely will bring significant change to global capital flow directions, commodity prices, and degrade many economies.

With the QE program of the Federal Reserve, emerging economies had increased foreign capital inflows using “borrowed” dollars. Mostly these dollars were converted into local currencies – but eventually these borrowings will need to be repaid by converting the local currency back to dollars. The current sustained strong US dollar is causing repatriation of dollars as the cost of a dollar based loan last year was well over 9% based on the appreciation of the dollar. The emerging economies are struggling under the weight of dollar based loans and the more the dollar appreciates, the more the global economy will slow.

A stronger US dollar will also bring higher default risk which may even spread to government and domestic banks. A strengthing US dollar will bring further headwinds to an already slowing global growth.

Innovative Office Space.  No more corner office.  The survival of the fittest is gone.  Here are four ideas of how work can best be done.

Naomi Jagoda writes:  Democratic presidential candidate Hillary Clinton called for an additional 4 percent tax on people making more than $5 million per year.  Clinton called the tax a “fair share surcharge” that would make sure wealthier taxpayers pay higher tax rates.

“This surcharge is a direct way to ensure that effective rates rise for taxpayers who are avoiding paying their fair share, and that the richest Americans pay an effective rate higher than middle-class families,” a Clinton campaign aide said.

The surcharge would raise more than $150 billion over 10 years.  It is part of Clinton’s plan to build on the principle of the “Buffett Rule” to raise the effective tax rates of the rich.

The Buffett Rule, named after philanthropist billionaire Warren Buffett, would ensure that those making more than $1 million pay at least 30 percent of their incomes in taxes.

Clinton intends to release more proposals that would increase the amount of taxes paid by the wealthy later this week, the aide said.

The former secretary of State also plans to release more proposals that would provide tax relief to the middle class. She has already proposed tax credits for excessive healthcare costs and for family members caring for ailing parents and grandparents.

The campaign of Sen. Bernie Sanders (I-Vt.), Clinton’s main rival for the Democratic presidential nomination, criticized the proposal. as “too little too late.”

Without defining surcharge, and without suggesting a fair tax overhaul, Clinton’s proposal may be meaningless.  Let the dialogue begin, for instance, on whether the first $50,000 of every American’s income go free of tax.  Donald Trump has suggested this.

Alexander Bolton writes:  As the price of oil plunges to its lowest point in 12 years — and threatens to drag the broader U.S. economy down with it — lawmakers say Congress should consider helping teetering energy companies with policy fixes beyond the decision to lift the oil-export ban.

Among the proposals under discussion: Expediting the process for exporting liquefied natural gas, and upgrading infrastructure to move energy to market more quickly and cheaply.

Another top priority is loosening environmental and other regulations. But moves in that direction are highly unlikely while a Democrat remains in the White House.

With oil currently below $33 a barrel, some on Capitol Hill are calling for quick action.

Some lawmakers are floating the possibility of taking retaliatory trade measures against Saudi Arabia, which has flooded the market with cheap oil in what some analysts see as a bid to drive America’s growing shale oil industry out of business.

The House version of the energy legislation includes language to expedite natural gas exports.

The Obama administration has proposed nearly 100 regulations for the oil and gas industry, ranging from restrictions on methane and carbon dioxide to limits on operating on federal land.

Legislation passed last month to lift the four-decade ban on oil exports is expected to boost exports by 500,000 barrels a day but so far it has had little impact on prices.

Goldman Sachs has warned that oil may sink as low as $20 a barrel, which would shake financial markets by sinking energy stocks, driving companies into bankruptcies and setting off a round of junk-bond defaults.

Third Avenue Investment, a New York-based fund, last month blocked clients from pulling their money, prompting a sell-off of high-yield bonds and evoking memories of the 2008 meltdown.

Growing tensions between Saudi Arabia and Iran over the execution of a Shiite cleric might have been thought to have boosted prices by raising the specter of regional conflict. But that had little effect on oil prices this past week.

Bankruptcies among oil and gas companies have hit the highest quarterly level since the midst of the 2008 financial crisis, Bloomberg Business reported last month.

Oil and gas companies have laid off more than 250,000 workers and that number could swell in the months ahead.

Saudi Arabia, taking advantage of its low extraction costs, has refused to curb oil production in a bid to expand market share and undercut competitors. This has raised the prospect of the U.S. government taking action to level the playing field for domestic companies.

If the energy industry continues to sink, other proposals will pop up in the energy negotiations due to kick off next week.  There are calls for new infrastructure: the right mix of pipelines, transmission lines, rail, roads,” he said.