Philippa Kaur

In a monty python sketch from 1969, the middle-aged Mr Anchovy, played by Michael Palin, wants to give up what he calls the desperately dull world of chartered accountancy in order to become a lion-tamer. His “vocational guidance counsellor”, aka John Cleese, suggests he consider an interim career path—banking, say—while he works towards lion-taming. “No, no, no, no, no,” Mr Anchovy interrupts. “I don’t want to wait. At nine o’clock tomorrow I want to be in there, taming.”Echoes of Mr Anchovy’s yearnings can be heard in the haste with which ey, one of the Big Four accounting firms, is considering spinning off its fast-growing consultancy practice from the unfashionable audit side of the business. Not only is it a bold move by the standards of book-keeping firms—to the point, says Michael Izza of the Institute of Chartered Accountants in England and Wales, that ey’s three rivals, Deloitte, pwc and kpmg, will be considering their next steps in light of its decision. There is also a hint of Pythonesque farce about it. Such is the excitement that details of a proposed initial public offering (ipo) in 2023 were leaked to the Wall Street Journal, which published them on June 20th. They included the size of the potential bonanza for some of the firm’s 13,000 partners—something ey’s bean-counters of old would much rather have kept under their bowler hats. The firm insists no final decision has been made. Yet a split would make sense. Regulators worry that consulting services generate conflicts of interest for firms also carrying out statutory audits. After a string of accounting scandals in recent years they are urging the auditors to stand on their own two feet. As for an ipo, that is bound to set consultants’ hearts racing. But like Mr Anchovy, they should think twice before they leap into the lion’s den. In the long run, audit may well be the more prudent bet. Make no mistake, the advisory practice is the red-blooded side of the business. It accounted for two-thirds of ey’s $40bn in revenues last year. Unshackling much of the tax, consulting, strategy and transactions work from audit would give the consulting arm more room for manoeuvre and free it from a partnership model that smothers quick decision-making. The new advisory firm could raise capital more easily to invest in technology, as well as developing trendy outsourcing businesses such as fully running multinationals’ tax affairs. It could bolster its fortunes by offloading niche businesses. (Not that it needs to wait for an ipo to do that: last year pwc sold one that handles global companies’ foreign postings to a private-equity firm for $2.2bn, its biggest divestment in nearly two decades.) There is an even more enticing precedent. Accenture, which was spun off from Arthur Andersen and then went public a year before the accounting firm collapsed in 2002, has soared in value to $190bn. ey’s consulting arm would not be worth close to that. However, the leaked documents, based on recent market conditions, suggest it could raise $10bn by selling a 15% stake. The partners who join it would receive 70% of the shares (the remaining 15% would be for lowlier staff).It is not all upside for the consultants, though. The split would involve a cash payout from the spun-off company to partners remaining in the rump ey, and would cover potential claims against the firm for problems such as those at Wirecard, a failed German payments company, and nmc Health, a collapsed British hospital chain, both of which ey audited. To make the payment, the new firm would reportedly borrow $17bn—a large sum considering that publicly traded rivals like Accenture and tcs have low debts.Those are not the only competitors, either. Barriers to entry in consulting are low. Big tech firms such as Microsoft and data-miners such as Palantir may try to muscle into the space. The ey brand may have raised the stature of the consultancy practice, but it will probably be floated with a new name. Like some other consultants, it could fall victim to delusions of grandeur.That is why, despite being the pedestrian side of the business, audit could be a dark horse. Its shortcomings are well known: lack of trust, conflicts of interest, low pay compared with other professional services, the risk that ai-powered “audit bots” will crawl over its business model. Yet it has some advantages. For one thing, it remains an entrenched oligopoly. The Big Four audit 99% of firms in the s&p 500 index. Moreover, structural changes are afoot that could benefit it. The first is regulatory. As the Big Four auditors are forced to become more independent, they are raising fees. As pressure mounts to improve audit quality, they will charge more for it. The second change is to their scope. The firms are expecting a lot of new work as regulators force companies to disclose more about their climate impact. Much of this will have to be checked and approved by auditors. One senior accountant talks excitedly about hiring “thousands of eco-warriors”.If history is any guide, the windfall from the split may favour the auditors, too. Though the partners remaining on the audit side would receive lower payouts than those departing with the consultancy, cash in hand is precious, especially in times of volatile markets. The last time ey split off its consultancy, selling it to Capgemini, a French firm, in 2000, the partners who received cash, not shares, did better. And after that the auditors simply rebuilt the consulting side of the business. Even now they plan to retain elements of advisory work, such as parts of the tax practice. These could again be reconstructed into something bigger.Ants in the pantsThose with long memories, such as the older partners, will know all this. Many of the more junior ones may find themselves lured by the eat-what-you-kill excitement of consultancy. But if they ignore history, they should not ignore comedy. Mr Anchovy never did become a lion-tamer. What he thought was a lion was instead an anteater. Shown a photo of a real lion, he passed out. ■Read more from Schumpeter, our columnist on global business:Amazon has a rest-of-the-world problem (Jun 16th)What’s gone wrong with the Committee to Save the Planet? (Jun 9th)Why Proxy advisers are losing their power (Jun 2nd)For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

Management is not a heroic calling. There is no Marvel character called “Captain Slide Deck”. Books and television shows set in offices are more likely to be comedic than admiring. When dramas depict the workplace, managers are almost always covering up some kind of chemical spill. Horrible bosses loom large in reality as well as in the popular imagination: if people leave their jobs, they often do so to escape bad managers. And any praise for decent bosses is tempered by the fact that they are usually paid more than the people they manage: they should be good. A world without managers is a nice idea. But teams need leaders, irrespective of the quality of the people in charge. Someone has to take decisions, even if they are bad ones, to prevent the corporate machine gumming up with endless discussions. That is true even of flatter organisations. In a paper published in 2021, researchers described an experiment in which a number of different teams took part in an escape-room challenge. Some randomly selected groups were asked to choose a leader before the task began; the rest were not. The teams with leaders did much better: 63% of them completed the challenge within an hour, compared with only 44% of those in the control group.The difference between good bosses and bad ones is striking. In one paper published in 2012, a trio of academics looked at the output of workers in a large services company who frequently switched between different supervisors. They found that the gap in output between the best and worst bosses was equivalent to adding an extra person to a nine-member team. Even the average boss enhanced their team’s productivity by enough to justify their higher salary. Managers are needed, but they do not have it easy. The job is structurally difficult. Most managers have to meet the expectations, sometimes unreasonable, of people below them and above them. The blurring of work-life boundaries as a result of the covid-19 pandemic seems to have made life tougher for them. Gallup, a pollster, found that in 2021 managers suffered higher levels of self-reported burnout than workers, and that the gap between these groups had widened considerably over the previous year. They are subject to conflicting demands. They are meant to care about members of their teams and be ready to get rid of them. They are supposed to give people agency while making sure that things are done in the way the organisation wants. The concept of the “servant leader” is utter nonsense. (What next? The weepy psychopath? The serf dictator?) It is also a reflection of the different directions in which bosses are pulled. Many of those in positions of power don’t want to be managing at all. True, some of them have found their way into management because of thrusting ambition. But others have wound up there because it is the only route available to more pay and greater influence. Hence another screwed-up office character: the “reluctant leader”. Managers are also handling the most baffling material on Earth: people. A study conducted by researchers in Germany found that handing out monetary bonuses for good attendance to apprentices in retail stores led to sharp rises in absenteeism (paying for behaviour that was previously considered normal seems to have made people feel licensed to bunk off). Another piece of research, by academics at iese Business School and the Poole College of Management, found that empowering employees could lead to more unethical behaviour if workers felt under greater pressure to perform. The law of unintended consequences runs through the workplace.Managers are allegedly human, too, and also susceptible to bias. Bosses who take steps to encourage employees to contribute their ideas are doing the right thing by their organisations and by their teams. But according to research by Hyunsun Park of the University of Maryland and her co-authors, the more they solicit input, the less likely they are to reward people for speaking up. Instead, they credit themselves for creating the right kind of environment. Laudable, no. Natural, yes. It is true that managers do not save lives or nurture young minds. Even the best ones spout jargon and cause unholy amounts of irritation. The worst ones make life a misery. But the job that managers do is almost always necessary, often unpopular, sometimes done reluctantly and pretty difficult to boot. Every so often that is worth remembering. Read more from Bartleby, our columnist on management and work:Work, the wasted years (Jun 16th)Corporate jets: emblem of greed or a boon to business? (Jun 9th)Do not bring your whole self to work (Jun 2nd) More

Tech giants, governments, trustbusters, investors: all eyes are on the much-anticipated stockmarket listing of Arm. Despite the recent rout in tech stocks, SoftBank, the Japanese group that paid $32bn for the British chip designer in 2016, still plans to refloat its shares by next March. On May 30th Cristiano Amon, boss of Qualcomm, an American chipmaker, told the Financial Times he would like to create a consortium with rivals like Intel or Samsung, either to buy a controlling stake in Arm or to purchase it outright—as Nvidia, another American firm, tried to do in 2020 in an abortive $40bn deal. Some British politicians argue that Arm is so critical that the government should take a controlling “golden share”. On June 14th it was reported that, perhaps in response, SoftBank was considering a secondary listing in London alongside the primary one in New York. Look at Arm’s finances and the interest seems puzzling. Its sales rose by 35% last year to $2.7bn—not bad, but peanuts next to the giants of chip design. Its valuation, as implied by the Nvidia deal, has risen by a quarter in six years. In the same period Qualcomm’s market capitalisation is up by half and Nvidia’s has risen 13-fold, recent market carnage notwithstanding.There are two explanations of the mismatch between Arm’s size and the covetousness it elicits. The first is the ubiquity of its products. Spun out of the wreckage of Acorn Computers, a British maker of desktops, in 1990, Arm has grown to the point where nearly all big tech firms use its designs. Most modern phones contain at least one chip built atop its technology. That makes it a keystone in the $500bn chip industry. Arm’s second selling point is its potential. After years of trying, its designs are making inroads into lucrative markets such as personal computers and data centres. They could also power everything from cars to light bulbs as everyday object become computers. Start with the ubiquity. Unlike firms such as Intel, which sells chips that it both designs and manufactures, Arm trades only in intellectual property (ip). For a fee, anyone can license one of its off-the-shelf designs, tweak it if necessary, and sell the resulting chip. Besides licensing revenue, Arm takes a small royalty from every sale of a chip built with its technology. In 2021 licensing revenues accounted for a bit over $1bn, while royalties brought in $1.5bn.Removing the need to design a chip—a complicated, highly specialised job—has made Arm’s off-the-shelf designs popular, especially as chips have become more and more complicated. New Street Research, a firm of technology analysts, reckons Arm has a 99% share of the $25bn market for smartphone chips. Its products are widely used in everything from drones and washing machines to smart watches and cars. Arm says it has sold just under 2,000 licences since its founding (see chart). More than 225bn chips based on its designs have been shipped. It hopes to hit 1trn by 2035. The firm’s long customer list explains the backlash against Nvidia’s proposed buy-out. Simon Segars, who stepped down as Arm’s boss this year, used to describe the firm as the neutral “Switzerland of the tech industry”. Other chipmakers feared that giving a rival control of it would undermine this neutrality, explains Geoff Blaber of ccs Insight, a research firm. So did trustbusters in big markets, whose concerns derailed the deal. Few were reassured when Jensen Huang, Nvidia’s boss, insisted that he had no plans to use Arm to stymie rivals. That same roster of customers is also part of the explanation for the mismatch between Arm’s importance and its finances. Low prices were one reason why Arm’s technology triumphed over rival chip architectures. New Street reckons that Arm earns royalties of just $1.50 from the sale of a high-end smartphone, for which consumers fork out $1,000 or more. Cheaper gadgets might earn it a few cents. The firm has raised its royalty rates over time, notes Pierre Ferragu of New Street, often when a new version of its designs is released. According to one insider, SoftBank wanted to increase them further. But, he says, the plan caused friction with Arm’s bosses, who worried this would irk existing customers. It could also jeopardise Arm’s effort to conquer new markets. In 2020 Apple, which has long used Arm chips in iPhones, began replacing Intel silicon in its laptops and desktops with Arm’s designs. Although Apple is not as big in this business as it is in smartphones, it was a vote of confidence for Arm in what had been foreign territory. Arm has also increasingly been competing in the high-margin business of servers, the high-spec machines found in data centres. That market has for decades been dominated by Intel, but in recent years Arm has scored notable victories. Amazon Web Services, the e-commerce giant’s cloud division, now uses lots of Arm-derived “Graviton” chips. Ampere, an American firm that sells data-centre chips, also bases its products on Arm’s designs, as do several makers of specialised processors for tasks such as managing networks. TrendForce, another research firm, predicts that Arm processors could account for 22% of installed server chips by 2025. Under SoftBank’s ownership Arm has put lots of money into research and development, says Mr Blaber. That will help it maintain its technological edge. It is nevertheless limited in how much it can charge for its products by the emergence of a new challenger: risc-v. This is a novel chip architecture that lacks royalties and licence fees. In 2020 Renesas, an Arm licensee, announced it would use risc-v for a new generation of products. Intel, Qualcomm and Samsung, among others, are also eyeing the technology. Whatever Arm’s fate, then—as a public company, a state-controlled one or the ward of a consortium of chip-industry heavyweights—its future will therefore probably resemble its past: vital but, by Silicon Valley standards, a minnow. ■ More

Rich countries pour heart-stopping amounts of money into health care. Advanced economies typically spend about 10% of gdp on keeping their citizens in good nick, a share that is rising as populations age. America’s labyrinthine health-industrial complex consumes 17% of gdp, equivalent to $3.6trn a year. The American system’s heft and inertia, perpetuated by the drugmakers, pharmacies, insurers, hospitals and others that benefit from it, have long protected it from disruption. Its size and stodginess also explains why it is being covetously eyed by big tech. Few other industries offer a potential market large enough to move the needle for the trillion-dollar technology titans.In 2021 America’s five tech behemoths collectively spent more than $3bn on speculative health-care bets (see chart)—and may have invested more in undisclosed deals. Some of their earlier health-related investments are starting to pay off. Amazon runs an online pharmacy and its telemedicine services reach just about everywhere in America that its packages do, which is to say most of it. Apple’s smartwatch keeps accruing new health features, most recently a drug-tracking one. Meta has scrapped its own smartwatch plans earlier this year but offers fitness-related fun through its Oculus virtual-reality goggles. Microsoft is expanding its list of health-related cloud-computing offerings (as is Amazon, through aws, its cloud unit). Yet it is Alphabet, Google’s corporate parent, whose health-care ambitions seem to be the most vaulting. Between 2019 and 2021 Alphabet’s venture-capital arms, Google Ventures and Gradient Ventures, and its private-equity unit, CapitalG, made about 100 deals, a quarter of Alphabet’s combined total, in life sciences and health care. So far this year it has injected $1.7bn into futuristic health ideas, according to cb Insights, a data provider, leaving its fellow tech giants, which spent around $100m all told, in the dust. Alphabet is the fifth-highest-ranking business in the Nature Index, which measures the impact of scientific papers, in the area of life sciences, behind four giant drugmakers and 20 spots ahead of Microsoft, the only other tech giant in the running. The company has hired former senior health regulators to help it navigate America’s health-care bureaucracy. Alphabet’s approach to innovation—throw lots of money at lots of projects—has served it well in some other businesses beyond its core search engine. It has given rise to clever products, from Gmail and Google Docs to the Android mobile operating system and Google Maps, which support people’s digital lives. Alphabet thinks that some of its health offerings will become as central to their physical existence. Is that an accurate prognosis?Techno-pharmacopoeiaAlphabet has dabbled in health since 2008, when Google introduced a service that allowed users to compile their health records in one place. That project was wound up in 2012, resurfaced in 2018 as Google Health, which included Google’s other health ventures, and was again dismantled last year. Today Alphabet’s health adventures can be divided into four broad categories. These are, in rough order of ambition: wearables, health records, health-related artificial intelligence (ai) and the ultimate challenge of extending human longevity.Google launched itself into the wearables business in 2019 with a $2.1bn acquisition of Fitbit. The firm’s popular fitness tracker has been counting steps and other exertions on around 100m wrists. It has come a long way since the Nintendo Wii motion-detecting game console that inspired Fitbit’s founders. A new feature—a sensor which monitors changes in the heart rate for irregularities that can lead to strokes and heart failure—has just been been approved by America’s Food and Drug Administraton (fda). Google is also trying to boost the health-care potential of its other devices. To help it along, it has enlisted Bakul Patel, a former official tasked with creating the regulatory classification of “software as a medical device” at the fda.The fda’s stamp of approval for the Fitbit sensor is a big deal. It should make it easier to get a similar thumbs-up for Google’s higher-end Pixel Watch, which uses a lot of the same technology and is due out this autumn, as well as other gadgets. For example, the camera on its Pixel phones can be used to detect respiration and heart rates by tracking the subtle colour difference brought about by the fact that blood with fresh oxygen in it is slightly brighter. Google’s Nest smart-thermostat-turned-home-assistant can listen to snoring to assess your sleep. As significant, if not more, is that Google considered the regulatory go-ahead worth getting. It signals that the company intends its products to be more than fun consumer gadgets, actually able to influence the practice of medicine.Google is also giving health records another whirl. The new initiative, called Care Studio, is aimed at doctors rather than patients. Google’s earlier efforts in this area were derailed in part by hospitals’ sluggishness in digitising their patient records. That problem has mostly gone away but another has emerged, says Karen deSalvo, Google’s health chief—the inability of different providers’ records to talk to each other. Dr de Salvo has been vocal about the need for greater interoperability since her days in the Obama administration, where she was in charge of co-ordinating American health information technology. Until that happens, Care Studio is meant to act as both translator and repository (which is, naturally, searchable).Alphabet’s ai projects are also beginning to produce results. Starting in 2016 DeepMind, a British startup bought by Google in 2014, used data from Britain’s National Health Service (nhs) to create diagnostic tools, in one case training an ai algorithm to detect retinal diseases. It made headlines last year with AlphaFold, a groundbreaking piece of software that can predict the structure of proteins, which is responsible for many of the complex molecules’ characteristics. Alphabet has also launched another subsidiary, Isomorphic Labs, which will be run by DeepMind’s boss and use machine learning to build on AlphaFold to accelerate (and cheapen) drug discovery. The most out-there part of Alphabet’s health portfolio is an effort to slow the ageing process—or stop it altogether. The idea is that ageing should be viewed not as an immutable aspect of life but as a condition that can be managed and treated, or a problem that can be solved with the right technology. To that end one of Alphabet’s life-sciences subsidiaries, Calico, is looking into age-related diseases in partnership with AbbVie, a big drug firm that has chipped in $2.5bn and which last year extended the deal until 2030. Another Alphabet subsidiary, Verily, is working with L’Oréal, a French beauty giant, to better understand how ageing impacts the biology of the skin—and thus create better skincare. Inspiring stuff, to be sure. But obstacles remain. Some are technical. The data DeepMind got from the nhs proved hard for ai to digest. DeepMind’s ai assistant for doctors, called Streams, has been discontinued. Given the strides being made in machine learning, it may be only a matter of time before something like Streams is resuscitated. Other hurdles may be harder to overcome. Trustbusters are increasingly wary of letting through deals that might be seen as stifling nascent competitors. In Europe competition authorities have forbidden Fitbit (but not the Pixel watch) from favouring Google’s own phones and operating system, or from using user data to sell advertising. Governments also fret about privacy breaches, which is even more sensitive than usual when it comes to medical information. Last month plaintiffs filed a class-action lawsuit against DeepMind for misuse of nhs patient data. DeepMind has not made a public statement on the case. Last, good ideas are not the same things as a good business. The wearables market is highly competitive. So, increasingly, is the one for electronic health records. Google’s reputation for technical brilliance has not exactly made Care Studio into an overnight success; the system is reportedly used by just 200 or so clinicians. Verily, which besides solving ageing also offers various diagnostics, signed $50m-worth of contracts for covid-19 testing during the pandemic, a tidy sum but chump change next to Alphabet’s total annual revenues of nearly $260bn. DeepMind as a whole reportedly turned a profit for the first time in 2020 (seemingly from selling services back to the rest of Alphabet) but it gives away its flagship health product, AlphaFold, for nothing. Calico could be years away from generating real revenues, let alone profits. These are open-ended bets that a company of Alphabet’s size can absorb. Still, in the next decade the task will be to show they can graduate from being experiments and vanity projects to being transformative for the firm—and for Americans’ health. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

The indian premier league (ipl) is awash with cash. cvc Capital, a European buy-out firm, paid $750m for the Gujarat Titans, one of the cricket extravaganza’s newest teams. In an auction ahead of this year’s competition, which concluded last month (with the Titans’ victory), the ipl’s ten sides splurged $71m on 204 players, five times the amount spent five years ago (when there were eight of them). Another auction, held between June 12th and 14th, attracted even more serious dosh. Media heavyweights fought for the right to show ipl matches to cricket-mad Indians for the next five years. Disney, which owns the current package, managed to hold on to the tv rights by agreeing to part with $3bn. It lost the online-streaming rights to Viacom18, a joint venture between Paramount Global, a fellow American media firm, and the media unit of Reliance, an Indian conglomerate, which will pay $2.6bn for the privilege. For another $500m or so, Viacom18 also scooped up the international rights for Australia and New Zealand, Britain and South Africa, the other big cricket markets, and a smaller domestic package for high-profile games. In all, the auction has netted the ipl $1.2bn per season—less eye-watering than, say, the English Premier League’s reported $4.2bn-a-year media haul in football. But if you adjust for the ipl’s leaner season—74 matches, against 380 in the English Premier League—that makes it the second-most-lucrative sports series per game. Only the gladiatorial contests of America’s National Football League score higher (see chart). The bidders believe it is money well spent, for two main reasons. The first is the promise of advertising riches. Perhaps half a billion Indians watch at least some ipl, and millions tune in religiously. The tournament’s format, with play stopping every few minutes, is an adman’s dream. Last season’s broadcasts featured more than 110 different advertisers, from sellers of paan, More

Spiritual growth is an odd mandate for business schools preparing graduates to make manna in a secular world. One such institution, hec Paris, has nevertheless decided to send students on a trek through the French countryside to a remote village, where a Benedictine monk (a former lawyer) guides them through ethical dilemmas. Whether or not the three-day seminar represents a shift away from the profit-driven logic of business and towards a kinder, gentler form of capitalism is up for debate. But it shows that expectations for what makes a great mba programme—and, by extension, a great executive—are in flux.mba courses (our ranking of which you can find at economist.com/whichmba) used to focus on number-crunching and business strategy. Executives must still master these skills. Yet the corporate world has changed since the mba first became a rite of passage for high-powered executives. Management teams answer to a growing number of “stakeholders”, from employees to social activists, and face public scrutiny on their companies’ environmental, social and governance (esg) record. Simply creating shareholder value no longer cuts the mustard.One consequence of this trend is that running a modern business requires an ever-expanding list of credentials and competences. In addition to financial and digital literacy, strategic acumen and communication skills, executives are expected to be clued in on supply chains, climate science and much else besides. They must ensure that their workforces are diverse and inclusive. And as work life goes hybrid, mixing time in the office with home working, they are also asked to spend more time checking in on subordinates. Some of these new duties are delegated to new corporate roles. Prince Harry is the “chief impact officer” of a Silicon Valley firm. Clifford Chance, a law firm, has appointed a global “wellbeing and employee experience” chief. Nearly 5,000 people on LinkedIn, a social network, describe themselves as “chief happiness officers”. Still, most high-ranking managers will almost certainly need to perform each of these novel tasks to a greater or lesser extent. Since a day has 24 hours—and even hard-charging executives need sleep—their workload is changing. Devoting more time to employees and other stakeholders leaves corporate leaders less for other things, including mission-critical ones like coming up with a strategy for their firm. Since 2006 Michael Porter and Nitin Nohria of Harvard Business School have tracked what ceos do all day. They find that bosses spend 25% of their working lives on fostering relationships with insiders and outsiders, more than they devote to strategy (21%), corporate culture (16%), routine tasks (11%) and dealmaking (4%).Although Messrs Porter and Nohria do not yet have the relevant data, anecdotal evidence suggests that hybrid work may be skewing executives’ workday even more towards people management. Human-resources chiefs report that managers spend more time hand-holding staff, for example. Bosses were hybrid workers before covid-19. The pre-pandemic ceo spent around half their time in the office and the rest in external meetings, travelling or otherwise working remotely. More than a third of their communications was via video chat, email or the phone. The difference now is that everyone else spends just as little time in the office—if not less. This further reduces opportunities for face-to-face contact, which makes building relationships with employees more difficult, and almost certainly more time-consuming. As the 21st-century executive’s workload is changing, so too are mba curriculums. Many institutions are busily incorporating new, cuddlier modules. Harvard Business School now has one entitled “Reimagining capitalism”. insead, a French organisation, teaches students about “Business and society”. Plenty of mba programmes offer courses on interpersonal skills. Some are tailoring classes for the Zoom age, for example pointing out the common traps of virtual negotiations. That necessarily leaves less time for other, more traditional instruction. A few schools are even fundamentally rethinking their recruitment policies to reflect the evolving character of modern management. That may involve conducting group interviews to assess candidates’ soft skills rather than their intellect alone, or screening candidates for emotional traits such as empathy, motivation and resilience through questionnaires, letters or essays. Changes to whom business schools recruit, as well as to what they teach, may in turn affect who applies. Given that a business-school degree is designed in part to send a powerful signal of executive competence, that may determine what type of person rises up the corporate pecking order. It might not be your parents’ mba. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

Spiritual growth is an odd mandate for business schools preparing graduates to make manna in a secular world. One such institution, hec Paris, has nevertheless decided to send students on a trek through the French countryside to a remote village, where a Benedictine monk (a former lawyer) guides them through ethical dilemmas. Whether or not the three-day seminar represents a shift away from the profit-driven logic of business and towards a kinder, gentler form of capitalism is up for debate. But it shows that expectations for what makes a great mba programme—and, by extension, a great executive—are in flux.Listen to this story. Enjoy more audio and podcasts on More

As every wartime quartermaster knows, it is only when things go really wrong that you get noticed—or shot. The same is true in the logistics business. That is why it made news recently that Dave Clark, Amazon’s former logistician-in-chief, left the Seattle-based online giant to become ceo of Flexport, a shipping-software company. His departure comes just as Amazon is deluged with overcapacity in its vast warehousing and distribution business, which he captained during most of his 23 years at the firm. Some wondered whether he had faced the firing squad. In fact Mr Clark’s move looks to have been a voluntary one—with a hint of masochism. After doing a job that would have finished off most people, namely blitzkrieging through the retail landscape to bombard the world with Amazon packages, he now wants to prop up firms battling to get to grips with global supply chains. In doing so, Mr Clark leaves behind him a severe headache for Andy Jassy, Amazon’s boss. The titan of e-commerce is not just overbuilt and overstaffed. For the first time in its 28-year history it is in the midst of an inflationary whirlwind, which is playing havoc with its ability to predict the future. The situation is bad enough in Amazon’s American heartland. It is worse in its operations elsewhere. That makes it harder to fix.When looking at Amazon, most attention is paid to its North American retail business—mainly the United States, but also Canada and Mexico. It accounts for the vast bulk of sales, almost 60% in the first quarter. The hinterland, which is to say its international business, includes dozens of countries, from Japan to India, parts of western Europe and elsewhere, that punch well below their weight. Strange as it sounds to non-Americans tied to the tyranny of the doorbell, collectively they contribute just 25% of Amazon’s overall sales. Amazon Web Services, the fast-growing cloud business, makes up the rest. Unsurprisingly, then, Amazon’s frenetic logistics drive in the past two years began at home. Since the early days of the covid-19 pandemic, the firm realised that lockdowns would fuel demand for online shopping. It threw caution to the wind and went on a domestic warehouse-building and hiring binge. In two years, as Marc Wulfraat of mwpvl, a logistics consultancy, puts it, Amazon created as much fulfilment square footage as Walmart, America’s ubiquitous supermarket giant, has built in half a century. Its logistics business, started only in 2014, has leapfrogged FedEx and is catching up with ups. Amazon’s total workforce almost doubled after 2019, to 1.6m. The feat was a Herculean one—with Hydra-headed consequences when inflation and covid-19’s contagious Omicron variant hit. In round numbers, overbuilding, overstaffing and inflation each added $2bn to Amazon’s costs in the first quarter, year on year, driving it into the red. The next epic task is to squeeze those costs out. This is where the rest of the world becomes a big problem. For cost control may prove harder abroad than at home. Although Amazon says it will keep building American fulfilment centres, it plans to sublease some of the space until demand recovers. It also hopes to reduce staffing through attrition and allow third-party sellers to use some of the spare capacity. It assumes that domestic retail growth will pick up later this year. Prologis, the world’s largest warehouse operator (and a big supplier to Amazon), showed similar faith in the future on June 13th when it agreed to buy Duke Realty, an American rival, for $26bn.Look outside the United States and such optimism becomes harder to sustain. Amazon’s international business is, as in America, awash with overcapacity. But whereas North American sales grew by 8% year on year in the first quarter, in the rest of the world they shrank by 6%. Worse, in some big foreign markets, such as Britain and Germany, conditions may be deteriorating. Mark Shmulik of Bernstein, a broker, notes that overall e-commerce penetration is shrinking in Britain and mainland Europe for the first time in years. Consumer confidence is plummeting. Europe’s woes may be exacerbated by its proximity to the war in Ukraine. They may also be a harbinger of trouble in America.Some of the deep-seated problems in these non-American markets were easy to make light of when business was booming, but loom larger now. The biggest is profitability. Amazon’s international operations are almost perennially loss-making, mainly because of the huge amounts of cash it is ploughing into expansion; the losses were particularly severe in the first three months of this year. Another is spending power. Mr Wulfraat calculates that Amazon sells $881-worth of stuff and services a year for every American. No other country comes close; the figure is $436 in Britain, $97 in Italy and $13 in Mexico. Third, in the poorer regions where the company operates, such as India and Latin America, the infrastructure is shoddy and local competition intense. That makes it look like it is throwing good money after bad. Amazon says it intends to continue its international expansion. It believes the slowdown in e-commerce penetration in Europe is partly a reaction to excessive dependence on online shopping during lockdowns. And whatever happens to the world economy, Amazon is confident that the structural shift from offline to online commerce is real and permanent. Cutting down the Amazon When Jeff Bezos was running the company he founded, few would have second-guessed such assumptions. But this is new leadership in turbulent times. Mr Jassy, who took the helm less than a year ago, is still on probation. If Amazon’s forecasts are correct, pretty soon the successor to Mr Clark will be building yet more warehouses and Amazon will be back to the races. If they are wrong, the newish ceo may have little choice but to consider reducing Amazon’s exposure to some of the more peripheral parts of its hinterland. Would he have the guts? ■Read more from Schumpeter, our columnist on global business:What’s gone wrong with the Committee to Save the Planet? (Jun 9th)Why Proxy advisers are losing their power (Jun 2nd)BASF’s plan to wean itself off cheap Russian gas comes with pitfalls (May 28th)For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More