A Japanese consortium has launched a billion-yen ($8.7 million) search fund to help small and midsize enterprises (SMEs) without apparent successors find the next generation of leaders.

The Development Bank of Japan, the Nihon M&A Center, Career Incubation and other firms created joint venture Search Fund Japan and launched it in November 2021, reported M&A Online.

The fund seeks to tackle a thorny problem: Many of Japan’s SMEs have been family-run for generations and face an uncertain future because there is no family member to take over the business. The fund will seek business school graduates with the potential to manage these mature companies.

However, delivering on the promise of a search fund will not be easy, according to one insider. After all, business succession discussions are a sensitive topic, requiring knowledge of the target business and finding a best-fit candidate for the company—and/or family.

Under such mechanisms, searchers raise funds via investors to fund the talent search, acquire a target company and install new leadership. The new team then is expected to increase the company’s value during the investment period, while the investors seek an exit.

Search Fund Japan, which has a ten-year operation period, targets companies with sales worth several hundred million yen and those with a steady cash flow. A 20% internal rate of return is typical, according to the fund, which expects a 2.5-times return on investment within five years.

Similar funds have decades-long histories in North America and Europe, which see more businesses that lack leader-ship successors. Although the problem is also apparent in Japan, to date such funds have not been widely used in the domestic market.

Yamaguchi Bank, the Momiji Bank and the Kitakyushu Yamaguchi Bank launched the first such mechanism, the YMFG Search Fund, in early 2019. The fund is managed by Yamaguchi Capital and the Japan Search Fund Accelerator. In early 2020, Shiomigumi, a civil-engineering company with a 64-year history, was the YMFG Search Fund’s first acquisition.

The prospectus for brewing-giant AB InBev’s $5 billion Asian IPO earlier this year included 58 references to water—an acknowledgment, CEO Carlos Brito says, of the commodity’s increasingly tenuous status and its importance to the business. The maker of Budweiser and other brands sources the core ingredient for most of its products locally in plants around the world—including 37 located in high-water-stress areas, where supply often can’t keep pace with demand. That’s made managing potential water risks an increasingly intricate and central part of AB InBev’s broader strategy.

“Water is our business,” Brito told attendees at a September sustainability conference. “We count every drop of it.”

As recently as the late 1990s, few companies considered water a major risk factor to their operations. It was an assumed resource, there for the using, at whatever price (if there was one) the local water utility charged. Today, water quality and quantities are under increasing pressure across the globe, fueled by climate change, urbanization and surging manufacturing and agricultural production volumes.

A color-coded map published by the World Resources Institute’s (WRI’s) Aqueduct initiative shows almost all of India, Western Asia, swaths of Africa and northern China, and parts of the American Southwest bathed in the maroon that designates “extremely high” levels of water stress. Droughts seem more severe today and floods more devastating. Aquifers are being drained and groundwater sources polluted. By one count, 95% of the world’s population lives in a place with less water than 20 years ago. One in 3 people lacks access to safe drinking water, according to a report by the World Health Organization and Unicef.

Water is causing stress for corporate bottom lines, as well. The CDP (formerly the Carbon Disclosure Project), which promotes sustainable business practices, estimates that companies in 2018 lost $38.5 billion in earnings from water-related shutdowns, slowdowns and other operating issues. “Water risks are often about top-line revenues and access to the capital markets,” says Monika Freyman, a Director of Investor Engagement for Ceres, a nonprofit that promotes sustainable practices by companies.

The issue doesn’t impact just beverage makers. Companies in industries as diverse as mining, energy, semiconductors and apparel have been forced to get more serious about managing and incorporating water-related risks into their strategic planning.

“If you don’t manage the risks effectively, you’re not able to expand or move into a market as rapidly as you want to, because of water shortages. You can’t expand production, because the community is concerned about local water impacts,” Freyman says. “Proactively managing water risks is a license to grow.”

External, third-party scrutiny of corporate water-risk management practices has blossomed over the past decade, raising the stakes. NGOs, including the WRI, the World Wildlife Fund, Ceres, and the CEO Water Mandate and China Water Risk, are pushing companies for better disclosure and more action.

“We see corporations as critical levers in flagging the importance of better water governance to local governments and regulators,” says Paul Reig the WRI’s director of corporate water stewardship.

Investors and ratings agencies are paying closer attention. In September, for example, Moody’s Investors Service warned that the mining industry faces increasing risks of facility shutdowns due to water availability and pollution concerns—factors that could affect a company’s ability to fund future growth.

Business is responding. An October study of 35 large publicly traded food companies by Ceres found that “77% now specifically mention water as a risk factor in their financial filings, up from 59% in 2017.” About one-third of them now charge boards and senior management with water-risk oversight and strategy, up from 10% two years ago. In a separate survey by GreenBiz (a business-sustainability media, networking and events company) and Ecolab (a water solutions company), 88% of large firms reported setting some kind of internal water-related targets.

There’s a sense of urgency behind these efforts. Freshwater is vital to all kinds of manufacturing, supply-chain and logistical processes; and it’s used in all sorts of ways—to clean products, heat and cool plants, feed animals and raise crops. For example, it takes nearly 40,000 gallons of water to manufacture a car, according to the US EPA. Various other estimates include 3,000 gallons to make one smartphone and 1,800 gallons to produce one pound of beef. A wafer-fabrication plant can use up to 149 million gallons per month to produce 40,000 30-centimeter (11.8-inch) silicon wafers for semiconductors, according to China Water Risk, a Hong Kong–based nonprofit.

“Certain industries have larger water footprints; but no industry can survive and thrive without a clean, sustainable supply of water,” says Kirsten James, water program director for Ceres.

The Triple Threat

Water risks are often divided into three broad categories: the physical (quality and quantity), regulatory (local officials imposing limitations or changing the price) and reputational. In an environmentally sensitive world, no company wants to be labeled as a water scofflaw.

But make no mistake: It’s mostly about quality and quantity. Water is a global issue that, by its nature, is intensely local. If there’s enough freshwater to go around in a given geography, then there likely won’t be much risk of any kind. If not, all bets are off.

In the worst case, corporate water-related risks can snowball—quality and quantity concerns sparking community pushback and regulatory consequences. In some cases, public outcries can force a company to shutter entire operations. It happened to Coca-Cola in Plachimada, India, where groundwater shortages and pollution near its bottling plant sparked protests and led government regulators to revoke the $25 million plant’s operating license. Newmont Goldcorp, currently the world’s largest gold miner, was forced to halt gold- and copper-mining operations at its Conga project in northern Peru in 2011 for similar reasons and has yet to gain approval to reopen the facility.

Often, the threats are more insidious, touching corporate supply and logistical chains in ways that can dent profitability and threaten growth. Olam International, a global commodity trader, saw second-quarter profits decline 36% year-on-year due, in part, to a drought in Argentina that hurt peanut suppliers. In 2018, and again in the summer of 2019, low water levels on the Rhine River slowed ship traffic to a trickle, causing shipping bottlenecks for chemical companies and other industries in the region and dampening growth for Germany’s entire economy.

“There was no water to ship their goods, so they had to shut down production,” explains Peter Adriaens, CEO and co-founder of Equarius Risk Analytics, a Michigan startup that is fine-tuning an algorithm to help investors gauge a company’s water risk. “That’s a real water risk with a significant bottom-line impact.”

Water risks are often governed by a company’s overall enterprise-risk-management framework. It’s part art, part science—driven by numbers and an intimate understanding of individual operations and their water appetites. At General Mills, a packaged-foods company, water risk is studied intently, but as a triggering event for bigger-picture risks like commodity pricing volatility and business interruption, not a standalone endeavor.

“If a plant gets shut down, it could be caused by water, political instability or trade [conflicts]. They all create the same risk,” says Jeff Hanratty, the company’s Applied Sustainability manager. “We’ve assessed the impact of that end result in advance.”

Water-risk management is increasingly becoming its own discipline, with its own distinct characteristics, measurements and lingo. Done well, it can be a full-out financial calculation, filled with complicated variables (like the weather and local politics). Commitments set at the enterprise level can influence plant-siting decisions, facility acquisitions, supplier choices, technology investments and even product-development and marketing strategies.

“Water scarcity can be a great driver for innovation,” said Virginie Helias, Procter & Gamble’s chief Sustainability officer, at the Aquanomics: Water, Wall Street & Climate Change conference in New York. After studying water-stressed Cape Town—where local residents were limited to 50 liters (13.2 gallons) of water per day over an eight-month period in 2018—P&G, the global consumer goods company, developed shampoos that don’t require water, and aims to market them in other countries.

For most, however, managing water risk is about avoiding trouble—things like business continuity, profits and maintaining access to the capital markets. Big corporate initiatives often must cascade down to business-unit level and then local geographies, facility-by-facility, to inform action plans and goals. The process often starts by simply overlaying publicly available water-stress maps with those of the company’s operations, and then digging deeper on the facilities that appear to present the greatest risks.

Nick Martin, a Colorado-based senior consultant with Dutch environment, health, safety and sustainability consulting firm Antea Group, helps companies set up water-risk management programs. He likes to visit high-risk facilities in person, to get a feel for plant management’s understanding of the issue and the local dynamics. “We look at the hydrology of the area. What is the structure of the aquifer? What’s the condition of the lakes and rivers? How much demand is there versus precipitation levels? What are the demographics of other users? What’s the regulatory environment?” he says.

Pricing is a key challenge. While there’s a global market for carbon emissions, no such thing exists for water. The water bill a company gets from the local utility never comes close to reflecting the commodity’s true value or cost.

“Water is underpriced everywhere,” WRI’s Reig says. “Underinvestment by local utilities is a root cause of the problem.”

Many companies consider finding a risk-adjusted “internal price” for water—one that reflects its true value and costs by location—crucial to the risk-management process. This can take many forms. In some facilities, for example, water’s primary purpose is heating or cooling. Understanding the energy and other costs associated with those activities can lead to technology investments that generate significant expense savings.

When Microsoft built a new data center in San Antonio, Texas, water risk was a big concern. Data centers use a lot of water for cooling, and the local watershed is stressed.

The company, using an Ecolab tool called the Water Risk Monetizer, analyzed water stress in the area, groundwater recharge levels, energy costs, social impacts like biodiversity, other corporate water users and other externalities to derive a risk-adjusted internal price more than 11 times greater than what it actually pays for water.

While such risk-adjusted numbers don’t actually make it onto an income statement, they provide a construct for management to compare and contrast against other facilities and prioritize investments and other actions. In this case, Microsoft concluded it would save $140,000 per year by investing in technology that uses recycled “graywater” for cooling, as opposed to freshwater. “If a business can monetize the risk, it can measure and manage it proactively,” says Emilio Tenuta, Vice President of Sustainability for Ecolab, which worked with Microsoft on the project. “You can’t make decisions based simply on current market price.”

Internal pricing can help set what are called “context-based water targets” that can bring clarity as to which water-risk mitigation efforts to prioritize. In simple terms, a company with 100 plants around the world facing some kind of water risk might choose to invest in only the 10 plants where mitigation efforts carry the biggest financial benefit.

But while internal-pricing exercises are common, they’re not universally acclaimed. Equarius’ Adriaens views them as off-balance-sheet mental exercises that fail to value water in the context of core business operations. “The question has to be, ‘If we don’t have water, how will it affect our operations?’” he says.

General Mills’ water-risk management program doesn’t devote much time to internal prices; because 99% of the company’s water risk comes from outside of its plants, on the farms that supply grains and other inputs for its products. “Trying to reduce water impacts in our plants is important, but it’s not going to move the needle,” Hanratty says. Instead, the company screens local watersheds and consults with outside experts to gain insights on factors like farm irrigation intensities and rainfall levels.

It also performs full-out water-risk assessments of its entire network every three years to identify areas where key ingredients, such as oats, cocoa or almonds are most vulnerable to water risks. The process has led to General Mills designating eight “priority areas”—four in the US, three in China and one in India’s Ganges River valley—where it engages with other companies and local officials to address water-related issues. In California, home to the world’s largest almond crop, it has joined with NGOs and other companies, including MillerCoors, to figure out how to recharge aquifers without disrupting local farms.

“If we lost the almond crop in California, it would seriously impact our Nature Valley [granola bars and cereal] business,” Hanratty says. “You can’t buy all those almonds someplace else.”

Such efforts can sound soft; but for companies wanting to build local water sustainability, there aren’t many alternatives. At apparel maker Levi Strauss & Co., a recent in-house assessment concluded that a pair of jeans uses about 1,000 gallons of water over its entire life cycle—from crop production to end-user laundering—68% of which involves growing the cotton. Levi makes much of its apparel in “high water-risk areas” like China, Pakistan and Mexico. Assessment in hand, it is now pressing farmers and other suppliers to become more water-efficient or risk losing its business—an effort to make its own supply chain more sustainable.

“What we’ve said to our suppliers is that if you’re in a high-risk water location, by 2025 you need to reduce your absolute water use by 50%,” said Michael Kobori, Levi’s Vice President of Sustainability, at the Aquanomics conference.

In this water-stressed world, anticipating and managing such risks is viewed not only as a sign that the company is thoughtful about the community and environment, but as a point of strategic differentiation, a competitive advantage and even a social license to operate.

Adriaens predicts that the scrutiny will only increase. “These are still early days,” he says. “I’m convinced that it won’t be long before water is priced into a company’s share price.”

Corporate water stresses and risks promise to intensify in the years and decades ahead. That alone is reason for financial executives to pay attention.

The merger of equals between BB&T Corp. and SunTrust Banks, announced in February, suggests something has changed in the US banking landscape. The biggest banking deal in a decade creates a Southeastern powerhouse with a $66 billion market capitalization and $442 billion in assets—the sixth-largest commercial bank in the country.

The longtime rivals had flirted in the past, but never got near to marriage. What changed? A realization that “as the banking model shifts from branches and real estate to technology, scale is crucial,” says Stephen Scouten, an analyst for Sandler O’Neill + Partners.

Regional banks no longer can rely on a local presence to retain corporate and retail clients, and are losing in the digital race. JPMorgan Chase’s 2018 budget for just technology and marketing, for example, was $16.5 billion—more than the combined total expenses of BB&T and SunTrust. The merged entity’s plan is to invest the estimated $1.6 billion in savings gained from the merger in digital initiatives, such as new technology and an innovation center.

“In order to survive in this really quickly changing world, it’s important to be willing to change,” said BB&T’s Kelly King, who will be the new financial institution’s chief executive officer. BB&T already had a program to shift resources from branches and people to technology, dubbed Disrupt to Thrive. “This is kind of the ultimate ‘Disrupt to Thrive’,” he said.

While retail-banking efficiencies drive the deal, commercial clients will notice a difference. Robinson Humphrey, SunTrust’s corporate and investment banking arm, has proven adept at cross-selling investment banking services to its commercial customers. BB&T has a sizable commercial book—business loans make up 46% of its balance sheet—and those clients can expect an aggressive new competitor for their fundraising and transactional services.

Mergers of equals often fail to deliver promised results, but given the dynamics, other large US regional banks might follow suit. Analysts cite KeyCorp, Huntington Bancshares, Fifth Third Bancorp and Regions Financial Corp, all $100 billion-something institutions, as potential candidates.

Action at the top of the food chain makes everybody hungrier.

As lead mechanical design engineer for BMW’s sprawling manufacturing plant in Spartanburg, South Carolina, Ryan Lambert heads a team of nine engineers responsible for designing and procuring custom jigs, fixtures and other tools for the assembly line.

Until recently, the task required spending a lot of time on the phone and email, finding local machine shops with the ability and capacity to execute his plans. That changed a few years ago when Lambert began using Xometry, a Maryland firm that’s often described as “Uber for manufacturing.”

Now, he uploads design specs to Xometry’s online platform, which then uses artificial intelligence and algorithms to instantly price jobs and selectively bid them out to a network of some 2,500 prescreened small machinists scattered around the country.

“It allows me to hand over my prints and know I can get the finished product on a set deadline and at a set cost,” Lambert explains. “It makes me more efficient.”

It’s a set-up in which each player gets something of value: BMW gets the tools it wants faster and cheaper; the machinists generate additional revenues by using an idle asset and more work capacity. Like Uber, the ride-hailing platform, Xometry takes a percentage for bringing the two sides together.

“There’s a huge amount of potential capacity and capability in custom manufacturing that goes unused,” says Randy Altschuler, privately held Xometry’s CEO. “This is about using the sharing economy to make it easier to get things done.”

BMW and Xometry are both players in a blossoming sharing economy that is transforming the way many industries conduct business.

Only a decade ago, sharing was viewed as an intriguing peer-to-peer idea that wasn’t very relevant for established companies. Today, it’s the latest rage—albeit more evolutionary than revolutionary—with potentially far-reaching implications for how business gets done.

“I’ll be very surprised if we’re still talking about the sharing economy five years from now—not because the activity will stop, but because it will simply be part of the way we do business,” says Urvesh Shelat, a Berlin-based venture architect lead at Boston Consulting Group’s Digital Ventures and former ambassador to BCG’s Henderson Institute.

For now, defining what even counts as sharing—let alone the market’s size—can be difficult.

For example, a Juniper Research study put global sharing-platform revenues at $18.6 billion in 2017, yet a PwC study for the same year pegged Germany’s sharing economy alone at €22.9 billion ($26 billion). China’s government reported $767 billion in sharing transactions in 2017.

More than $23 billion in venture capital has poured into sharing startups since 2007, according to BCG—figures from 2017 that have certainly risen since and don’t account for investments by larger companies.

Purists say true sharing occurs only when the platform serves as an intermediary and doesn’t own the assets. Others take a broader you-know-it-when-you-see-it approach that includes platforms owned by manufacturers or their partners.

“There’s a lot of vagueness about what constitutes the sharing economy,” says Michael Cusumano, an MIT management professor and author of an upcoming book on the platform economy.

As sharing spreads into the business-to-consumer and business-to-business arenas, the underlying trend is becoming clearer: a mindset shift from ownership to usage that, played right, can benefit end users, asset owners and the environment. (Sustainability, in the form of getting more out of existing assets, is part of sharing’s appeal.)

“People don’t care as much about ownership as they used to. They just want to use things,” says Vibhanshu Abhishek, a professor of information systems at the University of California, Irvine, who studies the sharing economy. “That’s a fundamental shift in the marketplace.”

Many assume that sharing is rooted in the preferences of millennials, who allegedly prefer experiences over material goods. Yet hard-nosed corporate leaders wouldn’t be pursuing it if sharing didn’t make business sense.

At its core, the sharing economy is a technology play, employing digital platforms to lower transaction costs and match under-utilized assets—be those room space, farm machinery, hospital equipment, clothing or even talent—with paying users.

“The algorithm is our most important employee,” says Sebastian Sorger, CEO of LoadFox, a subsidiary of Munich-based MAN Truck & Bus. LoadFox operates a platform that matches European freight forwarders with carriers that have extra space in their trucks. “Humans can’t combine loads as quickly and profitably as the platform can,” he adds.

Sharing works best with pricier assets that are used often enough by some to justify ownership, but are needed only occasionally by others who are willing to pay for short-term usage. In a market with frequent and infrequent uses, the model gives manufacturers a way to serve users who would never consider purchasing their products, and to sell more to owners who can monetize their purchases.“[With sharing,] low-usage consumers end up renting instead of forgoing consumption,” says Abhishek. “It’s a win-win-win for the borrower, owner and manufacturer.”

Higher-Level Sharing

For younger pure plays with sharing-based business models—think the Chinese ride-sharing service Didi Chuxing or Airbnb—it’s a no-brainer. Car rides and vacation homes fit the model perfectly. For established businesses, things geta little more complicated. The sharing economy can be a way for companies to generate additional revenues, tap new markets or drive efficiency. But it also can require changes that can be tricky to navigate: to business models, accounting practices and cultures.

Nor, despite the hype, is success assumed. “Almost every market could have a sharing-economy component to it,” Cusumano says. “But not all of these platforms are profitable. It often takes a lot of money to attract enough users and suppliers to generate the network effects necessary for success. Some never get there.”

Of course, there is more than one way to play the sharing game. The choices are unique to the company, based on its products, strategy and business model—and its willingness to change. Want to set up or participate in a platform to share your wares? Several models exist, each with its own advantages and drawbacks. Some own the platform and asset, which provides control over pricing and scale but requires capital.

One example is Avis Budget Group, the car-rental company and owner of Zipcar, a car-sharing platform that allows member users to reserve and pick up a car, all with their smartphones. Others, like Uber, set the price but don’t own the asset. Airbnb, which doesn’t own or set prices on anything, represents a third model.

If you believe sharing will become a bigger part of the economic landscape, then owning platforms—and the revenue streams from them—can be smart. “Do you want to be the commodity that’s sold on the platform, or do you want to own the platform?” the University of California’s Abhishek asks.

The downside is that owning assets is capital-intensive. One key benefit of sharing, says BCG’s Shelat, is the ability to change “capital expenditures into operating expenses,” which frees money for other purposes.

Changes in money flows can challenge finance and treasury operations. While traditional sales revenues typically come in big chunks, for example, those from sharing come in comparatively smaller, more frequent doses. “You’re generating millions of small invoices that have to be processed, and the revenue stream can be unclear,” says Nikolas Beutin, a customer practice leader and partner at PwC Europe.

Culturally, it’s not unusual for sharing models to face resistance from the sales force. “Cannibalization of sales is often a big concern,” says Jose Guajardo, a business professor at the University of California, Berkeley.

Even if you get buy-in from employees, sharing-based business models often require a shift from a sales-oriented culture to one that’s more about maintenance and service. That’s a skill set many companies with a sales orientation don’t possess.

“The question is, how do you play two games well at the same time?” Shelat says. “It might be uncomfortable to your core culture and processes. But if you’re in an industry where there’s a sharing opportunity, and you stay in your own traditional wheelhouse, someone else will play that game and steal your business.”

In recent years, established companies in a wide variety of industries have taken the sharing plunge—either as a business unto itself or as a means to help achieve broader strategic goals. They have a built-in advantage: According to a 2016 BCG survey, 55% of Indian consumers, and 53% of those in the US, would prefer to rent from an established brand than a startup. Trust is important to the sharing economy.

In addition to its work with Xometry, BMW owns platforms for car-, parking- and charging-station-sharing services, all under the “Now” brand, eyeing them as crucial to its strategic expansion into “mobility services” to complement the core car-making business.

“Sharing concepts are gaining market share and harbor major potential for … us as a mobility provider,” explains Christina Hepe of BMW Munich.

Daimler, Toyota, GM and most other automakers have similar platforms. So, too, do heavy equipment makers such as Caterpillar, which in 2017 acquired full ownership in equipment-sharing firm Yard Club.

Such platforms are typically set up as entrepreneurial startups, not divisions, with their own management and funding, so they can adapt quickly to changes in the market. “If you bury it five layers beneath the CEO, you’ll never attract the right leadership,” Shelat says.

In India, where according to BCG only about 15% of farmers can afford to buy tractors, Mumbai-based tractor maker Mahindra & Mahindra runs a platform called Trringo, which allows owners of Mahindra (and rivals’) equipment to share with fellow farmer-users by the hour. Arvind Kumar, formerly Trringo CEO (now with Force Motors), praised the company’s role in “driving rural prosperity by empowering farmers,” and says it has helped achieve several strategic objectives, including expanding the company’s customer base and reputation.

MAN’s management team views LoadFox, in part, as a way to increase sales. Carriers in Europe typically fill only 60% of their load capacity, Sorger says. Trucks made fuller with the help of algorithms, the reasoning goes, should make for happier buyers.

“In the future, OEMs will not earn money by selling steel alone,” LoadFox’s Sorger says. “There must be digital services to help the client.”

It’s not just manufacturers jumping into the fray. Clothiers, such as Ann Taylor and New York & Company, are working with platforms that allow customers to share expensive clothing for short-term usage. DSW, a US retailer, has even talked about renting shoes for special occasions. AccorHotels is among the hoteliers with sharing platforms to counter the effects of Airbnb.

“Sharing has become an integral part of many of our clients’ growth strategies,” says Judith Wallenstein, Munich-based senior partner and managing director at BCG and European director of BCG’s Henderson Institute.

Sharing done right can help global companies crack new markets and boost revenues. While the most-successful business models come out of the US, adoption rates are higher in emerging or less-developed markets.

“If you think you can’t sell heavy machinery, expensive electronics or high-end fashion in a market because the local population can’t afford it, then this is your way in,” Shelat says. To date, there aren’t many high-profile examples, he adds; and legal and regulatory risks can increase when leaving your home market. Even so, the idea makes sense given the soaring global popularity of sharing.

In China, where the word for “share,” gongxiang, made a list of the top 10 buzzwords in 2017, President Xi Jinping has hailed the expansion of the sharing economy as “a new driving force” for economic growth. The government-run Sharing Economy Research Institute predicts sharing will account for more than 10% of China’s GDP by 2020.

Despite that, it’s not clear how willing governments are to open doors to foreign firms. A high-profile attempt by Uber to enter China sparked a nasty legal battle and price war that eventually forced the sale of its division there to Didi Chuxing.

There are ways to capitalize on the movement without sharing. Some insurers now offer coverage tailored to platforms. Dutch bike maker VanMoof has thrived by integrating smart technology, locks and other sharing-friendly features into its cycles. A BCG study found that more than 80% of asset owners in the US and India would pay more for products that are durable enough to withstand the rigors of sharing or boast sharing-friendly features like keyless entry for cars.

Sharing to boost efficiency or cut costs is another way to benefit. Solar-power-sharing schemes are getting more popular, for example, allowing companies to get greener without investing in pricey systems.

Back in South Carolina, BMW engineer Lambert says working with Xometry has been so effective that BMW plants in Mexico and Germany might follow suit. To him, it’s less about what the Munich headquarters is doing or saying than about day-to-day results.

“We’re not using it because we think sharing platforms are cool,” he says. “We use it because it’s better than the old way of doing things. It gives us a competitive advantage.”

You can pity Jamie Miller for the difficult task she’s been assigned or celebrate the challenge she has taken on. Either way, there’s no denying the enormity of the job before her. Indeed, she might help redefine an entire sector.

Named CFO of General Electric (GE) last October, Miller, 49, has been the right-hand woman—part strategist, part fixer—to CEO John Flannery as the once-iconic conglomerate undergoes a dramatic makeover that will leave it smaller and less complex.

Flannery was abruptly and unexpectedly removed as CEO on October 1 and replaced byLarry Culp who isthe 126-year-old company’s first outsider to hold the position.

Before all is said and done, the company that in recent years boasted a huge financial arm (including a global consumer bank), a television network and aspirations to be what former CEO Jeffrey Immelt called a “top-10 software company” will be centered on just three core businesses: aviation, power plants and renewable energy. “We’ve described 2018 as a reset year,” Flannery told analysts in a July conference call.

Among the units that have been (or will be) sold, spun-out or significantly shrunk: health care, digital technology, locomotive manufacturing, and oil-services company Baker Hughes, which GE bought 63% of in 2017. GE Capital, once a $600 billion–asset behemoth, now holds $138 billion, with more cuts coming. “It’s about reducing complexity and improving GE’s ability to run its core businesses,” says Eric Ause, a senior director at Fitch Ratings. “GE has been dealing with the complexity of the overall company for quite a while.”

The spectacular implosion of GE’s earnings and share price—the company lost $6 billion in 2017, while its market cap, around $280 billion just two years ago, recently dipped near $100 billion—has sent a shudder through the world of conglomerates, many of which have been struggling themselves. Fair or not, it’s raising questions about the whole business model.

“GE’s meltdown has caused the entire large-cap diversified industrial space to be massively questioned,” says Nicholas Heymann, an analyst with investment bank William Blair. “Most investors today view the multi-industry space as too complex and higher-risk than smaller, more agile global companies.”

The list of multi-industry giants pursuing size-reducing makeovers includes the likes of Honeywell and United Technologies in the US, China’s HNA Group and Anbang Insurance Group and old-line European titans Siemens and ThyssenKrupp. And that’s just a sampling.

About the only place where conglomerates appear secure is Asia, where they are typically younger, family- or entrepreneur-owned, and frequently play the role of “national champion,” promoting a nation’s interests globally and attracting foreign investment. Think Korea’s chaebols.

“A conglomerate in Asia speaks to sustainability. [It’s] like a development board that represents the whole country,” says Terence Yong, who runs the Western Multinational Banking business for DBS Bank in Singapore. “In the West, it’s more market- and investor-driven.”

A need for agility and business synergies—both tougher to achieve with a multi-industry enterprise—and a wave of shareholder activism are driving big companies to think smaller. Conglomerates make ideal targets for funds eager to turn a quick sum-of-the-parts profit in a breakup. “It’s an old-fashioned structure that is getting increasingly difficult to manage” and leaves them ripe for dismantling, Christer Gardell, co-founder of Sweden’s Cevian Capital, told the Financial Times in 2017. Cevian owns stakes in ABB and Ericsson, among others, and is pressuring them to divest businesses. “I think it’s the end of conglomerates,” Gardell predicted. “The major trend in M&A over the next five to seven years will be demergers.”

GE being GE, its recent moves have drawn a lot of attention. But not everyone agrees that they portend the death of the multi-industry model in the West. “What GE is doing is as much about internal mistakes it made coming home to roost as it is an indictment of the conglomerate business model,” says Martin Sankey, a senior research analyst with Neuberger Berman, a mutual fund company that owns about 900,000 GE shares.

The company that started with Thomas Edison’s light bulb has a history of leveraging its global reach by taking on new industries, often via acquisition. Along the way, it grew into one of the world’s most profitable and admired companies. With hindsight, analysts say, it was mostly a mirage—much of it a creation of the finance side of the house. Former CEO Jack Welch was considered a legend, but didn’t pay $10 billion in loss reserves from a reinsurance business GE once owned in order to pump up earnings, leaving Immelt to clean up the mess.

Immelt’s team made things worse with some ill-timed bets that left GE overexposed to an increasingly complex (and risky) web of businesses—a big diagnostic-imaging acquisition in health care, for example, or the $700 million spent annually on building a digital software business—that became too cumbersome to run profitably. “Capital misallocation was the main issue,” Heymann says.

Things came to a head in 2016, when some $34 billion in excess pension obligations and a failed share-buyback strategy helped create a cash-flow crunch that was downright unseemly for a company of GE’s pedigree. In 2017, the year Immelt’s tenure ended, GE’s share price fell more than 40%, even as the S&P 500 rose 24%.

Miller, a former GE controller and CIO, has been part-architect, part-spokesperson for the effort, delivering to investors and the world news both good and bad, including a halving of GE’s dividend right after her appointment. “As we look out the next couple of years, we believe having a healthier … dividend payout ratio is the right thing for the future,” she told investors.

Miller, who was unavailable to comment for this story, benefits from not having been CFO when the bad stuff happened, turnaround experts say. But the demands of being CFO of a large company in turnaround mode are immense—and potentially tricky. Analysts, consultants and investors say that Miller must manage liquidity, asset sales, deleveraging efforts and the company’s response to regulatory investigations (of which there are a few).

Like CFOs in other turnaround situations, Miller must serve several masters, including a board with eight new members eager to straighten things out. It’s common for CFOs in her position to provide the audit committee with regular “reality checks” on the CEO’s plans and strategy.

Simplifying GE is a complicated endeavor itself, and not formulaic. In one illustrative deal, part of the company’s transportation business, including locomotive manufacturing, was sold to Wabtec., while another part was spun out to shareholders and then merged with a Wabtec subsidiary, all to keep the deal tax-free for investors. GE owns 50.1% of the new Wabtec.

Equally daunting, Miller must work within—and presumably try to change—a finance culture with a reputation for “very aggressive accounting practices that caused earnings to be significantly overstated,” Sankey says. In recent decades, GE failed to account properly for liabilities attached to sold assets, including some subprime mortgage loans. Part of what led to the 2016 cash crunch was the build-out of “contract assets”—sales of items like gas turbines, which would be recorded fully in the sales year but be paid over a decade. “It was great for reported earnings, but not great for free cash flow,” Heymann says.

Whether Miller can forge a new culture is open to debate. Sankey notes a recent switch to last-in, first-out accounting from first-in, first out, which he says is counterintuitive at a time when inflation is on the rise—but which can add a couple cents to earnings, suggesting “she hasn’t been able to change that aggressive culture.”

In a fast-paced, grow-or-die corporate world, it’s tempting to agree with the critics who say that GE’s realignment marks the beginning of the end for the clunky conglomerate, but analysts say that would be a mistake. Conglomerates fall in and out of favor on a regular basis and are always adapting to changes in the operating environment. “In a healthy world, a conglomerate should be rejiggering its portfolio in a measured, offensive fashion over time,” Sankey says. “What’s happening at GE is the result of an implosion. It’s a defensive transformation, not offensive.”

That makes Miller’s job challenging, for sure. Whether it is something to be envied will depend on how GE performs going forward.

We live in a real-time world where execution speeds for many tasks are measured in seconds, if not milliseconds. Except, that is, when it comes to payments, where it’s still not unusual for transactions to take days to settle.

Now, a wave of instant payments schemes is sweeping the globe, promising to revolutionize the way money is exchanged, and creating new opportunities and challenges for banks and corporate treasuries.

In just the past year, real-time payment (RTP) schemes went live in the US, the EU and Australia. Before 2018 is out, at least eight other markets—Hong Kong, Malaysia, DR Congo, Spain, Portugal, Belgium, Slovenia and the pan-European central bank’s Target Instant Payment System—are expected to follow suit.Throw in existing schemes in the UK, China, India and more than a dozen other countries, and over half the world’s population now has access to real-time payments solutions.

By 2020, Citi estimates, 50 countries with 85% of world GDP will have instant payments. Clearly, momentum is building.

“Banks haven’t come up with something this game-changing in payments for decades,” says Carl Slabicki, director and product line manager of immediate payments at BNY Mellon. “This is the first time we’ve been able to reset the playing field [and] build something new that can present opportunities for the next 10 or 20 years.”

RTP is mostly a nation-by-nation affair. Some schemes are further along than others and serve as models. In a 2017 report, FIS, a banking technology provider, gave India’s scheme its highest rating, while also giving high marks to Denmark, Kenya, Singapore and the UK, among others. But all schemes are less than perfect.

In markets where RTP has been recently introduced, banks have been slow to embrace it. In the US, fewer than a dozen large banks currently offer real-time payments. BNY Mellon, Citi and JPMorgan Chase are among the exceptions.

In Australia, many small and community banks have already linked the country’s hyped New Payments Platform into their mobile apps, but as of press time only two of the “Big Four” banks have done so. The other two, along with major foreign banks like HSBC, say they’re working on it. “It’s like the highway is there, but there are no vehicles for corporations to use on it,” says Arnie Cho, a senior analyst with GlobalData Financial Services in Sydney. The reasons include competition for investment dollars from other technology endeavors and a perceived relative lack of demand from clients.

Existing ACH (automated clearing house) and wire systems aren’t exactly broken, and they’re not going anywhere. Some potentially significant RTP catalysts—most notably enhanced cross-border messaging standards—have not been fully embraced.

“We get a lot of questions about the business case,” says Sandra Horn, senior principal product manager with ACI Worldwide, a Florida-based payments firm. “There’s an investment required, but what’s the return?” Many companies face significant costs converting to RTP.

Citi, which has made global instant payments a key part of its core strategy, is helping some clients “re-engineer their entire treasury process to make the best use” of RTP, says Manish Kohli, Citi’s global head of payments and receivables.

Even so, Erika Baumann, a senior research analyst with the Aite Group, says that banks are understating corporate demand for the service. She estimates that less than 1% of all business-to-business payments globally are currently made in real time, while some surveys show a majority of companies wanting it.

“It’s an industry joke when you talk about who’s winning the race [in instant payments], that the banks are coming in last,” Baumann says. “It’s ironic, because there’s corporate demand out there, but a lot of banks don’t have a strategy.”

Kohli acknowledges instant payments face “some challenges related to reachability.” Even so, he says it’s only a matter of time before “the benefits driven by the emergence of instant payments will drive rapid adoption by banks.”

For corporates, those benefits include enhanced liquidity and transparency, irrevocability of transactions and 24/7 availability. Everyone prefers to get the money they’re owed now, as opposed to waiting several days for a transaction to close. It could be a boon to risk-management efforts.

For banks, it’s a way to build stronger relationships, cut costs and create new sources of fee income. Today, the most common corporate use cases are in the business-to-consumer arena—tax refunds, brokerage and dividend transactions, legal settlements and insurance payouts—where the volumes can generate a return on investment for banks.

Nandan Sheth, US-based head of global debit solutions for First Data Corp., a payments processor, has experienced the benefits personally. After an adjuster reviewed storm damage to his house, “they asked for my debit card number and the funds were in my bank account two minutes later,” he explains. “It’s a powerful way to build loyalty.”

In time, the financial sector should be able to leverage real-time payments to innovate B2B product offerings and pricing.

Many of the potential use cases center on what’s attached to the payment. A key feature of ISO 20022, the global financial messaging standard, is the ability to include richer, more-detailed data with an instant payment. Invoices, confirmations and “request for information” messages can all be sent along the same pipeline, speeding processes and lowering costs.

“It’s about getting more certainty and speed, reducing the capital required for trade, and shipping goods faster,” says Harry Newman, London-based head of EMEA initiatives at SWIFT, the financial messaging and payments cooperative.

The enhanced messaging capabilities open the door to services like “request for payment” (RfP) which allows authorized billers to “pull” payments from a payer. Today, most schemes are limited to “push” payments initiated by the payer. Interest in RfP is growing in Europe and Asia.

The holy grail is cross-border instant payments. The RTP movement has been driven mostly by central banks and their national payment associations, employing different technologies and communications protocols.

ISO 20022 creates a common language for those disparate systems, which should eventually make RTP an efficient and attractive alternative for managing trade finance and global supply-chain payments.

“When you think about all the different payments that happen in a supply chain—a shipment has been received on the dock and payment is due, and one has the ability to move a message along at 11 p.m. on a Friday because it’s all automated—this is the perfect payment type,” ACI’s Horn says.

As things evolve, expect some banks to offer “overlay services”—value-added capabilities layered on top of their RTP systems to generate additional revenues.

Chris Allen, a managing director with Deloitte Consulting, offers the example of a US company needing parts immediately from overseas to repair a jet plane. “You need the parts quickly, and they are regulated. Serial numbers have to be tracked and reconciled,” he explains. “The new schemes that are emerging allow so much more data into the message that [companies] will save weeks in lost time and reduce their risk and regulatory challenges.”

It could take up to a decade for cross-border RTP to become a reality. Nobody cares to make a prediction. “There is not yet the ubiquity of a master plan” that can guide global direction, Baumann says. “Connecting these country schemes and predicting adoption globally is difficult, there are so many challenges.”

Either way, the broader RTP revolution is underway, with enough momentum that banks and corporates alike must decide how faster payments will fit into their strategies.