Business school professors’ picks

Welcome to professors’ picks, offering a weekly curated selection of FT articles by and for business school faculty to connect classrooms to current events and to develop students’ critical thinking.

Read all submissions at www.ft.com/bschoolpicks. Save this link in myFT to receive emails alerting you to each new edition. Search the tags for relevant topics to illustrate teaching points.

Comments or contributions? Get in touch at profpicks@ft.com 

Marketing, innovation, accounting, strategy

AI business technology takes on shoplifters and admin drag

Tags: Artificial intelligence, smart retailing, retail theft prevention, administrative task workflow management, persistent focus versus pivoting

Summary: Artificial intelligence has emerged as a potent solution for vexing problems faced by businesses. Companies like Veesion, SourceWhale and SolidStudio leverage artificial intelligence to create solutions for problems long plaguing their customers, whether it be reducing “shrinkage” (retail theft), seamlessly managing the many tasks linked to recruitment or minimising fraud at electric vehicle (EV) charging stations. Although all show promise, some “chanced upon” the solution and pivoted to it; others were focused from their inception on the value proposition of their solution.

Classroom application: This article provides an opportunity for faculty and students to discuss how artificial intelligence applications have revolutionised multiple sectors. It also affords an engaging discussion of steady focus and persistence versus the value of pivoting towards customers’ expressed needs, even if not originally anticipated.

Questions:

• How does artificial intelligence provide a basis for effective fraud or theft prevention?

• When should a company remain focused on its original “use case”? When should it pivot to providing solutions originally not anticipated?

• How might companies’ key stakeholders — investors, customers, regulators and even competitors — react to remaining steadfast in your targeting versus pivoting to new opportunities?

Kersi Antia, Professor, Ivey Business School

Artificial intelligence

Chinese AI start-ups overhaul business models after DeepSeek’s success

Tags: Global AI start-ups, Business model pivots, Open-source AI, Vertical applications

Summary: The rise and recent success of DeepSeek has upended the AI industry, including in China. DeepSeek’s open-source, low-cost innovation has produced efficient models leading other companies to re-evaluate their strategies. For instance, Zhipu is raising more capital to remain competitive and sustain itself before a big IPO, as one of the original AI tigers in the LLM space.

01.ai has shifted from pre-training large language models to selling tailored AI solutions leveraging the mixture of experts (MoE) framework. This approach combines smaller models trained on industry-specific data, allowing companies to train and deploy larger models with less computing power. Baichuan is focusing on the healthcare market, while Moonshot has reduced marketing for its chatbot. Moonshot has also sought to generate revenue by soliciting virtual gifts to ‘Kimi,’ the AI character behind the chatbot, to help fund its continued model training.

DeepSeek’s influence has prompted a consolidation in the Chinese LLM market, with companies redirecting resources from foundational model development to applications. This shift highlights the importance of regional talent, data and domain knowledge in AI applications. Companies like Zhipu are exploring multiple business lines, including consumer and enterprise applications but face high operational costs. The adoption of open-source models can help companies avoid investing in inferior in-house models, allowing them to focus on vertical applications where specialised domain knowledge and regional mores are crucial. Digital Public Infrastructure (DPI) could also play a role by enhancing public services through AI, which often begins with establishing secure digital identity systems. It is especially relevant to sectors like finance, healthcare and education.

Classroom application: Students can explore how AI start-ups like DeepSeek and 01.ai are leveraging open-source models and vertical applications to succeed in competitive markets. They can understand the strategic importance of regional resources and domain-specific knowledge in AI development. They can also discuss how Digital Public Infrastructure can be integrated with AI to improve public services, such as healthcare and education. This approach helps students develop critical thinking skills about the intersection of technology, business strategy and societal impact. Students should also consider the geopolitical implications that shape AI development and adoption across different regions.

Questions:

• How does the use of open-source models in AI development affect the competitive landscape for companies like DeepSeek and 01.ai in China as well as OpenAI and Meta (with its Llama models) in the US?

• What does truly open-sourcing an LLM mean? Making source code, training data and protocols; model weights as well as inference procedures publicly accessible?

• What role can regional data play in enhancing the effectiveness of large language models in specific markets?

• Can platforms like GitHub and HuggingFace be considered emerging pillars of AI Digital Public Infrastructure (DPI), especially with initiatives like the Academic Hub?

• How might DPI be used to integrate AI solutions into public services like banking, healthcare and education?

• What are the advantages and challenges of using the mixture of experts approach in training AI models? Any advantages to sequential experts (via chaining) versus parallel polling of experts?

• How can companies like Baichuan, Moonshot or US-based ones effectively pivot their business models to focus on vertical applications? 

• Are industries like healthcare ripe for disruption especially in the US with the rise of LLMs?

• What geopolitical implications might arise from the adoption of AI technologies developed by companies like DeepSeek, and how could these impact global AI markets?

Ganesh Mani, Professor, Tepper School of Business, Carnegie Mellon University

Corporate strategy

The UK high street is no match for WHSmith’s wanderlust

Tags: Corporate Strategy, Financial Restructuring, Retail Business Model, Investment Analysis, Market Positioning

Summary: WHSmith has undertaken a strategic divestment of its 480 high-street stores, selling them to Modella, the owner of HobbyCraft, for £76mn. This decision reflects a broader corporate strategy aimed at reallocating resources towards its more profitable travel retail segment. The transaction highlights the significance of financial management in corporate decision-making, illustrating how firms assess asset performance, divest underperforming business units and optimise capital allocation to enhance shareholder value.

The UK high-street retail sector has faced considerable challenges due to shifting consumer behaviour, rising operational costs and increased competition from ecommerce. In contrast, WHSmith’s outlets in airports and railway stations benefit from high footfall and strong consumer spending, reinforcing the rationale behind its strategic realignment. However, despite the sale, WHSmith remains exposed to financial pressures, including decelerating growth in travel retail and the risks associated with its US market operations which are subject to economic and political uncertainties.

Classroom application: From a financial management and corporate strategy perspective, this case provides an opportunity to explore key analytical frameworks, including return on investment (ROI), divestiture analysis, risk management and the long-term implications of capital reallocation. It enables executive learners to critically evaluate the interplay between financial performance, operational efficiency, and strategic decision-making in a competitive business environment.

It offers executive learners a practical lens through which to analyse corporate restructuring, financial decision-making and strategic growth imperatives, equipping them with insights applicable to high-level leadership and financial strategy development.

Questions:

• What financial and strategic factors underpin WHSmith’s decision to divest its high-street business? How might financial metrics such as return on capital employed (ROCE) and profit margins justify this move?

• What are the potential advantages and risks associated with prioritising travel retail? How does this shift align with long-term financial sustainability and competitive positioning?

• Given WHSmith’s exposure to the US market, how might fluctuations in economic conditions and regulatory changes impact its financial performance? What strategies could the company implement to mitigate such risks?

• How should WHSmith utilise the £76mn proceeds from the divestment? Would reinvestment in travel retail, debt reduction, or shareholder returns yield the greatest financial and strategic benefits?

• In the absence of a high-street presence, how can WHSmith continue to strengthen its brand, drive revenue growth, and maintain market relevance in an evolving retail landscape?

Niran Subramaniam, EMBA Programme Director, Henley Business School

Leadership, Management

Anne Wojcicki, the floundering 23andMe’s eternal optimist

Tags: Optimism, Bankruptcy, CEO, Board, Start-up

Summary: In 2008 Anne Wojcicki founded 23andMe, a genetic testing company that overcame both customer privacy fears and regulatory scrutiny to acquire fifteen million customers over two decades. While the company’s success, driven by Wojcicki’s charisma and optimism, was primarily in genealogy, her focus on using the technology to discover new drugs for healthcare diluted the company’s focus and burned through its cash. As the company went public and pursued joint ventures, Wojcicki’s approach generated conflict with the board and investors, ultimately resulting in the company filing for bankruptcy and her resignation as CEO. Despite this, she remains optimistic and is pursuing the acquisition of the company as an independent bidder.

Classroom application: This article provides a platform for faculty and students to discuss the importance of optimism in business and entrepreneurship as well as the limits and pitfalls associated with this approach.

Questions:

• What is the role of optimism in entrepreneurship? Given the risks involved in starting new ventures, can start-ups be successful without it? Why is it important in relation to goal-setting and perseverance?

• Is positivity a personality trait, or can anyone choose optimism in the face of challenges and adversity? If so, how can we learn to embrace optimism as a choice? 

• Where might optimism go off the rails? At what point does the focus on and belief in the possible shut a leader off from listening to advice or accepting reality?

• How might optimistic leaders recognise and manage their approach to ensure that their optimism does not turn into isolation or arrogance?

• The article mentions that “Anne won’t ever quit.” Is this type of persistence healthy, or is there a time to quit, and if so, how might we identify it?

Moshe Cohen, Senior Lecturer, Questrom School of Business, Boston University

Global Commerce, Finance, International Strategy

Asian defence stocks soar to record highs as Europe prepares to re-arm

Tags: Hanwha Aerospace, Mitsubishi Heavy Industries, Asia Pacific co-operation, defence spending

Summary: With the market value of companies like Japan’s Mitsubishi Heavy Industries (MHI) and South Korea’s Hanwha Aerospace increasing more than fivefold, east Asian defence stocks have risen sharply recently. A jump in defence spending and elevated geopolitical tensions are significant causes of this growth. These companies are positioned as important actors in the changing defence scene due to investors’ reactions to the growing demand for cutting-edge military technology and equipment. ​

Classroom application: This article provides an opportunity for faculty to discuss current events in the classroom through a business lens and how geopolitics directly affects private sector spending.

Questions:

• How sustainable is the growth in east Asian military publicly traded securities, and what are the driving forces behind it?

• From a business perspective, what benefits and hazards come with funding defence companies in politically unstable areas?

• How much of these businesses’ competitive advantage comes from technological innovation, and how much should remain privately held rather than jointly owned (or licensed to) by a government?

• How may US and European military companies react to the emergence of east Asian rivals in the global market?

• Is there an ethical concern(s) that private sector companies can benefit from geopolitical struggles?

Case discussion positioning: Query students about the investment timeframe, and in particular, a long-term buy-and-hold strategy vs. a quicker, for-profit flip. The FT recently wrote about a new Europe-focused defence exchange-traded fund. But what happens if a government goes one step further and wants to buy a stake in these companies or become a debt holder?

Next, as featured in the Opinion Lex column, “Sovereignty over research and development and intellectual property is key in defence. Different countries have different needs.” Does geopolitical necessity mandate changes in intellectual property rights or its application?

Finally, US Finance Editor Robert Armstrong and Markets Columnist Katie Martin tackled who will pay for Europe’s military spending in their recent Unhedged Podcast. If the US government removes (or curtails) its funding under Trump 2.0, can (or should) a private company or consortium step in?

Student Perspective: Sooyoun Kim is an undergraduate business candidate at Seoul National University and an exchange student at Boston University Questrom School of Business. Her analysis of this article is three-fold: 1) To what extent might Asia’s defence industry gain credibility with the Trump regime, and should that be an objective? 2) Are there new, even broader business opportunities and investments in the defence industry in Korea and Japan outside the various firms profiled in the FT article? 3) As defence companies expand, what does global now mean? Does this cross over to Asia, Nato, or some other permutation? Sooyoun noted: “Korea’s defence suppliers have been acquiring European shipbuilders and expanding its network. There could be new opportunities for joint weapon development projects and technological co-operation.”

Gregory Stoller, Master Lecturer, Boston University Questrom School of Business

Innovation management 

BYD’s 5-minute charge: is time running out for electric-vehicle rivals? 

Tags: automotive, technological innovation, consumer behaviour, global supply chains

Summary: BYD unveiled its Super e-Platform, capable of adding 470km of range in just five minutes, pushing EV charging speeds closer to traditional fuel refuelling. Competitors — including Tesla, Mercedes-Benz, BMW, and CATL — have developed competing technologies, but none yet match BYD’s charging speed. BYD plans to roll out its fast-charging system in China, alongside 4,000 new chargers. This innovation further threatens existing carmakers, although trade barriers and regulatory challenges could limit its global reach. 

Classroom application: This article provides a clear overview of technological advancements in an industry and of competition between legacy and challenger brands. 

Questions: 

• Will improvement in infrastructure support the transition to EVs and make BYD become the global market leader? 

• What will be the impact of tariffs on the automotive supply chain? 

• How could existing brands compete against emerging brands such as BYD? 

• If lagging in certain aspects (eg, fast chargers and batteries), on which areas could existing brands focus to win over consumers? 

• Will consumer behaviour patterns hinder or facilitate the transition to EVs? 

Pietro Micheli, Professor of Business Performance and Innovation, Warwick Business School

Accounting

Temasek and Warburg Pincus seek up to $5bn for sale of healthcare company GHX

Tags: Accounting, Accounting for Investment, Valuation, Impairment

Summary: Temasek and Warburg Pincus are preparing to exit their investment in Global Healthcare Exchange (GHX) at an expected valuation of nearly $5bn, up from its earlier valuations of $1.8bn and a subsequent $500mn injection, as part of a broader trend of asset disposals among private equity groups. 

Classroom application: This news can be used to investigate how valuation methods, accounting for investment disposals, and impairment adjustments work together in practice. It will help students understand how historical cost bases change into exit valuations and how these events affect financial statements and the portfolio’s performance as a whole. 

Questions: 

• What valuation methods might justify a nearly $5bn sale price for GHX, and how do the initial acquisition values factor in? 

• How is the sale of an investment like GHX recorded on the balance sheet under US GAAP or IFRS? 

• Under what circumstances might GHX require an impairment adjustment, and what are the accounting consequences?

Martin Mulyadi, Professor, Shenandoah University

Accounting 

Nike shares hit 5-year low as tariffs and consumer caution threaten sales

Tags: Managerial Accounting, Cost Accounting, Variance Analysis, Forecasting, Standard Costing, Activity-Based Costing, Differential Cost Analysis

Summary: Nike forecasts a mid-teens revenue decline for the quarter ending in May, citing tariffs, a strong dollar, and unfavourable shipment timing, alongside falling sales in key product lines and an expected reduction in gross margins, which contributed to its shares hitting a five-year low.

Classroom application: This article shows how managerial accounting tools can be used to solve problems in the real world. Students can look at how variance analysis explains why gross margins are going down, how forecasting can be used to account tariffs and changes in exchange rates, how standard costing identifies inefficient production processes, how activity-based costing shows what is driving costs across all of Nike’s different product lines, and how differential cost analysis helps decide whether to change or stop selling products that aren’t doing well. 

Questions:

• How can Nike use variance analysis to identify which factors (eg material costs, labour, shipment inefficiencies) are driving the drop in gross margin? 

• How can standard costing be used by Nike to analyse efficiency variances and identify areas for cost reduction in its production process? 

• What role can activity-based costing play in isolating cost drivers across different product lines, such as the Jordan brand versus its classic footwear, and how might this inform pricing and cost management decisions? 

• How might Nike use differential cost analysis when considering whether to modify or discontinue underperforming product lines? 

• What methods can Nike use to incorporate external factors like tariffs, foreign exchange volatility, and shipment timing into its managerial budgeting and forecasting?

Yunita Anwar, Assistant professor, Shenandoah University

Financial statements

Elon Musk’s X is a lesson in ebitda and ebit-don’ts

Filling in that Tesla ‘crack’

Tags: Accounting, EBITDA, Tesla, FASB, Operating Cash Flow 

Summary: The late Charlie Munger considers interest, depreciation and taxes to be very real expenses that must be paid. Using EBITDA to determine the earnings of a company provides a distorted view of a company’s true economic nature. For capital-intensive businesses, it is a misleading performance and profitability indicator since all the major capital costs pass through the income statement as depreciation, and thus are excluded from EBITDA. Despite these drawbacks, EBITDA has become a permanent fixture in securities analysis.

Classroom application: EBITDA is widely used by investment banks and analysts to determine a company’s ability to generate cash and service debt. Many corporate managers now consider EBITDA synonymous with Operating Cash Flow (OCF). This is concerning especially when empirical studies have shown that a falling trend in the ratio of cash flow to total debt is a credible bankruptcy predictor. The FASB has prescribed a more comprehensive definition of OCF that focuses on working capital (Accounts Receivables + Inventory — Accounts Payables) that normally grows proportionately with the scale of operations. Reducing company analysis to a single ratio like EBITDA or OCF may be a good labour-saving device but clearly not smart.

Questions:

• For many investment managers, actual risk means EBITDA coverage. What is wrong with this sole reliance on a single EBITDA-based ratio? What precautions should be taken while counting depreciation towards interest coverage?

• How can adding working capital to cash flow analysis reveal red flags that may not be evident from observing the trend of EBITDA or adding depreciation to net income?

• The FT article states, “even though Tesla sales shrank last year, it improved its cash position in part by taking longer to pay suppliers.” Can management mask inventory or receivables problems by pumping up the third component of working capital IE payables? 

• Why should analysts not rely entirely on OCF as a diagnostic tool? Is Free Cash Flow a better alternative?

• Some opine knowing the company’s “adjusted EBITDA” offer crucial clues about its financial health. Is this true?

• Why can no single measure capture all of a company’s financial traits? What should then be the recommended approach for company analysts?

• Did EBITDA play a role in Teva’s acquisition of Actavis and thus losing its footing?

Krishnan Ranganathan, guest faculty, Indian business schools

Got feedback on professors’ picks or willing to contribute? Get in touch at bschool@ft.com or add your selected articles and questions in the comments below.