Criticaleye, in association with Accenture, developed a series of films interviewing business leaders about their approach to the multi-polar world – a world where wealth and power is more evenly distributed between developed and developing countries with the global economic dominance of the United States, Europe and Japan waning.
As part of this series, we interviewed 16 CEOs and chairmen from FTSE 100 companies, SMEs and public sector businesses to see how they are dealing with the threats and opportunities of increased globalisation. The eye to eye films feature interviews with Stephen Catling, CEO, ABF Ingredients, Martin Graham, former Director of Equity Markets, London Stock Exchange and Darryl Eales, CEO, Lloyds TSB Development Capital (LDC) in addition to those quoted below.
The developing world now accounts for 49 per cent of total global GDP up from 39 per cent just 20 years ago. Emerging markets seemed to have faired the downturn better than developed countries and at this point businesses in the developing world have the edge as they have not yet developed the bureaucracy that exists in mature businesses.
According to the group of interviewees, in order to embrace this new globalisation leaders have to strive to be more nimble, flexible and have a fleetness of foot to respond to different economic climates and to any opportunities that may arise.
As part of this week’s newsletter, we wanted to give you a taste of what these business leaders had to say on the subject. We asked them how they are preparing their organisations for the multi-polar world.
The organisation needs to represent globalisation, the staff needs to be multi-cultural and so does the board of directors, asserts Alison Carnwath, Chairman, Land Securities. Often, organisations that claim to be a multi-national company have boards that are only representative of their home country. This is especially true for US multi-nationals which are known for having uniquely American boards.
“You have to start right at the top. You have to accept that board members will be multi-cultural, and will have spent a significant part of their career living and working in other countries,” says Alison.
Donald Brydon CBE, Chairman, Royal Mail agrees, “Chairmen will need wider experience, a truly domestic chairman will struggle in a globalised world.” He also believes that non-executive directors (NEDs) will have to spend more time thinking about culture within the organisation and governance against corruption, especially when operating in countries that are known for rampant corruption.
Donald believes that countries will not succeed by putting up barriers to entry; organisations can no longer sit comfortably behind these barriers and relax. “You may not need to think you need to know about other markets,” he says. “But you need market intelligence. You need to have your ear to the ground, and an understanding of how other countries’ markets are changing and how they perceive the opportunities in your domestic market.”
Alan Parker, CEO, Whitbread plc gives some handy advice on becoming a global organisation. He says it is vital to realise which brands can be rolled out internationally and which countries one should avoid, for example Whitbread is not rolling Costa Coffee out in the US because the coffee market is too saturated in that country.
“You need a strong, focused strategy that tells you what you are doing, but more importantly what you shouldn’t be doing [to accept the challenges of the multi-polar world],” says Rob Woodward, stv group plc. Interestingly, stv group just sold Virgin Radio to the Times of India group, the first such sale to an emerging market organisation. Rob believes that the multi-polar world offers great opportunities.
Sir John Egan, Chairman, Severn Trent – a water company – sees huge change in the industry due to globalisation. The regulator is preparing for increased competition that is causing change to the electricity and gas supply industry. “Our global business that offers water services, products and analytics is growing well,” he says. “Many countries, in places such as the Middle East, India and China, have far reaching environmental plans. So, there are big opportunities available … right now our global business is growing well.”
Embracing globalisation does not mean throwing away the old hand book, now more than ever it is important to focus on your strategy and what you do best.
Please click here to watch the eye to eye films. If you are interested in today’s subject please take a look at Accenture’s research Multi-Polar World 2: The Rise of the Emerging Market Multinational and Global versus Local Branding, a Criticaleye Community article.
Please get in touch if you have any comments about the issues in today's update.
I hope to see you soon,