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,
Matthew
