Competing in the MultiPolar World (Part 1 of 2)
Competing in the MultiPolar World Globalization is no longer a one-way street of multinationals exporting their products. Emerging markets are gaining clout. Business and political leaders tend to agree on very little, but there is a consensus that we have entered a new, "decentered" world. Some call it a "nonpolar" world. Others hail "the new Asian hemisphere." My colleagues and I at Accenture call this new era the "multipolar world"—a world of dynamic shifts in power and influence. As we travel the world, helping our clients in myriad industries compete as effectively as possible, we both observe and are contending with two issues over and over again. The first issue is readiness—how prepared are companies and organizations in the developed world to compete and win on the key battlegrounds for customers, talent, innovation, resources, and capital. The second issue is the pace of change—the speed with which these shifts in power and influence are occurring. Readiness and Pace
Everywhere I see the confidence and swagger of resource-rich nations going global. For example, in Africa, I see increasing mobile connectivity. India and the Philippines are experiencing a burgeoning of technical talent. In Korea, Singapore, and across Eastern Europe, there are huge investments in R&D and innovation; and then there's the increasing influence of sovereign wealth funds—many of them in Gulf States—in a credit-crunched world hungry for capital. My Accenture colleagues and I routinely ask ourselves: - How much do organizations headquartered in North America understand about this rapidly changing business landscape?
- Are they building these insights into new offensive or defensive strategies?
- Are they as ready as their counterparts in Europe, Japan, or elsewhere in the developed world to compete in this new game?
- Or do they need to work much harder to have the right feel for their new customers and consumers, the right cost-competitive business models for the cut and thrust of new markets, and the right global leadership mindsets?
The answers change as quickly as the questions. But this is what we know about the multipolar world: - The gross domestic product of the developing world has grown to 48% of global GDP, up from 38% in 1990. Data collected by the Economist Intelligence Unit predicts that it is likely to surpass the developed world within the next decade.
- Emerging-market companies now account for 78 of the Fortune Global 500 list of biggest corporations.
- The largest sovereign wealth fund, the Abu Dhabi Investment Authority (ADIA), controls up to $900 billion in assets, according to a March 2008 report in The Guardian. Singapore's Government Investment Corp. has assets of more than $330 billion.
- In its report Science & Engineering Indicators 2008, the U.S. National Science Foundation has found that there were 442,468 Chinese graduates in engineering. The U.S. was far behind, with 64,675 graduates.
- The International Telecommunications Union reports a 414% increase in the number of Internet subscribers in Asia from 2000 to 2007. Globally there's been a 245% increase in the same period. China Mobile reports that it adds 6.5 million new subscribers every month to its existing subscriber base of over 400 million.
Globalization is no longer a one-way street where developed-country multinationals export their products, services, and business models into emerging markets and view these new regions merely as sources of low-cost manufacturing. For much of this decade, factory workers in China, Mexico, Vietnam, and other cheap-labor countries couldn't afford the goods they were producing. But those days are over. Almost overnight, the middle class has gained critical mass in emerging economies. By 2010, there will be 83 million middle-class households in China and an additional 40 million in India—more than the total for the U.S. This new middle class has disposable income to buy cars and computers. It is highly educated, typically multilingual and increasingly both confident and ambivalent about traditional Western values and aspirations. A recent Accenture study looked at workers' readiness to succeed in the business world by 2011. We found that 68% of businesswomen in India, 63% in South Africa, 61% in China, and 52% in Brazil feel equipped to succeed. By contrast, only 46% of American women and men feel they're ready to do business in a more global business world. Mobile Phones in Africa
I experienced the full brunt of this new era a month ago when I zigzagged across three continents—from my home outside London to Tanzania and South Africa, on to Denmark, then to Boston in the U.S., and back home again. In Tanzania and South Africa, I was impressed by the pace at which innovation in financial services is taking off with the use of mobile phones to make micro-finance loan payments. In Mwanza, in the middle of the African bush in Tanzania, the sole advertisement in the provincial airport was for free mobile roaming in China—clearly targeted at visiting Chinese mining engineers. When I met with clients and colleagues in Denmark, I was fascinated to see how well Danish companies are doing in their global competitiveness and outlook, with leading positions emerging in green technology R&D, for example. On the other hand, they have comparatively little penetration in China and India, where their brands are less well-known and they struggle to attract talent. They are being forced to learn what "employer branding" means when your potential workers have not even heard of your company.
Next month, part two will discuss the threat of inward focus, tackling emerging markets and the way ahead.
|