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Ram Charan argues the global shift from North to South is an opportunity for business leaders to shake off traditional mindsets and adopt radical changes in strategic thinking. (thinkstock)
Ram Charan argues the global shift from North to South is an opportunity for business leaders to shake off traditional mindsets and adopt radical changes in strategic thinking. (thinkstock)

managing books

Tight margins, scarcity: Lessons we can learn from emerging powerhouses Add to ...

Global Tilt

By Ram Charan

(Crown Business, 324 pages, $34)

Ram Charan is a counsellor to CEOs and a terse writer of business books that capture the important issues managers are – or should be – grappling with. In his latest book, Global Tilt, he begins not with insider anecdotes from meetings with prominent executives, but with a definition of the phenomenon that gives his book its title.

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He describes the shift in business and economic power from countries of the North to those of the South as “the greatest change in business history,” and sees it as an opportunity for business leaders to shake off traditional mindsets and adopt radical changes in strategic thinking.

This dramatic change is “the result of unstoppable forces, including the unleashed energies of the South, demographic shifts, the volatile global financial system, and digitalization,” he argues.

But Northern countries and companies really haven’t been paying attention to this phenomenon, absorbed as we are in our own economic travails. Canadians, for example, saw the 2007 takeover of Ontario-based Novelis Inc. by India’s Hindalco Industries Ltd. as an oddity. The acquisition of Calgary’s Nexen Inc. by China’s CNOOC Ltd. was eyed through the prism of energy security. Labatt Brewing Co. falling into the hands of Anheuser-Busch InBev, headed by Brazilian Carlos Brito (who also snapped up fabled U.S. brewer Anheuser-Busch), was also seen as a one-off.

But Mr. Charan argues there’s a bigger backdrop to such moves: “The world has tilted. Its economic center has shifted from what have traditionally been called the advanced Western countries of the northern hemisphere to fast-growing countries including China, India, Indonesia, Brazil, and others in the Middle East and even parts of Africa.”

Our business mindset traces back to entrepreneurial North American industrialists such as Cornelius Vanderbilt, J.P. Morgan, Andrew Carnegie and John D. Rockefeller. They built a U.S. economic colossus from which Canadians have benefited. But Mr. Charan says a new cast of entrepreneurs have emerged – the new tycoons who are reshaping the globe.

From his native India alone, he cites Sunil Mittal of Bharti Airtel (telecom); Lakshmi and Aditya Mittal of ArcelorMittal (steel/mining); Aditya Vikram Birla and Kumar Mangalam Birla of the AV Birla Group (conglomerate); Dhirubhai Ambani and Mukesh Ambani of Reliance Industries (conglomerate); and J.R.D. Tata of Tata Group (conglomerate). Other developing countries have similar ground-breaking leaders, fuelled by ambition, tenacity and business acumen.

“They are growing small businesses into big ones, expanding beyond their home countries and continents, entertaining entirely new kinds of businesses, making acquisitions, and overtaking entrenched competitors, all at a dazzling pace,” Mr. Charan declares. “An American company might think 4-per-cent revenue growth is acceptable; a Southern company thinks 20 per cent is normal.”

Southern leaders are also very good at execution, because they grew up with scarcity and tight margins that taught them discipline. Ignore these emerging powerhouses, and you may find yourself falling behind in the competition for customers – or swallowed up by them, in acquisitions.

While the first half of Global Tilt charts this phenomenon, the second half looks at how to succeed in the shift. Mr. Charan warns not to count on incremental actions, and to be prepared to unlearn old lessons. Keep in mind that your competitors from the South are comfortable with risk, and wise to the idiosyncrasies of legislative and regulatory workings in their part of the world. They are also excellent judges of business talent.

He urges us to become “multicontextual,” adapting with ease to differing strategic and cultural contexts. That might mean adjusting to informal social networks and distribution systems in Southern countries, learning local languages, and understanding the complexities of countries such as India with its many diverse internal markets. Such adjustments might not come easily for those schooled in businesses organized around functions such as finance or human resources, hierarchies, and tight geographies.

“Global leaders, those who succeed in the South as well as the North, are fast and proficient in cutting through the local context. They are keen to detect what is different from what they have known or seen before, and don’t allow their perceptual lenses to filter out differences that conflict with their existing rules of thumb. To the contrary, they catch themselves when they subconsciously revert to their old assumptions. They connect with a range of people from substantially different cultural, social, and governmental contexts,” he advises.

Companies from the North will need multicontextual leaders to represent them in the South, he argues. And that will mean making it worthwhile for people to take on such assignments, and making sure they are given appropriate authority.

As always, Mr. Charan is lucid and provocative, writing with confidence. He knows business in the North and South from his many confidential chats with leaders in executive suites, and readers benefit from that experience.

POSTSCRIPT

Donovan Campbell, an American management consultant and former marine, explores The Leader’s Code (Random House, 226 pages, $32), which he defines as mission, humility, excellence, kindness, discipline, courage, wisdom, virtue and servant leadership.

Zig Zag (Jossey-Bass, 275 pages, $31.95) is the path to creativity, and Keith Sawyer, a psychologist, professor, jazz pianist and former video-game developer, offers an eight-step program toward being more creative.

In The Magic Question (McGraw-Hill, 97 pages, $24.95) consultant David Cottrell shares six questions critical to your team members and how to answer them.

Special to The Globe and Mail

Harvey Schachter is a Battersea, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column Balance. E-mail Harvey Schachter

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