This column is part of Globe Careers' Leadership Lab series, where executives and experts share their views and advice about leadership and management. Follow us at @Globe_Careers. Find all Leadership Lab stories at tgam.ca/leadershiplab
The rapidly changing nature of globalization is ushering in challenging new demands leaders will have to master to navigate our shrinking world.
Countries and organizations can no longer operate under the outdated notion that they are surrounded by intact borders and bear sole responsibility for taking charge over what happens on their turf. Leadership in the new world order is all about harnessing diverse resources and figuring out how to collaborate to solve complex problems that change moment by moment.
The same goes for international corporations, including Canadian-based firms, who want to tap into emerging markets. Globalization – the process that has brought trading partners together for hundreds of years – is going through a dramatic change in the 21st century.
Globalization as we've known it until now – what we call Globalization 1.0 – saw Western corporations pushing east, primarily to find cheaper production resources in less-developed markets. This allowed them to sell their products in their home markets at a far higher profit margin.
But a shift in the global balance of power to Asia and the rapid growth of the middle class in these emerging nations is forging a new way of doing business – Globalization 2.0.
This metamorphosis is one of six dominant trends we studied in our recently published book, Leadership 2030: The Six Megatrends You Need to Understand to Lead Your Company in the Future.
As the East gains economic strength, the tide is reversing. With India and China quickly becoming world powers, Asian management practices and values are becoming more influential. These emerging nations are increasingly trading between themselves – in some cases striking economic agreements that leave Western markets entirely out of the loop. Just consider the recent creation of the China-ASEAN free-trade area, a region that includes some 1.9 billion people and about $4.5-trillion (U.S.) of trade in markets across Southeast Asia.
Also complicating the situation for Western companies hoping to market their products and services to the rapidly growing Asian middle class is the fact that these potential consumers are not a globally homogeneous group – their markets are highly fragmented. This presents real challenges to companies rooted in Western business practices where a mass-market mindset is firmly entrenched.
In contrast to the more homogeneous markets of the West, emerging market tastes are fuelled by unique cultural differences and local preferences – meaning a product or service that appeals to one group of consumers in a specific regional market may be of little interest to another regional market.
How can international companies from Canada and the West make inroads?
Good leadership and execution based on Western business models and values will no longer be enough. Corporate leaders will need to build unprecedented strategic thinking and cognitive skills to navigate a more complex, varied and unpredictable business environment. They'll need to be multilingual, highly flexible and adaptive, internationally mobile and culturally sensitive. And they will need to quickly figure out how to develop their leaders locally. Companies like General Electric and Procter & Gamble are finding ways to leverage what they have learned about cultivating leaders by setting up satellite and virtual corporate universities in far-flung markets to develop their talent to fit the local environment.
Much of their success will hinge on their ability to collaborate on the ground in these emerging markets. Managing the often-competing demands of global and local markets in parallel will require them to bring local decision-making into the process through culturally diverse, often virtual and highly collaborative leadership teams.
The job of leading a company into these highly complex and competitive waters is far too demanding and vast for a single individual. A range of leaders with complementary skills sets will have to work together to manage the challenge. Leaders who have the ability to bring together diverse teams, drive innovation and get everyone all pointing in the same direction will be the winners in the new global economy.
Rick Lash is the national director of the leadership and talent practice for Hay Group (@HayGroup) in Canada and co-leader of the annual Hay Group Best Companies for Leadership study. Leadership 2030: The Six Megatrends You Need to Understand to Lead Your Company in the Future is written by Hay Group consultants Georg Vielmetter and Yvonne Sell, and published by Amacom Books.