Colombia, and the Philippines. Acronym lovers undeterred by the mixed performance of the BRIC nations now refer to the first four of these as the MINT countries.6 Their continued growth will require further investments in infrastructure along with ongoing social and political reform, and some will be more successful at harnessing their potential than others.
While the future will undoubtedly bring surprises as well as further developments based on existing trends, Ingrid and others are beginning to experience a new world with many centers and a fracturing of previous lines of power, investment, technology transfer, and political authority. Dozens of regional economic hubs are bursting with activity and rapid development. The largest cities on the planet now include Beijing, Mumbai, Lagos, Chongqing, Jakarta, São Paulo, Karachi, and Mexico City, with more on the way. Two-thirds of global economic growth is being driven by cities in the developing world; there will be approximately 370 new cities of over half a million people by 2030.7 Asian consumers are also increasingly shaping demand, and within 15 years will account for a significant majority of both the global middle class population and of worldwide consumption.8
Cutting-edge technological advances are as likely to be visible in newly emerged locations as in renowned centers of innovation. Infrastructure in many Chinese cities, for example, is often more advanced than in Silicon Valley – skyscrapers, bullet trains, subways, and cell phone connections are all more modern and efficient. It has become common in many locations, including parts of Africa, to leapfrog whole generations of technology, for example, by skipping the installation of landlines for telephones and the build-out of a nationwide retail banking infrastructure, and instead moving straight to e-commerce via cell phone. Top talent, too, can come from previously untapped sources, as Ingrid's bank is learning. Workers in an ever greater number of professions must both collaborate and compete with colleagues from other continents.
Western firms have been scrambling to augment their presence in global markets, where they are anticipating further growth. They encounter rival enterprises that were once primarily local, but which have now expanded beyond their home markets to compete with fellow multinationals worldwide. Huawei competes fiercely with Cisco, Lenovo with Hewlett-Packard, Hyundai with Ford, Emirates with British Airways, SABIC (Saudi Arabian Basic Industries) with Germany's chemical giant BASF, and Tata Consultancy Services with Accenture.
This trend is gathering momentum: McKinsey estimates that whereas 95 percent of the Fortune Global 500 was headquartered in the developed world in the year 2000, by 2025 almost half of the world's companies with a billion dollars or more in revenue will be headquartered in other markets.9 Due to rapid growth, along with mergers and acquisitions, leading global enterprises in economic sectors once integral to Western technological prowess now have owners based in Asia, the Middle East, and South America (see Sidebar 1.3).
Sidebar 1.3 Major Industries: Leading Global Enterprises
● Steel: ArcelorMittal (India), BaoSteel (China)
● Mining: Vale S.A. (Brazil)
● Shipbuilding: Hyundai (South Korea)
● Oil Production: Saudi Aramco (Saudi Arabia)
● Automobiles: Toyota (Japan), Hyundai (South Korea)
● Personal Computers: Lenovo (China)
● Cell Phones: Samsung (South Korea)
● Food Processing: JBS S.A. (Brazil)
Implications For Leadership
The global economy's ongoing transformation is a mixed blessing, bringing thrilling opportunities for some and headaches or deferred dreams for others, regardless of their location. The upshot for almost everyone is likely to be a career with more contacts and competition from all over the world – as well as a vast number of new leaders from emerged countries.
Instead of the outdated contrast between developed versus emerging economies, it is now more relevant to compare markets growing at different rates. Leaders and organizations that aren't aware of rapidly shifting customer tastes and preferences in fast-growth markets such as India will be left behind as other firms grow more quickly. On the other hand, those who fail to make careful strategic choices in slow-growth markets such as Italy or France are likely to wither in the face of high costs and fierce competition. Global organizations must make decisions and develop strategies for different regions, and encourage meaningful participation by people from those locations who possess the deepest market knowledge. Some common differences between the two types of markets are listed in Table 1.1.
TABLE 1.1 Fast-Growth versus Slow-Growth Markets
Successfully navigating today's global business environment requires that companies straddle the inherently competing demands of both fast- and slow-growth markets. Here is an example of the cross-border business challenges this global contrast can produce.
Air Filters for Shanghai
Alan, an expatriate based in China, comments, “Global headquarters just keeps slowing us down here; they don't understand how China works. We need more flexibility on the ground and more decision-making power. For instance, at the end of Q3, we had an overstock of aging air purifiers in the warehouse just outside Shanghai that we needed to move quickly. My local team came up with the solution to initiate a promotion to sell them.”
Alan suddenly becomes animated by frustration and begins to raise his voice and speak more slowly for emphasis. “It takes three weeks just to get the discount application for this promotion signed by the global team. Then, halfway through this approval process, the entire southeast region of China got hit with extremely serious air pollution – and suddenly everyone needed air purifiers. Within the span of one week, we sold all of our inventory and the warehouses were completely out of stock.
“This is what I mean by needing more flexibility. When we tried to reverse the discount application and replenish the stock of air purifiers, we got a message back from the global supply team asking for a three-month lead time in order to fit into the global supply planning process!
“How am I supposed to do business here in this market with processes that take three months? I am competing against local companies who don't have to wait, and who wouldn't dream of implementing such a rigid process. They would just call up their suppliers over the weekend and work night and day with them to make 20,000 new filters in two weeks. The market here is constantly changing; we can't survive if we aren't flexible. But the global team just does not understand this, and they always push back that we are not following procedure or providing enough lead time. They don't realize that these procedures make my life impossible here.”
Alan's struggles illustrate that a one-size-fits-all process or mindset could be fatal for organizations seeking to succeed globally. Individuals and corporations that have grown up in one kind of environment or another must now adapt to multiple worlds, thinking and acting with both slow-growth and fast-growth parts of their brains.
The shifting global economy has several other implications for people in almost any country. Many companies are expecting more than half of their growth to occur outside of their familiar strongholds in the coming years, which underlines the constant requirement to be agile. Present or future leaders will likely need to traverse new borders in several ways: crossing unfamiliar geographical boundaries, adapting to
Jim O'Neill, “Who Defines the Next Economic Giants?,”
See David Jin et al., “Winning in Emerging-Market Cities: A Guide to the World's Largest Growth Opportunity,” Boston Consulting Group, September 2010, 5–6. According to this report, “By 2030, the number of emerging market urban dwellers will increase by another 1.3 billion,” and this will drive 67 percent of world GDP growth by 2015.
“Five Megatrends and Possible Implications,” PricewaterhouseCoopers, April 2014, Directors edition, www.pwc.com/en_US/us/corporate-governance/publications/assets/pwc-corporate-goverance-directors-megatrends.pdf; “Asia will represent 66 % of the global middle-class population and 59 % of middle-class consumption by 2030, up from 28 % and 23 %, respectively, in 2009.”
Dobbs, et al., “The Four Global Forces Breaking All the Trends.”
