July 23, 2014
The Leadership Implications of Emerging Global Trends

At CLS, we have come to grips with the fact that we read a heck of a lot more than we write. This is probably the case for even the most prolific of authors (but something we wanted to “get out on the table” just in case there was any doubt). And, in our experience, when you absorb a significant cross-section of other people’s musings (i.e., books, journal articles, periodicals) there are times when whatever you have in front of you is frustratingly similar to whatever you just finished.

Fortunately, if you keep at it, the annoyance associated with consuming repetitive messaging is invariably interrupted by something that truly strikes a chord. It may confirm something you had been thinking on your own – but were unable to piece together. It may present an idea you had never considered until that very moment – but now can’t get out of your head. It also may actually scare you a little.

We have recently come across such a publication. And, since we can’t get it out of our heads, we thought the least we could do is transfer it to yours! The publication is the “Second Annual Business Trends Report authored by 18 experienced, informed partners and practitioners from Deloitte Consulting:

The stated purpose of the report is to “provide business leaders with a clear, concise and well-informed perspective on the dynamics that are currently reshaping the business environment.” If you are anything like us, some of this information will confirm things you already knew, present some things you will have the opportunity to consider for the first time and potentially startle you a little bit as well. Here are a few of the many excerpts from this report that caught our attention:

  • In 1990, approximately 45% of the world’s population lived in “extreme poverty.” Today that number is roughly 20%. By 2030, that number is projected to be less than 3%:
    • One of the many implications of this migration is that roughly one billion additional consumers will be entering the marketplace around the world in the next 15 years
  • Developing economies have contributed substantially more to Global GDP than the developed economies for more than a decade:
    • Developing economies – Brazil, Russia, India and China (BRIC)
    • Developed economies – United States, United Kingdom, Germany and Japan
      • Global GDP is commonly defined as the cumulative monetary value of all the goods and services produced within a specified period of time
  • The emerging economies are fast approaching the contributions of the developed economies:
    • Emerging economies – Mexico, Indonesia, Nigeria and Turkey (MINT)
  • Capabilities once exclusive to large businesses are now readily available on highly efficient open markets (i.e., information is everywhere; in many markets, traditional barriers to entry no longer exist or have been substantially mitigated)
  • After centuries of near uni-directional innovation (from the west, to the rest) we are currently in the midst of a massive rebalancing
  • From 2012 – 2013, the total global social media audience increased by an estimated 18% from 1.47 billion to 1.73 billion. This means roughly 25% of the world’s population is actively using online social networks with that number continuing to trend upward at a rapid rate:
    • Of Facebook users, 86% are outside the United States
    • Of LinkedIn users, 20% are in Asia
  • Market leaders from the developed and emerging worlds are seeking to learn from each other like never before in an effort to master a multi-dimensional game:
    • Emerging market leaders often have a better understanding of customers in the fastest growing parts of the world
  • The number of North American companies in the Fortune Global 500 fell from 215 in 2001 to 141 in 2013. The number of companies on the list based in Asia (excluding Japan) increased from 30 to 109 during the same time period
  • The Deloitte report in total is 123 pages. As you can probably surmise, we would strongly recommend setting aside an afternoon (or two) to read every word. In our collective opinion, the report impressively achieves its purpose (“provide … perspective on the dynamics … reshaping the business environment”). And, as it applies to the importance of leadership in our future business environment, here’s what the report confirmed for us, what we can’t seem to get out of our heads and what admittedly scares us a little:

    CONFIRMS – To coin a military term (that seems to be everywhere these days), our future will most certainly be dominated by all that is “VUCA” (volatile, uncertain, complex and ambiguous). The Deloitte report isn’t the first place we’ve seen this by any stretch of the imagination. But, it is (at an absolute minimum) extremely well-documented verification.

    CAN’T GET OUT OF OUR HEADS – The rising power of the emerging markets. Taking nothing whatsoever away from the philanthropic efforts many organizations have made over the years around the world, making tangible investments in the emerging regions of our world have become prudent strategy. One could argue in that regard it is not only “the right thing to do,” but it is the thing companies of all sizes must “learn to do right.”

    SCARES – First off, let’s think of “scared” on a continuum. At one end is “won’t come out of the room” scared and, at the other, is “not exactly sure how this is going to turn out”‘ scared.

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    The point (in case you missed it) of this blog, the Deloitte report and countless other “my iceberg is melting” publications is that THINGS ARE FUNDAMENTALLY CHANGING! They aren’t “shifting a little.” Businesses don’t need to calibrate what they are already doing. Essentially, businesses need to rethink everything that has worked for them in the past as they chart their courses for the future. Is that “scary?” Absolutely! Is it something we feel business leaders will figure out? Absolutely again!

    We have long felt the distinction between leadership and management can be expressed as follows:

    • Management is what you do when you “know what good looks like.” You have a well-defined destination you need to get to and a map that allows you to guide your progress
    • Leadership is what you do when you are tackling a problem that doesn’t have “an answer in the back of the book”

    Beyond that, it is at least within the realm of consideration that familiarity with “the book” (i.e., the way we have always done things) may be of limited or no discernible value at all. And, if you think that statement is overly dramatic or exaggerated in any way, we would encourage you to peruse the cover article of the June issue of Harvard Business Review entitled: The Big Idea: 21st-Century Talent Spotting (*Hint: Experience is overrated).

    Now, we have no crystal ball (by any stretch of the imagination) but we would suggest, after thinking about all this for quite a while, that our collective futures lie in the hands of leaders that will need to be able to:

    1. Unleash an almost insatiable curiosity for the unknown
    2. Accurately assess emerging circumstances (at breakneck speeds)
    3. Develop customized responses that reflect those assessments
    4. Articulate those strategies in a manner that advances “the cause”

    Bottom line: These sorts of dynamics either energize you – or they engulf you.

    We are The Center for Leadership Studies … and We Build Leaders™!

    APPLICATION CHALLENGE

    Read the “Deloitte Business Trends Report” and “The Big Idea: 21st-Century Talent Spotting” articles in the June issue of Harvard Business Review. List three measurable actions you can take to better prepare yourself for the emerging business environment.

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