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Center Shift

July 24, 2011
Need for Speed: Shift

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10 years ago, the emerging economies were China and India. There were numerous discussions on what this will mean to the world and how things will change. Well we’ve seen a lot of that happen.

Today, over 50% of the world’s IT outsourcing happens out of India. China is the largest consumer of commodities, steel, cement etc. in the world and the largest manufacturer and exporter of a variety of goods.

These changes impacted the developed world in terms of where they sourced from. They impacted beneficially, the financial health of organizations, and enabled sustainability in the face of rising local costs. There was some grief with respect to employment, but not a very significant impact on the overall financials of an organization or economy. This is all set to change.

Over the next decade, we will see another change. China and India, and I should say the Asia-Pacific region will become the largest consumers in the world.

This shift will be tectonic in nature, since this will mean a sea-change in consumers/customers for every large corporation on earth. And thereby, a change in where they make their money from.

What’s more, it’s not going to be a gradual change. IBM, BMW, Microsoft, Nokia, Motorola and many others took decades to build their businesses in the developed world. For Asia to overtake this scale of consumption within one decade is going to be the equivalent of an F1 to a bullock cart race! And this is not just true for consumer products companies, but equally true for engineering giants and B2B companies.

If you’re a numbers person, and data helps you have a

Mobile phone use as a percentage of population...

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clearer grasp, ruminate on this one – In the last 10 years, India has gone from 7 million mobile phone users to 840 million. That is more than the total subscriber base of USA+ Russia + Brazil. And China has 50% more than that number.

Today, for a lot of global organizations, the Center is still the country where they began. The USA or UK or Japan or Finland. A lot of strategic decisions flow from the top i.e home country. But in the next decade, this is what will change!

If these companies do not get closer to their customers, they will become irrelevant. It’s already happening to Nokia. IBM made the smart move and sold out to Lenovo, who are in the midst of the action now, based out of China.

R&D centers. Command Centers. Consumer Insights. Marketing communication. Human Resources. Knowledge capital. Even the Financials. Will all have to undergo a shift. The power centers will have to move to Asia.

Ivory Tower (film)

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Organizations that continue to hold on to existing power centers, will be at the periphery because the action, the customers – the very existence of the business, will have moved to Asia.

Time was, you sent space-fillers to “hardship” postings in China/India. Can you afford to do that today? The best talent will have to be deployed here. Professionals who are unwilling to move will become irrelevant. Organizations that don’t make these moves will become extinct.

And while I say organizations, I actually mean each component of an organization. What this really means is, that the Marketing team will have to refocus and shift. The Human Resources function will have to reorient itself to understanding talent, diversity, culture, compensation and much more, in the Asian context. Strategy, if run from Headquarters in the developed world, with no insight to Asia, will be sub-optimal, and that is putting it kindly.

The greatest impact of this will be on organizational culture. Organizations that will be able to walk away from a Parochial mindset will make the shift, others will lag. “It has never been clearer that the country’s best self is a global inheritance, its worst a parochial self-certainty. —Jedediah Purdy, New York Times Book Review, 22 Feb. 2009″

And the biggest impediment to any of this happening, will be the leadership team. Leadership teams that insist on hanging on to their own power centers, and their own relevance/control/comfort-zones will ensure that the future pays the price.

I don’t know if you have noticed, but the world map is

Globe icon.

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depicted differently in each country. If you were to see a world map printed in USA, the USA will be at the center of the map with other countries on the sides, ditto for a map printed in India, or the UK or China. It is such paradigms, it is such “ways of seeing the world and ourselves in it” that will be the largest impediment.

In the next decade, we are going to see a Center Shift. The question is, will your organization be ready? Are you preparing to shift your center today? If not, you’re already behind the curve.

This post was triggered by a phone call between my friend and OD guru, Gyan Nagpal, all credit to him.

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9 Comments leave one →
  1. January 5, 2012 11:41 am

    Hi,
    Good piece, though dated now in view of drastically changed situation in India and in China. Specifically taking the example of mobile phone usage in India and china further. 840 million mobile phones, assume average selling price is 5000 ($100), Total Market is $84B. 70% market dominated by Nokia, Rest other Korean, US, Taiwanese firms, say, 2% manufactured by Indian firms (1.8B) so, $82B (410,000 crores) of Hard earned money from india went outto these Korean, Taiwanese firms and to Nokia. Contrast with China, 1.2B mobile phones, 80% manufactured in the country because of low cost base and Chinese characters on phone. So even at $100 comparable selling price in China, $96B RETAINED in China, so china could build huge roads, bridges, canals etc so that more money could come in…etc.

  2. Monisha Advani permalink
    July 26, 2011 9:37 am

    All this is immaterial. Watch http://www.youtube.com/watch?v=b3-vwYJiD8g

    • gurprrietsiingh permalink*
      July 26, 2011 10:59 am

      Mon,

      Thanks for connecting! Happy to hear from you…. Saw the video, is this for real? Seems a little jingoistic to me…

  3. July 25, 2011 10:07 am

    An excellent read, thank you for posting! :)

  4. July 25, 2011 9:41 am

    Your post is very complementary to this one. A global mindset, an attitude that embraces change & actually leverages it – with a steady finger on the economic pulse of the world would seem to be the way to go, for long-term survival. I am thinking of a real world that is similar to the virtual world – seemingly without boundaries. And what a massive opportunity for those in the Training & Development industry!

    Very good (and shareable) read.

    • gurprrietsiingh permalink*
      July 25, 2011 1:48 pm

      I agree 100%, borderlessness, with no emotional attachment to Center. Center is where the action is! And thanks for sharing the excellent blogpost.

  5. Mohinish Sinha permalink
    July 25, 2011 5:59 am

    Ah! An Alvin Tofflerian quality of conversation Joy! Very thought provoking indeed. My two bits: The point about leadership – I have noticed that the indian leaders today are acting just like their american counterparts did 10-15 yrs ago. They are self centered and take their current fortunes and their position of economic power for granted. What they dont recognize is that the circle of opportunity will continue moving. There are only one way in which this center shift can be exploited while it lasts – think sustainabilit. Gear culture towards valuing the short term and long term: invest in building knowledge edge, build talent and leaders with a global mindset and finally, create and sustain a climate of “we are in second place and trying hard”. This party will not last for ever. The western world enjoyed it for decades and we will get far lesser time in a more connected world.

    • gurprrietsiingh permalink*
      July 25, 2011 1:46 pm

      Thanks for a great input Mohinish! I don’t think it is about Indians or Americans, power and control are primal drivers, which is why it is so difficult to make a shift when those are involved! And you’re absolutely right, China/India will have far lesser time at the top than the earlier developed world did. We’re on an F1 track!

  6. Manpreet permalink
    July 25, 2011 1:22 am

    A delicate yet a very thought provoking post.. Already started thinking in terms of alignment – how can i as an individual play a role in this reorientation and center shift!

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