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
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.
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
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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