It doesn’t take Superman: Marketing leaders in China don’t need x-ray vision, just consumer focus

Who owns the brand?

How does a mainstream global multinational set about turning a somewhat tired consumer brand in China, growing in the single digits in 2005, into a market-leading, powerhouse brand, growing in the double digits five years later, culminating in a four-fold growth in revenues?

DDG (not the real name) created a culture of deep consumer centricity and ruthless focus, supported by a globally aligned leadership team, to take full advantage of China’s emerging opportunities. In turbo-charging growth, acquisitions help, as they did for DDG, by building scale, multifaceted talent, and broader and deeper capabilities. But acquisitions didn’t account for the success of this Turbo brand, which saw organic growth far surpassing competition and even DDG’s own past successes. Over these five years, DDG drove a huge shift in the organization’s commitment to innovation, local decision-making, and talent.

Our first instinct is to attribute this success to one game-changer, in this case, to Tom Ringer (not his real name), the agile head of marketing. Much credit is due. His impressive communication skills, humility, and strategic sensibilities pop out. He’s the un-superman. I’m tempted to doom Tom with the ‘effective manager’ moniker, which isn’t how we describe game-changers in this day and age. Most impressively, this leader, based in Asia and armed with natural charm, savvy, and empathy, altered the organization’s orientation from a headquarters’ sense of true north to an entirely new bearing, a place deep inside the Chinese consumer. The result was a fresh and open mindset and willingness to dismantle all that was understood about the brand. A new organizational culture took root in China and grew in lock-step with Corporate’s willingness to cultivate local autonomy, accountability and pride. Along with all the other good stuff, DDG’s growth recipe has resulted in a senior leadership team in Asia that is now 90 percent Asian, up from just 75 percent two years ago. The team takes pride in, and celebrates, the results. This personalized, globally aligned leadership team, led by Tom, is not the stuff of super-heroes; it is, however, game-changing.

China will emerge as the world’s largest economy during the career-span of Tom’s high-potential young managers. Two-thirds of the world’s middle class will reside in Asia by the year 2030, if not earlier, creating enormous opportunities for both Asian-based and Western-based multinationals – and pressure on these same global competitors to develop talent fast enough to exploit these opportunities. Given the shifting footprint of their customers and workforce, companies like DDG are fast re-thinking their management structures and centers of gravity in an effort to support local decision-making, speed, greater autonomy, and, just as importantly, the mission-critical leadership competencies of their high-potential young leaders. Hardest to alter is the corporate culture underlying most of today’s successful, highly centralized, globally integrated organizations. And yet change they must, especially around the talent that will drive their double-digit growth in Asia.

DDG drove a seismic shift in their approach to marketing, moving from a headquarters-determined brand strategy to a China-centric approach based on deep customer understanding and local innovation. This doesn’t happen without leaders who listen and learn. DDG transformed the way they grew leaders across the talent platform in Asia. It doesn’t take superman.

The gravitational shift: Asian multinationals have the economic edge

Tomorrow’s battle for corporate dominance will be fought and won in the emerging markets of Asia, home to half the world’s population. The the winners are likely to Asian.

As the world’s economic center of gravity shifts to Asia over coming decade, new multinational corporations will emerge to take advantage of Asia and emerging markets in ways that the established Western multinationals cannot. These multinational organizations, with cultural roots in Asia, will emerge with a strong natural understanding of Asian consumers and needs; they will possess great adaptability, responsiveness, and consumer insights – posing a threat to the many of today’s largest and most successful Western multinationals…especially those multinationals who continue to maintain their Western roots and leadership far from their customers and suppliers.

These new Asian-based multinationals—Samsung, Tata, HTC, Huawei, LG, Acer, Lenovo, Alibaba, Tencent to name a few of today’s leaders—are not interested in borrowing business models from their Western counterparts; they possess the needs of the emerging markets in their corporate veins and are not interested in the past. The shape their business models and products for the emerging markets from the inside out, drawing on organizational cultures that are unique to Asia – not cultures and organizational models derived from 50 years of multinational experience, but models that germinate from the opportunities and needs of today. The impact of this important mega trend on talent and leadership is staggering. Just in case the boardrooms of the West haven’t noticed, the battle is already being won.

Who’s playing catch-up now? As Asian markets boom, MNCs need to blow-up old mindsets

We’ve read the numbers and forecasts. Asia is home to 3.5 billion consumers, one-half the world’s population. The region has amassed the world’s most important manufacturing and sourcing ecosystem, driven by world-class talent in logistics, R&D, and procurement. Asia has a thriving capital allocation system and stock market and, most importantly, a value system that honors sacrifice, hard work, and learning. The giant sucking sound is the multi-trillion dollar transfer of wealth from the West to the East. Stock markets in Asia have surged well above their pre-Lehman values, while Western consumers are still climbing out of debt, having seen their net worths plunge by many trillion dollars over the past couple of years. To top it off, Samsung is now the largest global tech company, larger than HP and IBM in revenues.

There will be more disasters, bubbles, booms and busts in Asia over the coming years but it seems clear that this great recession appears to be the tipping point for Asia as the world’s center of gravity.

We have two observations to make. First, while it is clear to almost everyone that the center of gravity of the largest global multinationals is shifting to Asia, why then does the management talent driving growth remain largely in the West, as if Asia will always represent a small slice of a company’s revenues? For most of these multinationals, local executives based in Asia continue in execution mode: they are asked to sell more, execute better, and matrix more effectively with decision-makers in headquarters. But how many Asians sit on their Boards or in their C-suites to help guide their firm’s growth in China, India and emerging markets? The future will be driven by the needs of Asia and the emerging markets, but we still have a glass ceiling.

Second, we are already watching the Asian multinationals respond to the opportunities in their backyard: Huawei, Samsung, LG, Infosys, and others. Korean giant Samsung reports more than $15 billion in revenues in China alone. Watch the best Asian executives flow to these companies.

For the large Western multinationals, the hard work — the transformative work — has yet to begin. Being the biggest today is yesterday’s news and a pretty hollow measure of performance. The only thing that matters for HP, IBM, Google, Proctor, or any other mega Western multinational, is not their sheer global size, but rather their success in organizing themselves to meet the needs of people in the vast emerging markets, especially Asia, whether these needs be thirst, health, transportation, communication, management skills, shelter, travel, learning or fun. Their challenge is not to drive more quarter-to-quarter in Asia but to change their cultures, business models and Western-centric priorities. Who is doing this?

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