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.

Drilling down in interviews: Why do hiring managers talk instead of listen?

Research says that 64% of new executives hired from the outside fail in their new jobs, so how do we improve our selection process? Most successful leaders are taken aback when a hiring manager or recruiter tries to understand what makes them tick, and I mean try to really understand, because so few people in the corporate world try, even during a critical job interview. They’re too busy selling (as are most candidates). That’s why one of the best ways to recruit the best candidates, the hard-to-get candidates, is to drill down, understand how they got to where they are, and get to the bottom of their motivations. When you know they’re right for the job, great candidates will know it also.

Take China and Japan, two countries with critical talent needs. In Japan the danger is that interviewers, whether the hiring manager, executive search consultant or HR executive, tend to treat senior executives with the respect of an elder or become overly impressed with the executive’s track record of name brand employers which may or may not be relevant for the job. In the case of China, where everything is urgent, the short supply of talent and can lead to making the wrong trade-off decisions. Meanwhile, without better direction, the candidates themselves tend to let their status do the talking. So what should we be looking for? How do we know when the candidate has what it takes?

Successful leaders don’t just materialize out of thin air or hatch out of some top-ten business school. They somehow master their environment and emerge with a strong sense of who they are, while others come and go. So, during an interview, the executive will be taking stock of the interviewer while the interviewer does the probing. How much is shared depends on trust and the quality of the interviewer.

We would hope to hear some truths about the executive’s successes and failures, one or two watershed moments that defined his or her career. We’ll should looking for the how and why of his or her actions. This is described as ‘behavioral-based’ or ‘competency-based’ interviewing and there are books on the subject. But it’s not so easy and takes both practice and desire. Try to hear the executive’s description of the emotions around the experience: pain, humiliation, exhilaration, regret, satisfaction. You may hear about decisions or achievements, but try to learn about what matters most: how the individual mustered the wherewithal to make things work out against the odds, accept the hard lessons, and apply the learning.

You might hear about luck or good timing. But our job is to dig deeper and understand the true makings of a person’s success. Then, link these competencies to the critical needs of the job at hand. Is it that difficult to drill for the fuel that drives successful leaders? We’ve got to get better at it. Knowing that the person opposite you is taking stock, be curious, be real, and reach out.

MIA leaders: Most CEOs haven’t transcended their economy, or corporate culture, in Japan

Half full or half empty?

Where are Japan’s leaders? And why have Japan’s few corporate leaders risen to almost cult status? Leadership guru and writer Warren Bennis says—I’m paraphrasing—that great leaders rise above their context. Put another way, you might say that in Japan, great leaders rise above or push through the context of their culture and established norms for corporate behavior. They make their mark regardless. My goodness, how difficult this is – in any society, much less in Japan.

It’s tough, but let’s not let Japanese executives off the hook. Case in point: Surprisingly, in an era of low or non-growth within Japan, most of the elite institutions (Toyota and Sony excepted) have failed to diversity their revenues and make their mark outside of Japan, defying strategic  logic and common sense. Viewing the world through the dimmed light of slow-growth Japan, they struggle to raise their eyes to the horizon. Their glass is half empty. These leaders have elected not to challenge their own corporate apparatus and cultures in order to wage and win in battle against the globalized big-boys on Wall Street, in Silicon Valley, in the business schools, in BRIC, you name it. The music is different out there, but Japanese managers haven’t changed their tempo. And now it appears that even Sony and Toyota have proven that global success requires more than overseas assets or even a foreigner at the top.

Leaders are a study in perseverance and growth, often through painful, personal experience. Failure is inevitable, perhaps necessary. And so who would volunteer for such a hardship role in Japan, and why? Add on top of this the need for today’s Japanese leaders to acquire experience in the West, or at least China, speak English, be accountable, and yet have the modesty and temperament necessary to win support of his or her team…and you have a tall order.

Leadership means more than holding a leadership position, in the same way that being a writer means more than writing things down. Ask a writer why they do what they do and most will say that they must, that writing is existential. It’s not surprising then that leadership, for true leaders, is existential. They do it because they must; to not embark on the struggle to make your mark is to go somehow missing. The sheer weight of Japan’s culture and behavioral context, Planet Japan’s turbo-charged gravity, creates national heroes out of corporate leaders, usually entrepreneurs, who decide to break through. Let’s acknowledge that true leadership is courageous.

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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