By Scott Hensarling, Senior Client Partner and Tobjorn Karlsson, Senior Client Partner, Korn Ferry,
2020 has challenged many assumptions on globalisation and by extension, disrupted global businesses at an unprecedented level, as a result of closed borders to curb the spread of Covid-19. Around the world, every business and industry are impacted or recovering at their own pace, a process largely affected by how well its respective country is handling the pandemic.
All these factors question the premise of the traditional ‘efficiency through scale’ approach – especially when local regulations are evolving quickly to respond to needs on the ground. Large organisations are now struggling to resolve the growing tension between global complexity and local agility, while re-balancing their global approach. Can scale and efficiency still win, when globalisation has become so complicated?
The key to this balance lies in ‘powering’ those at the edges to take ownership and responsibility. While this has always been a hallmark of agile working structures, providing autonomy to those closest to customers, communities and partners has become increasingly important to organisations’ viability in today’s complex business landscape. Given the current environment, businesses need to consider who they want to be, who they serve and how they engage local communities to empower local agility.
Re-thinking organisational structures and processes
At the core of the considerations, businesses will need to determine whether they are truly global organisations or locally based companies with a global reach for their products, and what they want to be. While there is no right or wrong answer, this starts with a conscious decision about being global or local, and putting appropriate business structures and capabilities in place: global organisations need to pay attention to local agility, while locally based companies look at trusted partners on the ground if the leadership team is operating at a distance and so forth. Such efforts will allow companies to respond in real time to execute on a clear and uniting purpose, scale up their capabilities quickly in the face of unforeseen circumstances.
Additionally, whether the organisation is truly global or local, Covid-19 has accelerated a shift to regional clusters. Strong partnerships in adjacent markets can help businesses leverage their strengths to better serve customers in target areas. For example, global business Johnson & Johnson now has a thriving medical supply business and is working on the frontline on research and development for recovery. At the same time, it has quickly focused on local supply chain needs in high-demand markets like China and Japan, restructure responsibilities, and rapidly fill new talent roles in these markets.
Re-thinking supply chains and review future customers
The disruption of global supply chains has exposed the risks of having one’s manufacturing operations and customer base too dependent on just one market or segment. When Chinese factories were forced to close, many organisations realised how little flexibility there was in their supply chain while many other sectors – from healthcare to consumer goods around the world – also realised how dependent they had become on Chinese demand. Post-Covid-19, many industry experts believe that a decentralisation of manufacturing capacity, with companies looking to bring production closer to home or destination markets , or diversify into adjacent regional markets such as Vietnam, India and Mexico.
Southeast Asian markets still represent a promising 1 Here’s how global supply chains will change after Covid-19, World Economic Forum, May 6 opportunity for growth, despite the vulnerabilities of developing nations to this pandemic. Indeed, Apple announced in May that it will be shifting millions of its AirPods production from China to Vietnam for the first time , with other tech giants like Google and Microsoft looking to move some of their hardware production from China to Vietnam and Thailand. Businesses will need to consider the ‘new normal’ of the global supply chains to determine who their customers are – now and in the future.
This is where efficient use of technology can be a vital differentiator. Having the right technology in place to provide the customer-centric insights needed to make smarter decisions at a local level can result in more efficient workflows, accelerate development and generate faster business returns. This will enable businesses to innovate, anticipate and meet new needs from the markets. Reassessing leadership and purpose Given the current disruption, businesses are struggling with new realities, including the complexity of dealing with multiple regulations across many jurisdictions, difficulty in applying employment policies consistently across a global workforce and more.
This means that the leadership teams of local businesses and on-the-ground operations must step up to fulfil this far more complex leadership role. While business leaders will need to look globally to navigate the complexity and everchanging external landscape, local conditions will determine who the right person is to lead in each market. As they may not have the capabilities or networks needed to respond, it is crucial that leaders invest in these local talents to equip them with the right skills and mindsets.
For example, they can look at establishing advisory groups by creating a dynamic and diverse network of advisors who are ready to engage either as individuals or as a group, to serve specific market needs. These advisors bring a broader perspective to leaders on the ground and enable them to make better tactical decisions without depending on the core for direction. The post-pandemic world will see new ways of operating, agile business models, and streamlined processes as the cornerstone of success for organisations.
Leaders will need to have both local understanding and agility, as well as leverage global capabilities and networks to steer their businesses. Empowered country managers and local executives will be able to navigate their own challenges, provide new perspectives and contribute the overall resilience of the business against disruptive forces and the volatile business landscapes.