Keep­ing CEOs up at night

Finweek English Edition - - INSIGHT -

Bechek meets reg­u­larly with CEOs and chair­per­sons of com­pa­nies around the world as part of his job. From large multi­na­tion­als head­quar­tered i n de­vel­oped mar­kets to high-growth com­pa­nies in de­vel­op­ing coun­tries, business lead­ers face sim­i­lar chal­lenges. Here are three is­sues that are on peo­ple’s minds:

“I think num­ber one is the abil­ity to adapt quickly. Vir­tu­ally ev­ery­one is fac­ing new types of com­peti­tors that they haven’t seen in the past, ei­ther be­cause in a more glob­alised econ­omy there are com­peti­tors from new re­gions, for ex­am­ple China and In­dia, that they weren’t fac­ing be­fore, or be­cause of tech­nol­ogy, which has a way of break­ing down bar­ri­ers be­tween prod­uct ar­eas. So com­pa­nies that ex­isted be­fore but weren’t com­peti­tors are sud­denly serv­ing as sub­sti­tutes. That cre­ates a need to be able to change quickly.

At the same time, the world’s been go­ing t hrough s ev­eral decades of in­creased glob­al­i­sa­tion. Or­gan­i­sa­tions are truly global even if they’re head­quar­tered in Western Europe or North Amer­ica. It is a mam­moth chal­lenge for th­ese large or­gan­i­sa­tions to try to cre­ate align­ment around a shared set of val­ues, ob­jec­tives and strat­egy, and then to adapt quickly. There are also mam­moth tal­ent needs across or­gan­i­sa­tions glob­ally, as ed­u­ca­tion is not up to the task in many of the coun­tries that th­ese com­pa­nies serve around the world.

Se­condly, deal i ng with a n in­creas­ingly dig­i­tal world is both an op­por­tu­nity and a threat in many dif­fer­ent ways for th­ese com­pa­nies.

The third one I’d say is the search for ad­di­tional sources of prof­itable growth. Risks also seem to be grow­ing in many in­dus­tries in parts of the world. Of­ten i nvest­ment time­frames are get­ting shorter, and so there is enor­mous pres­sure on com­pa­nies to find ad­di­tional sources of growth and to de­ploy cap­i­tal when it’s of­ten chal­leng­ing to do so.

We see ex­cess ca­pac­ity now in many dif­fer­ent in­dus­tries as China, i n par­tic­u­lar, has gone through this mam­moth in­vest­ment boom. De­mand is con­strained in many coun­tries as de­mo­graphic growth moves peo­ple out of their key spend­ing years and as we con­tinue to deal with the af­ter­math of the global fi­nan­cial cri­sis, which still de­mands more delever­ag­ing for house­holds and even more so for gov­ern­ments. And so, many in­dus­tries have a lot of sup­ply rel­a­tive to de­mand.

I n Africa, we have enor­mous i nf r astr uc­ture needs a nd a n ex­plod­ing mid­dle class in coun­tries like Nige­ria that wants ac­cess to ser­vices like bank­ing and in­surance and telecom­mu­ni­ca­tions. The shift is in­creas­ingly to take ba­sic in­dus­tries and move up the value chain; do­ing more pro­cess­ing lo­cally rather than ex­port­ing com­modi­ties. We be­lieve the op­por­tu­ni­ties in Africa to be enor­mous.

Bob Bechek

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