World Monitor Magazine June #3 - Page 128

additional content These are the challenges corporate leaders and investors should be taking on, however, building their own capabilities for future growth. One company can’t solve all the problems of the developing world, of course, but today it’s essential for a venture to understand how it will fill the gaps that exist in these markets and thereby contribute to growth. Otherwise it is going in without a clear-cut plan. In particular, every company needs a plan for establishing the capabilities of operational efficiency, innovation, and go-to- market excellence, adapted for each market where it does business. • Operational efficiency can be achieved through a variety of elements, such as developing more short-term and flexible business strategies, using half-year and annual growth plans as opposed to the more familiar three- to five-year growth strategies seen in developed markets, and transferring more decision-making powers to local units or developing more efficient supply chains through technology adoption and local partnerships. As labor costs rise in many of these markets, companies 122 world monitor must focus less on low-cost labor and more on improving productivity through technology enhancements and automation. Furthermore, they need to reevaluate their manufacturing footprint by considering new and emerging manufacturing centers such as India, Thailand, and Vietnam, while also taking into account evolving trade linkages and market integration efforts such as the ASEAN Economic Community in Asia or the Pacific Alliance in Latin America. • Innovation is also critical as new product development, often tailored for specific markets, has become more of a necessity. It isn’t just product innovation, however; this capability can also involve finding innovative ways to reach untapped markets, and those product or process improvements might even work in the developed world. • Go-to-market capabilities that are regularly reviewed and adapted enable a company to keep up with the evolving consumer trends and maturing business environment in these markets. These might include new technologies and sales channels, as well as an ecosystem of partners that includes cross-sector players, public sector entities, and social sector units. Companies might need to build that ecosystem by taking a proactive approach to local entrepreneurship, mentoring and funding small companies that might become their partners or acquisitions someday. These capabilities will help businesses compete in a system that might require launching a new product almost overnight, or tapping a new customer base in a remote village, or knowing who can grant a local permit. In observing the social, technological, and institutional developments that now drive growth markets, we’ve also found that these capabilities are critical to success in six key sectors. Using data from the International Monetary Fund and BMI Research, we estimate that these six sectors represent 60 percent of the GDP of the top emerging economies across global regions: China from East Asia and the Pacific, Russia from Europe and Central Asia, Brazil from Latin America and the Caribbean, Saudi Arabia from the Middle East and North Africa, India from South Asia, and Nigeria from Sub-Saharan Africa. Here is a look at how these capabilities will work in each sector.