Dynamic Talent For Dynamic Markets

Dynamic Talent for Dynamic Markets Part I

The leadership challenge

Key Takeaway

Companies in dynamic markets need dynamic, socially intelligent and emotionally aware leaders with strong learning agility. There is a critical difference in the business acumen and leadership capabilities required of these companies as distinct from those in established markets.

Dynamic markets are powerful dynamos of economic and social change – they are making a significant contribution to global economic growth. These markets offer growth potential for both homegrown and foreign multinational companies, but they are complex environments which present business leaders with unique talent management challenges.

What are dynamic markets?

In our discussions with Dr. Lyal White, Director at the Centre for Dynamic Markets at GIBS, he explained that dynamic markets is more of a descriptive term as opposed to merely another category of countries.

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In other words, the term dynamic markets describes the inner-workings of markets and the factors and players that shape and drive them. This goes beyond size, growth and demographics and emphasises that when looking at this rich diversity of countries, it is important to go beyond single-factor theories to understand their institutions and institutional performance.

There are certain skills required to lead companies in such markets and be able to face some of the key challeges business leaders may face.

Dynamic markets: a brief overview

Although countries that fit the definition of a dynamic market vary in size, they typically :-

  • have strong institutions;
  • have impact and influence in their region; and
  • often develop innovative national policy frameworks that are business-friendly and attract foreign investment.

Dynamic markets are defined by a broad set of indicators which include :-

  • the strong prospect of economic growth;
  • recent significant political, social and cultural change; and
  • signs of innovation and sustainability.

These criteria set them apart from the classic emerging markets which tend to be defined primarily on the basis of geography or macro-eco­nomic indicators. According to Dr. White, “Dynamic markets have key stabilising elements such as institutional capacity and strong businesses that have an impact beyond the focus on the bottom line.”

Dynamic markets are defined not only by the strength of their political and social economies, but also by the quality of their local companies.

In addition, many of these countries have been through political or social changes which have resulted in public policy decisions favouring busi­ness enterprise and encouraging the creation of improved governance structures. They have also attracted substantial foreign investment (and in most cases) strengthened their democratic institutions.

According to the research, dynamic markets include China, Singapore, Indonesia, Chile, Argentina, South Africa, Turkey, Kenya, Nigeria, India, Brazil and Vietnam.

Dynamic markets are defined not only by the strength of their political and social economies, but also by the quality of their local companies.

Dynamic companies

The companies that are indigenous to dynamic markets are increasingly becoming regional and even global players and are described in the book Talent Management in Emerging Markets, edited by Professor Steve Bluen, as “the new pistons behind the engines of global economic growth”.

Companies which have their roots in these dynamic markets include some well-known brands such as:

  • Huawei, Alibaba and ICBC in China;
  • Concha y Toro and LAN Airlines in Chile;
  • Vale, Petrobras and Embraer in Brazil;
  • Koç Holding in Turkey;
  • SABMiller, Aspen, MTN, Shoprite, Sasol and Standard Bank in South Africa;
  • Arcor and Los Grobo in Argentina;
  • Zenith International Bank and Ecobank in Nigeria;
  • Kenya Airways in Kenya; and
  • Mittal, Bharti Airtel and Tata Group in India.

Although these companies are of vastly different size and scale they are all either regional or global players that have grown out of challenging business environments.

These companies generally have high and ambitious growth rates.

Operating in complex and highly competitive markets, they rely on leaders who have the ability to navigate the business through fast-paced and complex environments. Leaders need to be able to contend with ambiguity in countries where infrastructural issues are real impediments to growth and where they are confronted with issues of governance, commercial sustainability, political influence, increased customer sophis­tication and a growing middle class. In such environments, companies need dynamic, socially intelligent and emotionally aware leaders with strong learning agility.

It is important to develop a better understanding of these companies and the people who lead them, the kind of general management and leadership talent that make these leaders successful, and the corporate cultures that enable them to attract and retain talent. In our experience, these companies tend to challenge the traditional norms of doing business and require leaders and managers with particular skill-sets.

Leadership and general management requirements

The general management and leadership skills required to make these companies successful are becoming clearer as we get a better understanding of how these individuals perform in very specific busi­ness environments.

We see the growing importance of ensuring that leadership skills are aligned with the social, economic, political and business cultures that play out in these markets. In fact, when we look at the research done by McCall and Hollenbeck in 2002 (Developing Global Executives, Harvard Business Press) we see that cultural agility was recognised over a decade ago as a key attribute of successful global executives.

Today, it is an absolute necessity.

How then do we differentiate between the business acumen and lead­ership capabilities required in the more established market economies such as the USA and most European countries and those required in the dynamic markets?

The most common capabilities that should be present in “best-in-class” executives running companies or business units in the developed nations are:

  • Strategic thinking ;
  • Driving for results ;
  • Leading change ;
  • Leading people ;
  • Collaborating and influencing ;
  • Building capacity .

However, when appointing executives to lead businesses based in dynamic markets, whether expats or local appointees, these attributes are particularly important :

  • Cultural agility and adaptability ;
  • Managing different kinds of complexity ;
  • Building local talent pipelines ;
  • Political connectivity and exter­nal stakeholder management ;
  • Managing regulatory challenges ;
  • Entrepreneurship.

The following diagram illustrates these two sets of leadership capabilities:

Two Sets Of Leadership Capabilities

Functional expertise

Many of the functional leadership roles in dynamic market companies, such as those in human resources, finance, marketing, risk and informa­tion technology, require specific skills and experience.

Chief financial officers who are successful in dynamic markets often have experience in start-up operations, putting new systems and policies in place in challenging environments. They tend to have experience in M&A and are well versed in the complexities of ongoing currency fluctuations, highly divergent tax laws in multiple countries, and working with regula­tory authorities that have different agendas.

Chief information officers need to have a good understanding of the challenges of setting up successful information technology networks in countries where bandwidth is a major issue. Cross-border connectivity, regulatory issues and the cost of setting up information management systems can be crippling in many dynamic markets.

Chief marketing officers face a completely different set of challenges in dynamic markets from those in more mature markets. Consumer behav­iour is affected by a complex mixture of social and cultural factors which need to be studied carefully. Marketing executives more than almost any other group need to possess a high degree of cultural fluency.

Governments in the developing world want to see their people being given leadership opportunities in global businesses and HR plays an important role in making this happen.

A recent Spencer Stuart study identifies five essential elements that need to be present in a successful global marketer:

  • humility;
  • sensitivity;
  • intellectual curiosity;
  • agility (intellectual, cultural, social and emotional); and
  • the ability to communicate effectively in any environment.

The challenges faced by HR specialists are similarly complex. HR executives need to be on top of their game across the full gamut of talent management issues addressed in this article. Multinationals seeking to roll out global HR policies will find that these increasingly clash with localisation issues. Governments in the developing world want to see their people being given leadership opportunities in global businesses and HR plays an important role in making this happen.

The management of financial and reputational risk is particularly critical in dynamic markets. The chief risk officer is closely involved in a wide range of strategic issues, from choosing the right business partners to the question of bribery and corruption. Fully integrated, enterprise-wide risk management has to be pursued aggressively; however, when properly implemented, it will often clash with local expectations of how business should be conducted. Different standards and protocols may apply between markets, calling for difficult decisions over how to achieve global compliance and manage reputational risk.

Each of these functional heads will report to a general manager, either at the local or regional level, who has the challenging task of ensuring operational effectiveness while aligning the imperatives outlined above with strategic directives. They need to drive profits in highly competitive environments where the local business culture does not always support their goals. It is their ability to manage this level of complexity that sets them apart from their peers in developed markets.

Despite the fact that business leaders in the dynamic markets often work for highly structured companies that, in essence, may not be seen as entrepreneurial entities, they do need to have strong entrepreneurial flair and be prepared to develop a culture of innovation and adaptability in order to compete in these markets.

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Consider, in my next article, the challenges posed by the socio-political environment in these dynamic markets.

Headline image courtesy Judith [email protected]

 





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