The South’s new power

Making sense of the new world order is crucially important for business leaders. They simply must recognise and respond to what Ram Charan describes as the Global Tilt, using this term as the title for this engrossing book.

The tilt (or trend – call it what you will) is seeing world economic power shift from the north to the south. There will be few that have not realised that the global impetus is now moving from the developed economies (the North) to the emerging countries (the South) – less geographical terms than a handy shorthand. The tilt is exemplified by, but by no means restricted to, the growth of the economies of the BRICS nations.

In the opening chapter of his book, Charan describes how his own realisation of this phenomenon took place. In 2010, our author’s flight from New York landed in Dubai. He was in the UAE for a speaking engagement with India’s number-one telecom company, Bharti Airtel, but had spent the previous week in the US consulting with various American companies.

He describes how the executives of these US companies were wrestling with the problems of the Eurozone and how they would impact their own businesses that were still struggling for stability following the financial crisis a couple of years earlier.

“Arriving at the hotel,” Charan writes, “I freshened up and headed for the conference room, passing through the lobby where 160 of Bharti’s top managers were mingling. Forty-six of them were Africans who were new to the company following Bharti’s acquisition of Zain’s [now Airtel] telecom assets in 15 African countries.

“They [the Africans] were now part of the managerial mix of Bharti Airtel, along with leaders from Sri Lanka and Bangladesh where the company had expanded the year before.

“Many wore typical Western business garb; other wore traditional African clothing. All were speaking English. The majority appeared to be in their 30s, and some looked younger than that.

“But youth alone did not explain the unmistakable difference between this group and the leaders I had seen just hours earlier – a physical and psychological ocean away. There was energy, optimism and excitement in the air … that moment crystallised for me a truth: the world has tilted. Its economic centre has shifted … .”

Today, the best part of three years later, the trend that Charan noticed in Dubai is self-evident as the developing world outstrips the developed economies in terms of economic growth. Africa, for example, one of the fastest-growing regions in the world, has many nations experiencing the rate of GDP acceleration (admittedly from a low starting point) that America, European countries and Japan can only dream of.

And Charan makes a fascinating observation – that the corporations of the North are, in fact, accelerating this very process. In the hunt for revenues and profits they are targeting the world’s high-growth regions, moving not only their manufacturing bases but also their market focus to the South.

Midway through this book, Charan profiles three of the South’s business leaders. They are compared to the “iconic titans” of another era – Cornelius Vanderbilt, JP Morgan, Andrew Carnegie and John D Rockefeller. “Today the beckoning landscape is in the South, and the empire builders have been born and raised in countries such as India, China, Brazil, South Africa and Malaysia,” Charan writes.

Choosing those business leaders of the South  –with a definite emphasis on those leaders from his own country, India, that he has been closest to – Charan profiles Sunil Mittal of Bharti Airtel (as discussed earlier); Lakshmi and Aditya Mittal of ArcelorMittal; Aditya Vikram Birla of the AV Birla Group (now India’s third-largest industrial empire), Dhirubhai and Mukesh Ambani of Reliance Industries, and JDR Tata of the eponymous Tata Group.

But Charan insists that other countries of the South have their own versions of what he calls the “large-scale entrepreneurs” with the same kind of ambition, tenacity and business acumen.

“They are growing small businesses into big ones, expanding beyond their home countries and continents, entering entirely new kinds of businesses, making acquisitions and overtaking entrenched competitors, all at a dazzling speed,” he avers.
Later, he suggests that a lifetime of scarcity and tight margins has taught the large-scale entrepreneurs of the South a discipline that makes them remarkably good at business execution that gives them a distinct edge.

In addition to this insight, the author says that is imperative for all business leaders to observe their business from ‘the outside in’ and ‘the future back’. “You have to take a fresh look at the world,” Charan writes, “and in a sense, look out of the corner of your eye to see how forces that seem unrelated to your business could combine and interact and combine to create opportunities and threats to your industry or company.” Little wonder that our author considers the ability to reorient a business to succeed in the global tilt is akin to performing a heart transplant – “the surgeon has to keep the patient alive while cutting and splicing” – is the way he puts it.

But if the idea of putting your business on the operating table sounds too daunting, fear not. Charan guides his reader through the means to keep a business running smoothly functional and delivering an acceptable performance amid the trauma. Nevertheless, he cautions, “preparing the business to execute your new strategy requires at least as much thinking as creating the strategy in the first place”.

Asked: “Are your reviews helping you make the shift?”, the reader is presented with guidelines for navigating the organisational tilt. These suggest including more people from the South; using reviews to learn and observe; turning presentations into dialogue; creating linkages; and giving feedback.

Furthermore, Charan provides some further reason for confidence that businesses in the North, with the requisite vision, can succeed in the South, by examining some of the companies from the North that have done just that, including those that have formed partnerships with businesses in the South.