Concluding a recent article in Finance and Global Banking Review, Hult International Business School’s Dr Yusaf Akbar suggested that “Ultimately, companies need to seek out and promote executives who have significant prior exposure to emerging markets. In particular, they need to look for managers who have grown up in these environments, since these people recognize and respond to turbulence much more quickly and pragmatically than executives from developed countries.”
What’s more he sees no reason for companies not taking this advice. Because as he points out: “There are so many gifted executives from these regions – at Hult International Business School we see a constant flow coming through the door – so it’s not enough for companies to say that they can’t hire them or are unable to find such people. They must actively go looking for them.” Alongside this, he also suggests that where companies identify high-potential junior executives they should give them full exposure to emerging markets as early in their careers as possible, ensuring they build up experiences and skills which will help them as they transfer up to senior leadership.
Yusaf ‘s observations follow up on research, carried out at Hult International Business School, into whether executives who had considerable experience in emerging markets or who had grown up in these countries developed different mechanisms to cope with turbulence, compared with managers who had grown up in developed economies.
Many of the developing countries now presenting opportunities for business growth are economically and politically unpredictable. They are institutionally weak, the rules of business engagement are opaque, regulations poorly enforced, and corruption an ever-present shadow. Furthermore, in these environments, where success may not always depend on playing by the rules, multinational companies tend to be held back by ‘Western’ codes of ethics (rightly so in most cases).
Consequently, executives working in emerging markets know they cannot rely on conventional competitive weapons such as IP, technology and branding, or on standard business best practices to conduct successful business. In fact, they need exceptional levels of agility and resilience to operate effectively in these turbulent environments.
The difficulty companies face today is that turbulence is not limited to developing countries. Today’s business leaders face unprecedented uncertainty and volatility in the developed world too, caused by rapid technological advance, social and demographic change, and ever-increasing complexity. In this fast-changing environment with shortening product lifecycles and dramatically transforming competition, the agility to adapt quickly and continuously has become an essential leadership skill and a key to company survival.
The Hult International Business School study, which drew on a series of interviews with Directors, MDs and C-level executives, based in Africa, Asia, Latin America and the Middle East, identified differences in the way these leaders, from a range of backgrounds and environments, operate within these markets. Overall, the researchers found that managers who have had significant exposure to or who originate from emerging economies, have ways of managing uncertainty that those from developed countries do not have. On the other hand, Western European and North American executives seem to struggle with the contradictory situation of following rules and being flexible at the same time.
“People who have grown up in turbulent environments have a flexibility in mind-set: they possess agility of thinking, willingness to delegate, openness in knowledge sharing and recognition that in these emerging markets, compliance can slow things down,” says Yusaf.
The Hult research identified three key sets of skills executives need to develop to be able to successfully navigate volatile, uncertain, environments:
- Organizational and individual flexibility. The ability to change direction flexibly as the situation evolves and avoid rigidities in thinking at an organizational level.
- The ability to process new knowledge. Being able to combine what you already know from experience, with new information coming through the pipeline.
- Innovation to manage the external environment. Quickly finding ways of doing things differently than you’ve done in the past.
The researchers also suggested three key lessons for organizations and individuals working within emerging markets:
- Immersion is crucial. Executives who have been sent from developed economies need to be more open to the turbulent contexts in which they are expected to operate and immerse themselves. Place themselves within the environment itself, rather than observe it from a distance.
- Organizations need to rethink the rules. Many of the research findings reflect on organizational processes and attitudes, rather than just the individual executives. Organizations need to transform their mind-set around who should be at the upper echelons, as well as be more willing to work flexibly and rethink the rules of the game.
- Actively seeking and training the right executives is key. The findings did not correlate with either the industry or the nationality of the executive interviewed – what really mattered was the executive’s exposure to emerging markets.
Read the full original article in Finance and Global Banking Review