Page last updated at 10:04 GMT, Monday, 25 January 2010

Davos 2010: Business leaders need to learn new skills

VIEWPOINT
By Mark Spelman
Global head of Strategy, Accenture

Mark Spelman
Mark Spelman: The global economy will run at different speeds

Davos this year marks the 40th anniversary of the global summit between policy makers, business leaders, academics and the great and the good.

This year more than any other in the past, the pulse of change is beating heavily. The challenge of a wide range of short term and longer term issues weigh heavily on the delegates: the effectiveness of the G20, follow-up to Copenhagen, the future of banking, the pace of economic recovery, the challenges of urbanisation and the shortages of food, power and water.

What is clear is that the benign years of 2002 - 2007, where economic growth benefitted all regions around the globe, have been replaced by a much more volatile and uncertain landscape.

A three-wave crisis

Two years ago few had a sense that we would soon witness the worst financial crisis and economic downturn since the Great Depression. The crisis played out in three waves:
• a financial crisis in the banks did restrict credit,

• which hit trade and created an economic downturn,

• which resulted in a third wave of growing unemployment in many countries.

The synchronized downturn and the coordinated response from governments around the world has brought some short term stability - the concern is whether there are some nasty side effects that will come back to haunt certain economies during the recovery: in particular are all the toxic loans out of the financial system? What happens to demand when the fiscal stimulus packages unwind? And will the trade imbalances remain, generating large currency reserves in commodity-rich countries?

Hot spots of growth

Companies will have to recognise the speed and scale of change

As we start a new decade, the economic reality is of a multi speed world - where Asian gross domestic product will most likely be stronger than in North America and Europe.

For business leaders heading into 2010 - after a year heavily laden with short-termism - the challenge will be to balance the longer term with the short term; to continue to drive short term results without forgetting the rapidly changing landscape, and to pick the hot spots of growth.

The challenges are managing costs and cash, looking for growth and innovation, dealing with the new constraints of accessing capital and securing market share when demand patterns are uncertain.

New rivals, new technology

Alongside them two trends stand out in the new landscape.

Participants at roundtables at WEF
Business leaders will use their Davos to learn new skills

Firstly, business leaders are aware of the growing importance of new growth markets - particularly in Asia. This is also creating a new cadre of global competitors. The number of emerging market companies in the Fortune Global 500 - a leading ranking of the world's largest companies - has risen from 20 in 1995 to 91 in 2009.

Secondly, higher growth rates in emerging markets and new competitors are combining with a new technology wave. As computing power accelerates, new but scalable information technologies such as cloud, mobile and collaborative computing have the power to change the way businesses operate and collaborate.

These technologies - combined with the ability to process large amounts of real time information - create new options for businesses in all regions.

Consumer power

New markets are emerging such as smart grids and intelligent infrastructure - old ways of operating are changing as physical banks are superseded by mobile banking applications in many developing countries.

New economic relationships are possible for the first time. The traditional boundaries between customers and manufacturers are becoming blurred, as innovation and product design tap into contributions from stakeholders around the world.

Consumers can use new technology to share information about products and services in open and global online forums where the objective is to increase knowledge or economic wellbeing.

As more and more information can be accessed by consumers, we see two powerful shifts: the power of consumers relative to manufacturers increases, and emerging markets become the strategic focus for companies with global aspirations to grow.

New skills required

These forces have big implications for business. Companies have to master a new complex eco-system where customers, suppliers, competitors and other producers are increasingly interconnected and interdependent.

This requires new skills: managing networks of third parties, competing with new market entrants and protecting proprietary information and data.

So as we get ready to don the snow boots and meet in Davos, as we contemplate the title for this year's World Economic Forum meeting : "Rethink, Redesign, Rebuild" the challenge for those present will be to work out how to move forward in a way that is speedy, effective and sustainable.

The economic landscape that lies ahead will seem foreign and forbidding to many business leaders. The economic, political and regulatory landscapes are changing but beyond global governance there are fundamental shifts happening in the way of doing business.

Holding on to old notions of competition, linear value changes and the old definitions of customers will not work.

Companies will have to recognise the speed and scale of change. The successful business leaders of this new decade will be able to bring a global lens to a world of new emerging rules and increased uncertainty to provide the strategic clarity and operational flexibility required by their operations and staff.

Now more than ever we need political and business leaders with the skill of global orchestration.



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