Masters of Management by Adrian Wooldridge

Masters of Management by Adrian Wooldridge

Author:Adrian Wooldridge
Language: eng
Format: epub
ISBN: 9780062096722
Publisher: HarperCollins


The Power to Disrupt

During the long boom of the 1950s and 1960s the Marxist intelligentsia in the rich countries, furious at their proletariat’s refusal to rise up in revolt, turned to the third world instead. Frantz Fanon celebrated anticolonial revolutionaries in The Wretched of the Earth (1961). A generation of student radicals wore Che Guevara T-shirts and chanted “Ho, Ho, Ho Chi Minh” at any passing university dean.

These days the third world is known as the emerging markets, the Che Guevara T-shirts are made in China, and the wretched of the earth are enjoying growth rates that are the envy of the former colonial powers. Moreover, these emerging markets are likely to shake things up not only in their own backyards but in rich countries, too. Clayton Christensen has coined the term “disruptive innovation” for new products that slash prices and new processes that radically change the way they are made and delivered. Today, many of the most disruptive innovations hail from emerging markets. They will make a bigger difference to life in the West than lean production, the previous great disruptive management innovation from the East.

There are four reasons why things will move faster and further this time. The first is that the markets for corporate control and for senior managerial talent are much more liquid than they were twenty years ago. The great Japanese and South Korean giants grew organically, whereas emerging-market champions are keen on mergers and acquisitions. They have access to highly developed capital markets, both public and private, and to armies of experienced investment bankers and consultants. Emerging-market giants are snapping up Western companies and employing Western managers.

The second factor is the sheer size of the emerging markets. The Japanese export machine was powered by a handful of engines, notably cars and electronics. By contrast, the emerging-market export machine has engines in almost every industry. Arcelor-Mittal is the world’s biggest steel company. Infosys and TCS are among the world’s biggest IT companies. Haier is the fourth-largest manufacturer of home appliances. ZTE, which started foreign operations only in 1997, looks set to become one of the world’s top five mobile-handset makers. Just a decade ago not a single emerging-market company could be considered world-class. Today such companies are among the world’s leaders in twenty-five big industries, according to the Boston Consulting Group.

The third reason to expect a big impact is the emphasis on volume. Emerging-market companies are obsessed with finding new markets to make up for their slim profit margins. Indian and Chinese mobile-phone companies have been adding eight to ten million new subscribers a month for the past few years. Emerging-world giants such as Infosys and ZTE have been growing at more than 40 percent a year.

Fourth, the West’s best companies have grasped the potential of emerging markets. Henry Ford Jr., who ran the Ford Motor Company for decades after the Second World War, continued into the 1980s to dismiss Japanese cars as “those little shitboxes.” By contrast, the best Western companies are now looking to emerging markets as sources of innovation and growth.



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