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Succeeding in Asia Through Diversity in Leadership - Talent Challenges Most Critical in Asia, Says Expert
Source: theedgemalaysia.com
Source Date: Friday, October 22, 2010
Focus: Institution and HR Management
Created: Oct 24, 2010

According to author and global chief economist of HSBC, Stephen D King, the sun is setting on the age of Western prosperity and rising in the East. In his book. Losing Control: The Emerging Threats to Western Prosperity, King writes that it’s time for “companies to invest in Asia”.

But the region’s diversity in culture, language, politics, stages of economic development and even climate presents a unique human capital challenge for companies looking to develop in the region. Rick Smith, managing director of Accenture’s leadership consulting practice identified the top three challenges for leaders across Asia as sourcing the right talent, building strong leaders and developing future talent through learning. Although these challenges are relevant worldwide, “most global business leaders agree that the challenges are most critical in Asia,” said Smith in a recent email interview.

Smith, who delivered a presentation on this subject at the Singapore Human Capital Summit 2010 which was held at the end of September, noted that the shift in the world’s economic focus to Asia renews these problems for companies who have invested to build talent in Malaysia over the years. “They face these same challenges due to increased local and international talent competition,” he said.

In a 2009 study, Accenture researched how high-performance businesses have been evolving their strategies to succeed in a multi-polar world. The research found that high performance businesses conceive and execute their strategies in three main ways: First, they “create geographic options” by continually looking outward to sense the business environment and make focused choices about where to compete. Companies who have succeeded are also “authentically local” and have become fully embedded in their chosen markets. Finally, successful organisations are well networked and are “internally and externally permeable — enabling ideas, people and industry-leading practices to flow to the right places at the right time,” said the study.

Having strong local leadership in each country has been an important way for MNCs to be “authentically local”. However this can prove a challenge as “being authentically local can seem to be at odds with being globally diverse,” said Smith.

One option is to imitate manufacturing giant 3M which strives to fill top positions with local or regional talent, but reserves 20% of top management positions for international movement.

“Many leading MNCs still require leaders to take global assignments, but it is less about Westerners heading East and now more about global rotations to build a globally diverse organisation,” said Smith. These “expat assignments” are important for developing future leaders and building a global network, he added.

It would be a mistake, however, for companies to assume that “East” is synonymous with “emerging”, cautioned Accenture’s study. The study quoted Microsoft’s vice-president for the Asia-Pacific region, Emilio Umeoka who said, “APAC is the most diverse of the multi-country areas as it comprises both very mature and emerging markets. Different countries and regions will be driven by different combinations of factors”. He observed that expansion in Indonesia would be “driven by market size” while expansion in South Korea would be driven by innovation. “There is a balance between market potential and the stage of the country’s technology adoption,” said Umeoka in Accenture’s report.

The study also included Asian companies that have succeeded in the region. For Asian companies looking to invest in Asia, most do so using an emerging to emerging (E2E) approach — that is, the companies first invest in similarly emerging economies before venturing into developed economies.

“This pragmatic approach enables companies to build experience in familiar markets before attempting to enter more mature and less familiar markets,” said the study.

From there, many of the larger Asian firms seek to diversity their top management when entering Western markets. Taiwanese PC manufacturer Acer appointed Italian Gianfranco Lanci as its CEO and president in 2005 and Lenovo is the product of China-based Legend Computers’ acquisition of IBM’s PC-making division. According to the latest data from analysis firm IDC, Acer is now the world’s second largest PC maker with 13% market share while Lenovo is the fourth largest with 10.3% market share.

Accenture’s Smith observed, “Many leading organisations in Asia are diversifying globally. In fact, our research has shown that diversity is a key factor linked with high performance. One CEO for a regional company in Asia worked hard to create a strong globally diverse leadership team for his organisation with leaders of many nationalities, backgrounds, and ways of working.”

Organisations who resist diversifying their talent may find that they limit their thinking and orientation to the marketplace, continued Smith. “Diversity can create challenges in learning to work together, yet has proven to show strong results. Organisations that celebrate diversity also enjoy high performance,” he added.

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