Hamel’s Challenge to Asia
The growth you assume s inevitable is not necessarily so.
The growth of Southeast Asia has been spectacular. But you have to be concerned about taking success for granted. You have to be extremely careful not to assume the inevitability of growth in Asia. Clearly, you face substantial challenges in maintaining the rate of growth. Before the Second World War, Argentina was the fifth-largest-and perhaps the most vibrant-economy in the world. So I don’t think one can take success for granted. It can come very quickly. A client said to me, Gary, we’re growing like a rocket. My answer was, Have you ever noticed that rockets follow a parabolic flight path? They go up, and they come down the other side of the curve. The time to worry about the future is when your growth is on the upswing. One of Asia’s specific challenges is to move from companies that have grown primarily by horizontal expansion-the conglomerates-to those that are much more focused. Asian probably has more focused. Asian probably has more conglomerates than any other part of the world. Here you see companies that are in banking. Transportation, construction. Raw materials, and so on, But that’s not a sustainable model in the global economy. If you look at the companies that win consistently around the world, you will see that they are focused on a set of core businesses. Many of Asia’s conglomerates will have to redefine their structures and ask themselves, Where are the businesses where we can actually win, worldwide? Many Asian conglomerates have also grown by being effective local partners of multinationals. They became the gateway in to their countries. But if you want to get to the next level of the game, you have to push it the game, you have to push it the other way. The goal is to use the multinational as a gateway to global markets. To do that. You must have much more to offer than knowing the local economy well and having political competencies that are valuable on a global basis
A good example of how that transition is shaping up is in Taiwan. There is not one Western computer company that can build a laptop without help from Taiwan. What companies like Acer and Twin head do is not to serve as Taiwanese branches of multinationals. But as repositories of global capabilities that happen to sit in Taiwan but are leveraged world-wide by global companies.
Asia also faces the challenge of moving from a production economy to an information economy. The world has quickly moved from an agricultural economy then to a mechanical one, and now to an information economy. Wherever you are you have to able to compete in that information economy. The technology is available throughout the world so there’s many cause for not being at the leading edge
Around the region, I see great enthusiasm but also a great lack of confidence. If I had to score Asian companies on implementation-as doers making things happen-I would give them a nine out of ten. But if I score them on thinking and anticipating, I would only give them three out of ten.
There’s almost a view that you’ve got to follow the American of Japanese models: that you have to take those models and incrementally improve on them. For example the classic American and Japanese assumption is that it takes 40 years to build a true multinational. But why can't it be done in five years? Some companies are doing it in that time frame.
You don’t have to take to take the same path before you can try something new. Today, there is no road map.
In 1995, This region’s companies must ask themselves : What kind of industrial structure will we need un the year 2005? What kind of management talent will we need? Otherwise, One day they might wake up and discover that the game has changed, and the success they thought was inevitable didn’t turn o9ut to be.
So my message to Asia is : Have the courage to challenge convention entry. They’re necessary, but sufficient to be competitive. You’ve gone to world-class levels of efficiency.