How Emerging Giants Can Take on the World
Many large and fast-growing companies in emerging economies face an existential threat they did not see coming: the headlong growth that put them on the map is not enough to sustain them when their industries mature or their geographic markets start to cool down. These emerging giants are often so focused on chasing growth that they fail to invest in improving their organizational capabilities, which leaves them unprepared when growth slows and competition from increasingly savvy developed-world multinationals intensifies. They lack the capabilities—the processes, tools, structures, and people—to remain profitable in a slower economic environment.
It’s critical that the next generation of emerging-market corporations heed this lesson and develop enterprise capabilities from the very beginning—even as they battle for early advantage by seizing nascent business opportunities. The best approach is to develop capabilities in four stages: (1) start with building the rudimentary capabilities that allow you to be in business; (2) as the company is up and running and building strength, develop the basic capabilities that are aligned with your strategy and that you’ll need when the industry matures; (3) work on scaling up so you become a leading player in your domestic market or consolidating the market, while making sure not to overstretch management resources or become a collection of poorly integrated business units; (4) move up into higher-value customer segments or out into international markets.
Developing capabilities along these four stages will help “emerging giants” build an organization that can excel over the long term.