30 May 2018

How seventy leaders of multi-nationals in the Asia-Pacific region are responding to disruption

In-depth interviews reveal the true impact of unprecedented change

As the acceleration of technological change begins to outstrip our ability to adapt, Mark Braithwaite, Managing Director of Odgers Berndtson in Asia Pacific, interviewed seventy leaders of globally-successful companies. Exactly how do they see disruption and what’s their best response to its effects?

Disruption in the business world is nothing new. Much of it is really part of the ongoing evolution of particular business environments and markets that CEOs have always had to plan for.

One real disruptor, however, is universally impacting every organisation: the exponential acceleration of pace driven by new technology. Again, this is not new. Innovative technologies have replaced older technology for centuries.

Today, however, it is actually different. In the first of a series of articles, we will start to explain why this is so, and how leadership is required to respond. Fast.

Out of control

In his 2016 book, “Thank You for Being Late”, Thomas Friedman argues that the accelerating pace of technology-driven change has now overtaken our ability, as humans, to adapt.

APAC leaders agree:

“I have been in this industry since 1988. There are now more things coming at us, faster and all at once.”

“Innovations of today will be the lowest common denominator in five years.”

Imagine driving your car around a race track at a constant 30kph. Anyone can do this. No stress at all.

Then, every lap, you increase the speed by 5kph. On each new lap, the complexity of your world increases. At some point, your ability to process the faster pace and keep control of the car will fail you.

This is similar to how the pace of change in business is challenging its leaders. The pace of change is creating a level of complexity that is overtaking their ability to process and make effective decisions.

This series of articles is not about technology. In fact, we barely touch the subject. It’s about how leaders are working to remain effective in a world that is fast changing around them.

Two important questions

We interviewed seventy APAC leaders, face to face. All of them led big-name, highly-successful global companies, across multiple industry sectors. There were also a handful of CEOs of global companies, who had moved their HQs to Asia.

We asked them two questions:

Are you talking about disruption, and, if so, what are you talking about? How are you responding to this disruption as a leader?

We recognise that every company and every industry has its own unique challenges, but by half-way through the interviews, three clear themes had emerged. The remaining interviews then brought greater clarity and depth to our research.

Three stages of disruption

Most of the interviewees could immediately articulate the threats and/or opportunities they face because of accelerating pace and the inevitable greater complexity.

Many are urgently and fully engaged in transforming their organisations for the future. Having said this, we saw our interviewees falling naturally into three groups:

Those who are initiating disruption in their markets. Most technology companies fit into this category, but also companies in long-established sectors, who are aggressively investing in technology and innovative business models to disrupt their competition.
Those who are reacting to disruptive forces rather than initiating. This group represents more than 60% of companies.
Those who are not being disrupted...yet. They know they will be disrupted at some point, but there is nothing imminent that they can see. These companies are few in number.

Both disruptors and reactors are experimenting with new business models and setting sail into uncharted waters. They are all wrestling with the complexity that has come with the new pace and they all see this as the most serious challenge they have ever faced.

Common themes

We identified three common themes that are consuming leaders operating in what “they” see as “their” disrupted environment. Added complexity comes from all three themes being multi-faceted and equally demanding at the same time.

Theme 1 - Strategy has now become fluid, as the business environment changes at an ever-faster pace. The five-year-plan is obsolete and mature companies are really struggling with this. Their customers are behaving differently and so is the competition. Moving away from successful legacy business models and structures are tough for leaders and also for their people. The decisions are hard, execution is hard and they can’t move fast enough.

“Our customer base is changing faster than we can see.”

“We have changed to meet a changing market. We understand conceptually what this means but we have not worked out how to articulate this to mobilise the organization. The incumbent is its own worst enemy in a transformation.”

“By the time something becomes a visible trend, it’s too late.”

“We built a structure 5 years ago that was right, but today it is not. Our business plan from 2016 is not worth the paper it is written on.”

“Disruption is by far the most important topic – we are a disruptor, but we are always in danger of being disrupted by others.”

Theme 2 - Talent is expecting more from employers. They seek a more personal and direct connection with their employer. Organisations must have a purpose and place in society that is bigger than the bottom line. Employees expect investment in their professional development, so they can move ahead faster than traditional business models can cater for. They also want a direct connection with the leadership. Attracting and engaging talent in APAC for multi-national companies is getting tougher.

“The war for talent has escalated. Our traditional competitors are still there, but now we are competing with well-funded start-ups that don’t have constraints.”

“I can’t solve the disruption issue. It’s about first-class people.”

“Young people have high expectations of me as a leader. If I don’t agree with them, they may walk away from the company rather than their idea.”

“The skills we need are very new. We have work to do and we need to do it really fast.”

“Diversity of thought is a big issue for us. The people we need, don’t want to come to the office.”

Theme 3 - Effective Leadership now demands a different mindset. APAC has great potential for most multi-nationals, but reaching that potential is a very complex game compared to operating in the relatively homogenous European and North American markets. Add changing business models, demanding flighty talent, the need to stimulate local innovation, and the complexity may seem insurmountable.

“We are not able to react to the pace of change of our customers.”

“As a leader, I now need to be curious about the wider business community as opposed to just the competition. This has shown me the shackled, restrained thinking of our industry.”

“Sometimes it is hard to re-imagine how we do things. It’s easier to create new.”

Beyond smart

Smart people thrive on complexity. Unlike the car on the race track analogy, a single challenge of greater speed in an environment that is familiar, it’s now as if leaders are flying a helicopter, for the first time, with nothing but a good guess at which buttons to press and levers to pull.

In this new scenario, being smart is no longer enough.

“Everyone is having the same challenges, so I am not scared. I have learned so much over the last two years.”

“The biggest challenge is the mindset change. People are comfortable when things are defined. You need to set up separate cells, so they can find new ways of doing things.”

“Traditional thinking will not work.”

“The command and control CEO – Those days are done. Younger people do not relate.”

Welcome to Monday morning

Plenty of books “define” disruption, but yet another definition is of no practical use to leaders who need to turn up at the office on Monday morning and make decisions affecting their future, the future of their company and the lives of their people.

This series of articles uses many quotes from Odgers Berndtson's seventy interviews to set the scene on how the three themes are being addressed across multiple sectors. We show how some of the smartest leaders in this region are transforming their companies, and themselves, for the future.

This series is not about our opinions, but about sharing the collective intelligence of some very smart leaders, who have told us about how they are tackling disruption.

The principles of good leadership are timeless and are the same as they were a century ago. The leaders of 100 years ago though, operated in an environment that was more or less static compared to today. As we shall hear in this series, ours couldn’t be less like that, and that’s the challenge for leaders today.

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Next, in the Leadership Disrupted series, we tackle strategy and the influence and impact of competition and customers. To join the conversation, please get in touch. How is disruption impacting your world and what’s your response?

To read further chapters of the ‘Leadership, Disrupted' Report, click below: