As we emerge from the pandemic into a world of even greater uncertainty, bold moves and decisions rather than incremental solutions will move the performance dial, just as they did pre-pandemic.
Over the years, VUCA [“volatility, uncertainty, complexity, ambiguity”] has forced multinationals to re-examine their business models. The challenge has been to create change and quickly adapt to a dynamic marketplace further disrupted by technology.
“The world is undergoing six major shifts,” writes Swami Raote, Worldwide President of Johnson & Johnson Vision Care. “People are living longer and growing older, fatter, more crowded, more connected and more urban. As a result, society is unsettled, which is paving the way for disruption and reinvention.”
Managing this disruption has been difficult, given that the very nature of organizations has been to “organize work” into predictable activities governed by inflexible procedures, structures and bureaucracy, which allow organizations to systematically set budgets and allocate resources to achieve results.
So what do multinationals need to do in 2023 to manage this disruption and reinvent themselves to compete more effectively? Here are seven bold ideas:
1. Stimulate innovations – organizations must find new sources of growth either by outsourcing the task of innovation to third parties, or by leveraging diversity. Contracting third party consortiums such as the Food Nest that nurture start-ups and accelerate innovations is one alternative. Another is to create more opportunities to stimulate and reward diverse thinking and new ideas in change resistant cultures.
2. Redirect energy externally – bureaucracies and functional silos are strangling companies. It’s like death by a thousand cuts. Employees are spending too much energy fighting each other and losing touch with their customers. Leaders must find ways of creating space for their local operations to focus outward on the market. Otherwise, local competitors will continue to out manoeuvre them.
3. Empower to increase agility - organizations will need to create work cultures based on trust with the right balance between empowerment and control. With enough direction and clear expectations, empowerment will give people and teams the freedom to make decisions and act quickly. Execution must be based on sound judgment and incomplete information, rather than only doing what you are told.
4. Make bigger bets on where to compete - no longer will multinationals be able to cling to existing distribution channels while dipping their toes into new opportunities. They will have to make bigger, bolder bets based on forecasting trends that are reshaping how retailers compete and where consumers will buy. For example, Costco in the U.S. sells popular brand detergents in bulk and at a discount. That might narrow down the channels in which FMCG companies should compete.
5. Optimize talent - outstanding companies must discover how to leverage the full potential of their workforces and restructure quickly to address change. Human Resources must view their organizations more holistically, rather than by geography, functions or businesses. They must serve as the “stock market of people,” across the whole company, breaking down boundaries to put the right talent in the right jobs.
6. Develop people as a priority – VUCA has made it difficult to manage careers. But more demanding employees, including the so-called millennial generation, have forced organizations to identify top talent and shape disciplined development programs. These programs offer intensive skill development and opportunities for people to gain valuable experience. In 2023 and beyond, investing in individual growth is a sound retention strategy.
7. Clarify digital strategy - despite the past hoopla surrounding the success of digital players such as Amazon, Alibaba and Facebook, most established companies still only use digital to enhance operations, rather than change how they do business. That might not be enough. Companies need to be clear about the role of digital in their future business and how to change to reap the benefits.
Given that Thailand has the third fastest ageing population in the world, finding the best way to retire and staying vibrant has become the talk of the town.
Many executives who are about to retire tell me how nice it will be to relax and not have to deal with office politics, stress or pressures of work. They are looking forward to free time, visiting family & friends and recreation.
But once they have done these things for a while, life begins to become boring. There is only so much golf, tennis or bowling one can do before these activities start to lose their appeal.
Moreover, the dilemma is what do you do between the times you are traveling and enjoying yourself? What do you do Monday through Friday when everyone else is at work?
The trick is to keep yourself challenged. Being challenged means having a purpose and finding meaning in what you do. It involves learning and growing mentally, physically and spiritually throughout your whole life.
“Retirement is an opportunity to do what you love to do and on your own terms,” said Kaisri Nuengsigkapian, who retired as CEO of KPMG here in Thailand in 2015. “You don’t work for money, you work because you have a purpose and can still have impact.”
Most studies on longevity confirm that stretching yourself and feeling valued is just as important in retirement as it is when you are working.
“I think working for international organizations trained me to live with purpose. I don’t want to wake up every morning and wonder, oh what am I going to do today?”
For Kaisri, this means leveraging her 13 years at KPMG and an earlier stint with Arthur Andersen to helping Thai companies create organizations that can compete globally.
“One area where I feel I can contribute is to help Thai companies globalize. This includes creating the right work environment to attract and nurture the newer generation. These younger people are looking for diverse leadership and cultures that are open to change and new ideas.”
At the same time, according to Kaisri, it is important to select opportunities that enable a person to keep learning and that fit into one’s lifestyle.
“It’s important to clarify expectations and the scope of what you want to do. This enables you to plan how much effort you need to invest, and to select things where you are continuously learning and adding value.”
Moreover, it is never too early to plan for retirement.
“Many people do not plan for retirement until they are about to retire,” said Kaisri. “But it is important think ahead and explore different groups of people, interests and activities ahead of time. If you expand your network then you can see new opportunities and others can see what you can do and how you can contribute.”
Over the past six months, Nestle Indochina has experienced a remarkable surge in business performance. After years of tepid growth, where the business struggled to compete against aggressive competitors and to understand fickle consumers, Nestle finally managed to breakthrough and beat its targets at the end of 2018. At the end of the first quarter of this year, business growth exceeded budget by over 20%.
Victor Seah, who took over as CEO in May 2018 of Nestle Indochina’s 44 billion baht operation in Thailand, Myanmar, Cambodia and Laos, reflected that it was not more experience, expertise or resources that contributed to these results, but a change in the mindset of his leaders.
“We didn’t add people or make any unusual investments during this time, but the willingness of our leaders to work together and do what was best for our business in Indochina made the difference. As a result, we executed faster and more effectively,” he said.
Indeed, last September, Seah had gathered his top 50 leaders at an offsite meeting in Hua Hin to debate and sort out key growth strategies for the upcoming 18 months. It was a critical time to gain traction on what Nestle needed to do to succeed in Indochina.
Most of the emphasis was placed on three business areas: core coffee business; opportunities in liquid drinks; and how to strengthen distribution and sales.
“The offsite was the catalyst. It was as if a light bulb went off and people started collaborating and working together toward common goals, rather than operating in silos or on separate agendas,” said Seah. “The team elevated “growth” as our highest priority and simplified what needed to be done.”
What drove success of this offsite? In hindsight, much was due to Seah’s ability to motivate his leadership team to collaborate and synchronize its efforts. To do this, Seah had encouraged healthy dialogue during the offsite, where people were willing to say what was on their minds and share information openly. Even controversial issues were discussed in a constructive, respectful manner. As a result, the offsite was relaxed, yet productive. People left knowing exactly what they needed to do.
To lay the groundwork for healthy dialogue, prior to the offsite meeting, cross functional teams were asked to develop integrated plans needed to succeed in their business areas. Participants were urged to think of driving growth as their first priority, and work together as a unified local market team, rather than disparate functions.
Meanwhile, Seah also empowered his team to execute with minimum interference from himself and others.
“As Market Head, it is my responsibility to ensure our leaders have the resources and freedom to execute the right strategies. If we compromise what we need to do, the competition will punish us.”
Seah is not alone facing this challenge. For many multinationals, it is often the country manager’s role to create the right conditions for teams to implement the most competitive local strategies. Often this means making the right trade-offs between corporate policies and local market needs.
As Seah plans how to sustain Nestle’s growth engine through Indochina’s current political uncertainties and choppy economic times, he knows the importance of maintaining healthy dialogue, synchronization and supporting his team’s commitments.
In fact, the company has just completed a series of employee engagement meetings where Seah and his leadership team met with over 3,500 employees across the Indochina region to communicate the vision and direction of Nestle Indochina for the future.
“There is no shortage of capabilities, talent and experience in Nestle,” said Seah. “And there is no business problem so big that we cannot solve it. My job is to ensure that everyone is aligned behind a common vision, is engaged to work together, and keeps their eyes on the prize.”
To become more agile, companies need leaders and teams with an entrepreneurial mindset, who value ideas more that processes and protocol.
For many business leaders in Thailand, the future promises to be either exciting or heart breaking, depending on whether they can change their organizations to be more agile.
To create agility, leaders need to adopt a more “entrepreneurial mindset.” The challenge is to create a work culture that encourages people to behave in ways that enhance organization agility. For example, leaders need to persuade their teams to think and act beyond boundaries and silos that stand in the way of innovative ideas.
No one knows this better than Victor Seah, chief executive of Nestle Indochina, who has ramped up profits and growth for his business since he arrived here in Thailand five years ago.
“Many of the best innovative ideas are beyond existing products and above existing categories,” said Victor Seah, chief executive of Nestle Indochina. “I encourage our people to think outside the box about what consumers really want, not just what we normally provide.”
Moreover, leaders need to create opportunities for people to experiment and initiate ideas. Over the past few months, Seah has established an “incubator business” designed to come up with innovative ideas that cut across product categories to serve selected consumer segments. This idea was conceived in an offsite workshop we conducted with his leadership team last year in Hua Hin.
Seah has also supported a flurry of innovations, including the successful development of virtual reality campaigns using digital tools to enhance a shopper’s in-store experience with Nescafe products.
“Entrepreneurship involves risk taking, being willing to fail, and a desire to change the status quo,” said Seah. “We want people to be motivated by ideas and content, not processes.”
To bring ideas to fruition, an entrepreneurial mindset also involves the willingness of people in different areas of the organization to work together. Leaders like Seah know collaboration and respecting different viewpoints are critical in translating a good idea into a successful business, not to mention accelerating the whole innovation process.
“With strong cooperation from everyone around the same goals, we have reduced the time it takes to bring a new idea to market from 18-24 months to six months.”
At times, a leader must have the courage and instinct to go against the grain and do what is necessary to ensure new ideas receive the resources necessary to germinate. Yet at the same time, there is recognition of the importance of balancing agility and stability to commercialize ideas, achieve scale and profitable growth.
“As important as it is to promote one vision and to create space for people to experiment with innovative ideas, when the time is right, focus and discipline are equally important to run the business,” said Seah.
Over the past several years, the majority of Nestle Indochina’s growth has come from incremental sales from innovations. Explained Seah: “It’s not just me who needs to act like an entrepreneur. My entire leadership team and all employees need to think this way. My role is simply to ensure teams are moving in the same direction, give them the support and resources necessary to succeed, and then I just let them go.”