The new age of globalization: Executives stand to gain inspiration from the world’s top entrepreneurs
(As originally appeared in FEI Canada F.A.R. member e-newsletter, June 2010)
By Colleen McMorrow, Partner and Strategic Growth Markets Area Leader for Canada, Ernst & Young LLP
Globalization continues to change the way we do business. Advances in technology and businesses’ endless appetite for new growth opportunities have made the world more interconnected than ever before. As a new and uncertain era dawns, one thing is clear: the most successful companies — regardless of size, sector or location — will be those that understand and embrace these changes and adapt quickly to the resulting challenges and opportunities.
Globalization has been a hugely positive force for entrepreneurs. A recent report by EY, Ambitious, adept and agile: How entrepreneurs are changing the world, explores the successes of the world’s leading entrepreneurs. Their optimism, sharp business savvy and steadfastness in times of economic uncertainty set an example for others in driving change and recovery in the right direction.
The survey, based on interviews with 300 winners of the EY Entrepreneurs Of The Year® Awards, reveals four major themes that suggest a golden era for entrepreneurs and increased competition on the world stage.
- Globalization will drive the age of agility. In a globally connected world, entrepreneurs are looking to outdo established multinationals by building globally agile businesses that respond quickly to change and opportunity.
- Entrepreneurs will drive global growth. Unlikely to waste the shake-up of the economic downturn, entrepreneurs are planning international expansion and exploring M&A deals in new markets.
- New competitors and new rules are emerging. The world’s best entrepreneurs are responding with greater innovation to ensure they can rise to the challenge of the new competitive landscape.
- Globalization is driving – and changing – innovation. Greater involvement of clients and suppliers, and a focus on supply chain innovation are helping entrepreneurs stay ahead of the curve.
Entrepreneurial spirit restores economic stability
With the free flow of labour, goods and technology across borders, open international markets have been a positive driving force for businesses, creating boundless possibilities. Entrepreneurs’ agile nature in responding to change has allowed some top world business leaders to emerge victorious from the economic crisis. Having an innate ability to sense opportunity, ambition and sheer business sensibility, they will play a significant role in creating jobs as the economy bounces back.
Forty-two percent of respondents to the EY survey say they derive more than one quarter of their revenues from international customers, and in three years 55% expect to reach that benchmark. Further, 60% of those interviewed plan to increase cross-border M&A over the next three years.
With globalization comes both tremendous potential and risk. Consequently, Canadian companies are not taking full advantage of circumstances abroad. Entrepreneurs now have a substantial advantage over more traditional multinationals, whose governance, decision-making and stakeholder relationships can impede quick reactions to the market. By incorporating flexibility into their operations, entrepreneurs are better able to deal with the challenges of the uncertain and progressively changing economic environment.
New and unexpected competitors emerging
Open channels for global commerce usher in new, unforeseen competitors, all vying for a share of the market. Free access to markets and the steady liberalization of trade have resulted in increased competition for multinationals and entrepreneurs alike. As the economic focus shifts from west to east, new characteristics of the business landscape emerge. Deviation from the traditional economic environment suggests that executives must recognize global entrepreneurs as serious contenders. Accordingly, organizations should seek expansion opportunities abroad and tackle economic factors to manage change and remain competitive.
Notably, more than three-quarters of respondents agree that globalization has resulted in increased competition and changed the nature of competition. It is not surprising that entrepreneurs with the most internationally diversified operations are particularly aware of the growing market struggle, while those who focus on domestic markets are less conscious, and risk being unprepared for the change brought by the “new globalization.”
Despite the strong focus on international expansion, entrepreneurs still see local companies as their biggest threat. Fifty-one percent have found that competition in their domestic markets is swarming with non-local companies. These entrepreneurs are not ignoring the prospects for their local markets and need to ensure they stay ahead of the competition.
International expansion generates diverse workforces
Many of the survey respondents believe that in addition to optimizing economic growth, globalization has expanded the scope of the workforce. By creating internationally mobile employees, the open market system has resulted in more diverse management teams.
Tackling global issues at their root
By observing the new global landscape, entrepreneurial companies are developing a global outlook at an early stage. The ability to access international markets also means an increasing role for entrepreneurs in solving problems, such as climate change or water shortages, that are global in nature. It is no wonder there is significant growth and innovation in the areas of green technology, cloud computing and biotechnology.
Successful entrepreneurs thrive on innovation and diversity
The same characteristics that enable entrepreneurs to thrive in an era of globalization also make them well placed to deal with the aftermath of the economic crisis. Their willingness to take risks when others will not helps stimulate stagnant economies, while their lateral-thinking approach can provide a fresh perspective on seemingly intractable problems.
Canadian organizations, large and small, can learn from cross-border entrepreneurs who develop the talents and experiences of globally agile employees — bringing more innovative solutions and diverse perspectives to the decision-making process.