Rough Diamonds: the next generation of successful enterprises within BRIC

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Moscow, St. Petersburg, 22 June 2012 – The Moscow School of Management SKOLKOVO, in cooperation with EY, will be presenting a new report, “‘Rough Diamonds (RDs): Sustaining High Performance in BRIC” at the St. Petersburg International Economic Forum today. The study, developed under the auspices of the Institute for Emerging Market Studies (IEMS), highlights the emergence of the next generation of exemplary firms within BRIC.

“Given the deep interest in emerging markets, it is natural for economic analysts to look for future breakout nations, such as the Next 11 or VISTA,” explains Sam Park, Executive Director IEMS, “but our approach to this study is different.” Instead of focusing on nations, the study identifies the best performing private-sector firms in the BRIC and examines how these firms have been able to sustain their development over time. Dr. Park compares this approach to legendary sports teams that are able to consistently demonstrate high performance over time. Newly competitive firms within BRIC not only signal future growth but also exemplify the dynamism, vibrancy, and resilience of successful private sector firms in emerging markets.

While chronicling breakout firms is neither new nor novel, this level of performance differs from the storied experiences of previous breakout firms in both developed and emerging markets. Dr. Park remarks, “We were initially surprised at the magnitude and consistency of the performance-metrics.” Placed in perspective, these RDs have grown at an average annual rate of 43.1% over 10 years. In other words, they double their sales at a phenomenal rate of almost every 1.93 years. And the growth did not come at the expense of other measures. The RDs compared favorably in profitability, efficiency, and market ranking.

Ruben Vardanian, President of Troika Dialog, noted: “A detailed analysis of the situation requires objective indicators that are applicable to companies on all markets. This study offers criteria that can be used to examine in detail the development and current operations of successful private companies in BRIC countries, to project their development at later stages and, which is also important, can be applied in the future to companies in countries that may subsequently join the ranks of the rapidly developing.”

“But why pay attention to these RDs? Understanding their performance provides important clues on how to succeed in an era of late development in emerging markets. These RDs might well be formidable competitors or strategic partners for other firms in the foreseeable future. Knowing these RDs also reveals important changes within BRIC, notably developments in institutions, changes and transitions in industrial development, recent government policies, and growing shifts in the balance of competitive standings among firms”, - says Andrei Volkov, Dean of Moscow School of Management SKOLKOVO.

Who are these exemplary firms? How did they achieve these levels of performance? And can they sustain these advantages in the future? What are the implications for firms from BRIC and the rest of the world?

Much like the transformation of rough diamonds in gem-cutting, RDs employ a similar progression of value creation that is called the 4Cs for Sustaining High Performance:

  • “CAPITALIZING on Late Development”
  • “CREATING Inclusive Market Niches and Segments”
  • “CRAFTING Operational Excellence
  • “CULTIVATING Profitable Growth”

The full version of the report “Rough Diamonds: Sustaining High Performance in BRICs” will be published in July 2012.

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About Moscow School of Management SKOLKOVO
Moscow School of Management SKOLKOVO is a joint project of Russian and international business representatives, who joined their efforts to create a business new-generation school from scratch. Focusing on practical knowledge, the Moscow School of Management dedicates itself to training leaders, who intend to implement their professional knowledge in the conditions of rapidly developing markets. SKOLKOVO is defined by: leadership and business undertakings, rapidly developing markets focus, innovative approach towards educational methods.

About Institute for Emerging Market Studies
Institute for Emerging Markets Studies (IEMS) is a knowledge center that specializes in the research of the economies and businesses of the emerging markets. It provides a research platform that attracts and links leading thinkers and experts from around the world, who can collaborate on studying timely and critical issues in emerging markets. Its research is rigorous, field-driven, and comparative across emerging markets and offers practical, broadly applicable, and valuable guidelines and frameworks for business leaders, entrepreneurs, policy-makers, and academics with interests in emerging markets.