Achieving High Performance in the Multi-Polar World

The collective economic dominance of the United States, Europe and Japan—known as the triad economies—is giving way to a greater dispersal of global economic power as developing economies contribute an ever-increasing share of the world’s output, trade and investment.This shift is creating a world characterized by multiple centers of economic activity that Accenture research terms the “multi-polar world.” In it, developed and emerging economies are becoming increasingly interdependent. To achieve high performance in this new environment, industrial equipment companies will need to understand five key dimensions of challenge that reflect the global market’s growing interdependence and make up the multi-polar world.These five dimensions are:1. Talent2. Flow of capital3. The battle for resources4. The changing map of innovation5. Emerging customer markets.In the multi-polar world, the balance of global labor supply is shifting to developing economies. However, these supply-side shifts are occurring in tandem with fierce competition between both developed and emerging economies for skilled employees. Talent has become a global commodity, fought over by multiple competitors. To maintain competitive advantage, it will be more important than ever for industrial companies to align their highly skilled workforces—wherever they are located—through a common culture tied to their global business strategies.The flow of capital is changing. Developed economies have traditionally been the major sources of outward foreign direct investment, investing first in other developed economies and then in emerging economies. By contrast, emerging economies have traditionally been net exporters of portfolio capital—stocks, bonds and the like—as developing-economy investors sought to channel domestic savings to the more secure capital markets of developed economies. We are beginning to see the first signs of an inversion of this dynamic.The theme of deepening global interdependence is further evidenced in the interplay between supply and demand for natural resources. Soaring steel prices, for example, are fueled largely by demand from China. As the battle for resources increases, industrial companies will need to sustain extraordinary productivity comprised of operational excellence and lean processes that help optimize assets and successfully integrate acquisitions. Moreover, they will need to be innovative and create pricing power by using customer insight to enable continuous generation of new products and services.Springing innovationDue to a combination of deep investment in education and skills, and rapid diffusion of new technologies, many emerging markets are moving up the value chain at a far more rapid pace than was previously thought possible. In short, the map of innovation is becoming more geographically diffuse, with clusters of innovation springing up in locations as diverse as Beijing, Bengalooru, Greater Seoul, and Krakow. This has ratcheted up competitiveness in the global market, making the pursuit of innovation even more critical within any industry.Finally, while the interdependence of developed and emerging economies is placing greater demands on the resources needed for profitable growth, such as talent and raw materials, as well as favorable pricing, manufacturing capacity, and research and development (R&D), it also is creating substantial opportunities for growth. Emerging economies are becoming important customer markets in their own right. Companies will need to position themselves to take advantage of such opportunities by employing some combination of high performance capabilities, such as global flexibility, extraordinary productivity and innovation, to succeed in the multi-polar world.Paul Loftus, [email protected], is North American Practice lead for Accenture, a consulting firm in New York City.