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Markets are lively organisms sending signals to businesses about their needs and demands. At the moment, the world is experiencing drastic transformations that emphasize a continuous change rather than an AdHoc project. The ability to recognize their voices is the first step towards the successful long-term operations. Accordingly, the opportunities of global markets should be executed with a fact-based strategy and confident management. This article looks into the main market drivers, business cases and theories behind the successful change management.
shift to Asia
By 2050 Asian markets will be the biggest ones in the world. Thus, the global economic power is shifting from west to east. According to PwC, in the next 30 years, the US and Europe are steadily losing ground to growing China and India. At the same time, emerging markets confidently heading to a domination of the world’s top ten economies sending Japan, Germany, and the UK to the end of the list. As the result, the growing Asian middle class will tremendously increase food, water, and energy consumption by 2030. This change requires a foresight thinking from company leadership to grasp the opportunities of global economic development. Trend awareness is an essential tool for the development of vision and strategy. For example, the global tech players like Google and Facebook are increasing their presence in Asian markets already today. They are challenged on their path of expansion by both local regulations and internal objections.
It is a well-known fact that it is difficult for social media platforms to enter the Chinese market. Moreover, main Western social media are banned in China. Thus, companies are looking for various ways to make their roots in the market. Google invests $550 million e-commerce giant JD.com and plans to launch the “censored search engine” in China. The latter one is the drastic change for Google’s strategy that challenges their mission of “organizing the world’s information and making it universally accessible and useful. The company’s employees expressed their protest of the new direction in an open letter: “We urgently need more transparency, a seat at the table, and a commitment to clear and open processes: Google employees need to know what we’re building.” The success for the change management is enabled only when having the internal powers on board. In Google’s history, there have been moments of withdrawing actions due to internal disagreements. Eight years ago the similar projects in China have been postponed for the same reason. Likewise, an AI project with Pentagon was canceled due to ethical concerns of Google’s employees. Google sets an example of the holistically operational organization. However, the question is whether it delays company’s development or, otherwise, supports the main mission?
The change does not always come from within. The transformation of the company arises from recognizing the shift in the demand from the long-term perspective and finding new market potential. For instance, the African KCB Bank and Diamond Bank changes were triggered by Women’s World Banking nonprofit organization. According to IFC, the banking sector sees the 70% of women-led SMEs across the globe are un- or underserved. This is a case, especially in the developing countries. The banks together with WWB implemented change management to better serve women-led MSME’s. The approach was to develop a financial model that projects investment and returns aligns senior management on expectations. The WWB led a number of exposure visits to the senior management of the banks presenting the opportunities of women-led lendings. During the process, the companies have gone through an internal resistance, organized training and learning programs, and challenged the status quo internally. As of the result, the Diamon Bank has outperformed its December 2018 targets already by July 2018 by adopting the cash flow lending methodology. At the same time, KCB Bank’s satisfaction scores have increased by 10% and women clientele has grown from 9% to 49% in one year.
of sugarless lifestyle
Digitalization and transparency empower customers to influence all the industries and sectors. Nevertheless, those businesses with the direct contact to the end customer have to be always aware of the changing habits and values. The soft drink industry is one example of consumers generating change. Global beverage sales consumption patterns have evolved due to the growth of healthy lifestyle trend. Hence, the carbonated soft drink market has been declining for 13 years, and bottled water has taken over the market as the most preferred beverage by volume in the US in 2016. As a result, almost all beverage companies including Coca-Cola Company and PepsiCo Inc. are redesigning their selection to match the healthier needs of their customers. Besides producing sugarless options, Coca-Cola Company acquired the US rights of a premium sparkling mineral water brand, Topo Chico in 2017. In 2018, the company acquired Costa and now manages to blend the culture of both companies. “We’ll operate Costa with our successful, connected-but-not-integrated model within Coca-Cola. Costa is a very different business for us, and we want current Costa employees – from executives in the UK to baristas in stores around the world – to be assured that we respect and value their expertise,” comments James Quincey is president and CEO of The Coca-Cola Company.
The change management is a complicated process that has its own hidden obstacles as it is closely connected to human cooperation. Most of the change management strategies stumble upon due to human-driven reason and the absence of a confident leadership. According to Harvard Business Review, in order for a change strategy to be successful, organizations need to understand and analyze what initiates transformation, as well as the underlying quest and leadership capabilities. The catalyst for change is often either the decision to improve efficiency or to reinvest in growth. The quest, in turn, can be defined by using a quest audit that helps companies find the most compelling and uncontested priority to focus on. If these things are not taken into account, there will be a danger of taking the wrong change journey. This can then result in the real underlying problems persisting and new problems emerging, in addition to the risk of employee commitment for future initiatives diminishing.
No matter what the cause is, change is a crisis that everyone reacts to similarly. According to Riikka Hackselius-Fonsén, CEO of Brand Agency Punda and author of “Growth with a change”, the success of the change management depends on the leadership capabilities. Any type of change is protested as it is a natural reaction towards unknown. The leaders have to be able to justify the change with rational argumentation and supportive data to stakeholders, management of the company, employees, as well as to customers. Creating the shared vision leads to a gradual acceptance of the relevance of the change. As the result, the whole audience is able to let go of old habits and commit to new actions that support the new direction. This recovery process takes time. The second important rule of change management success is building the trust within the company and community. Riikka points out that the trust lays in the predictability and is build together with the partners and colleagues. “Executing the strategy brings everyone together behind the shared goal. Also, it means that there has to be a shared responsibility to build trust. People want to feel that they are committing to a great idea and to recognize their own value in its achievement. They do not want accomplishments to be just handed to them,” says Riikka in her book. The change is unarguably difficult and inevitable.