Asia CEO Insights: Incorporate Local Market Dynamics into the Strategic Plan

CEO Takeaways

“Knowledge of local markets should not reside only in local markets.  Institutionalizing knowledge is critical in light of the high attrition of local talent in Asia.” –Head of Asia, Food & Beverage Company

Last week, I shared the first post in a small series on key takeaways from the recent Executive Breakfast hosted by Frontier Strategy Group in Singapore.  I had the opportunity to join nine senior APAC executives for a robust discussion on managing the strategic planning process despite the volatility and distance from HQ that characterize doing business in emerging markets.

One of the most important capabilities for multinational companies to possess is an effective and efficient process for capturing the insights and wisdom of front-line managers when formulating strategic plans.  In Asia, the fact that highly capable local managers are so difficult to retain for more than a few years before they leave for a big pay increase being offered by a competitive firm, or that many managers have relatively little multinational work experience, adds an extra layer of complexity to an already thorny challenge.

Furthermore, we discussed the fact that constantly churning local teams may lack a sense of ownership of plans developed by predecessors.  And, that when employees expect to have short tenure with the organization, it can be hard to incentivize them to invest in developing and implementing long-term plans that may not maximize short-term personal benefits.

A leading packaged food company in attendance of our discussion has responded by attempting to institutionalize local market knowledge at the regional and corporate headquarters (where employee tenure tends to be longer and strategic capabilities tend to be more consistent) by developing a strategic planning Center of Excellence within each business unit to own the process of long-term planning, and gives local teams ownership (and accountability for) short-term planning and execution.

Another executive, from the fashion/retail space, chimed in to mention that his company has used a similar Center of Excellence strategy, with the added tactic of segmenting focus by channel as well as business unit.  Some of the executives in attendance questioned the obvious drawback of not involving local teams directly in long-term planning, but acknowledged that this approach may be a realistic compromise in markets suffering from particularly high attrition.

An executive from the medical devices industry has shrunk the planning horizon for country teams to just two months; longer-term planning is done at the regional level.  In his view, the key to executing in this type of bifurcated planning environment is a highly structured discipline of communication between regional and country teams, and strict accountability to meeting mutually agreed upon strategic milestones.

Another important consideration when it comes to managing the human element of planning is of course incentives.  I’ll touch on some of the highlights of our discussion on that front in my next post.

 

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Comments

  1. Chris,
    I agree with your comments. Failure to integrate the local considerations for strategic planning and operating in Asia Pacific has been a major failing of the last two multinationals I have worked for.
    Asia Pacific is an extremely complex region to both operate within and to open new markets with different cultures, different regulatory guidelines, trade arrangements, transport infrastructure, existing resources and the geographies. These are all key considerations for any organisation looking to work in this region and in emerging economies.
    Spend the time doing the groundwork I say!
    Regards
    Mal Lovell.

  2. Chris Moore says:

    Mal, thanks for your comment. In terms of spending time doing the groundwork, one interesting quote that I will never forget from the discussion in Singapore (and I am paraphrasing here), was, “One of my biggest obstacles in trying to communicate the reality on the ground to corporate is the guy at headquarters who has been to visit Shanghai three times and is convinced that he really understands Asia as a result.” I think HQ either needs to dedicate the resource to truly immerse execs in the markets, or give local markets a little more trust when they are developing plans.

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