As 2016 draws to an end, EMEA executives are preparing to focus on 2017 and executing the plans they have laid out for next year. However, this is also a good time for reflection, learning from mistakes, and pressure-testing your own assumptions. In that spirit, and taking into account that 2017 will likely be another complex year for multinationals in EMEA, here are seven questions we suggest thinking through during the holiday season and heading into 2017.
Q1: Are our long-term assumptions still accurately representing the opportunities in our markets?
How confident are we that we understand the size, shape, structure, and accessibility of the opportunity we have identified in this market?
The oil price shock, slower global growth, and political disruption have shifted the potential of a large number of EMEA markets – for some only in the short-term, or not substantially, while the long-term attractiveness of others has come under question. Long-term opportunity assumptions more than a couple of years old are likely based off of fundamentals that are no longer an accurate representation of reality. It’s critical to have an honest assessment of actual realistic demand you’re working with today, and how that might evolve going forward, especially if it’s likely to diverge from longer-term visions embedded in older versions of your long-range plans.
Q2: Are we truly getting the information and insight we need from partners to identify specific opportunities for growth?
Do we have the right processes in place that will allow us to monitor market shifts effectively as they unfold?
Changes in consumer, government, and regulator behavior over the past couple of years have been quite abrupt, especially in markets that were hit by devaluations and/or the oil price crash. However, underneath that are slower-moving, but potentially more impactful shifts to customer preferences, government approach to investors as a whole, as well as long-term opportunities that are arising across EMEA markets. Make sure that you have processes in place that incentivize and empower your teams and channel partners to consistently collect relevant data on these shifts to help you get ahead of competitors.
Q3: How effectively are we prepared to deal with rising price sensitivity in 2017?
As currency depreciation against the dollar continues, but customers are less open to further price increases, how confident are we in our approach to pricing in 2017?
Further currency depreciation, combined with low growth and substantive erosion in purchasing power across many EMEA markets, will pose a real challenge to MNCs in 2017 as customers are much less likely to take a price increase than they were at the beginning of the latest cycle of FX devaluations that started in 2013-2014. New products, revamped marketing strategies, local manufacturing, and more nuanced customer segmentation from a sales perspective will all be essential to dealing with customer price sensitivity next year.
Q4: Are we sufficiently equipped to adapt to changes in government policy that are happening across our region?
How effectively are we adapting our own strategies to the priorities, purchasing power, and policy shifts that are happening in the public sectors in our key markets?
A series of unsettling elections in Western Europe, geopolitical pressures and rivalries in the Middle East, and the need to sustain government spending power despite weakness in traditional sources of tax and export revenue are all going to reshape how governments from Egypt and Saudi Arabia to South Africa, the UK, and France relate to multinationals. Companies of all sectors would need to excel in government engagement, monitoring of government regulatory activity, and establishing relationships across a broad spectrum of stakeholders to get ahead of these changes in 2017.
Q5: How well equipped are local teams to handle continued disruption to normal operations?
Do we have the skills, processes, and infrastructure to respond to any number of possible disruptions next year?
Without a doubt, 2017 will be a year in which MNCs will face plenty of disruptions. These are most visible currently in the realms of geopolitics and FX, but others risks may well be added to this list as the year progresses. Instead of trying to guess every possible scenario that could unfold next year, it’s more important for you to ensure that your team has the skill sets, tools, and mindset to anticipate some sort of disruption, react to it quickly, and adapt your business to it as needed. Your local teams and partners will be on the front lines for most of these changes; make sure that they specifically are getting the support necessary to react in a strategic way when disruption happens.
Q6: My team is focusing on execution, but is that enough to ensure success beyond 2017?
Even if we execute everything we intend to next year, will that be enough to get us in the right place for 2018?
While many MNCs have approached 2017 as the year in which their emerging markets organization can win through top-quality execution across a range of activities (sales, marketing, demand generation, channel management, customer segmentation), that approach can capture demand that is present, but does not create additional new opportunities in and of itself. In addition to excellence in execution, your team needs to start laying the groundwork for an EMEA strategy that is no longer about capturing upside growth, but about creating sustainable competitive advantage in emerging markets that can support strong performance not only during periods of rapid economic growth, but also during downturns and periods of sluggish economic expansion.
Q7: Are we having the right conversations about 2018?
Our longer-term plans reflect improving growth in 2018, but are we missing anything in our assumptions?
While focusing on 2017 execution and your team’s ability to remain agile in the face of disruption, pay particular attention to their longer-term assumptions, starting with 2018. 2018 is unlikely to be a year in which we return to the pre-oil-price crash world of emerging markets growth. Any plans that look to 2018 as a year of “normalization” are likely to face headwinds. Instead, start thinking about the kinds of groundwork you and your team would need to lay out in 2017 that would allow your EMEA business to not only adjust to the new conditions in your region during the year, but be positioned to substantially outperform competitors in 2018 through strategic investments, innovation, partnerships, and selective localization.