As the pantomime season draws to a close, in this Edition of Overture Fidelio considers what are the “magic beans” which will grow into the Beanstalk of Prosperity in 2013. As in any good pantomime there are frightening obstacles preventing our hero from achieving his goal. These include a receding but still extremely dangerous Fiscal Cliff, as well as the Mire of Slowdown represented by Europe.
Gillian Karran-Cumberlege
From the perspective of Executive Search, Fidelio has identified two “magic beans” which have the potential to deliver corporate growth in 2013.
The first is related to the Prism of Risk. Since 2008 the Western world has become dramatically more cautious. In some sectors regulators are dictating greatly enlarged risk management and capability. This is driven by the political and public mood which now views the business world through the Prism of Risk rather than opportunity. The implications for corporate reputation have been felt by a number of leading companies, including those deemed to be paying too little corporation tax in what are considered to be very profitable markets.
By late 2012, however, a number of companies were seeing Risk as an Opportunity. Much intellectual capital associated with Risk Management has been outsourced to consultancies, which are flourishing as they help their clients comply and adapt to this Risk-Adjusted Environment. While the Big Four are clearly major beneficiaries, we are also seeing innovative propositions developed by strategy consultants and communications agencies both of which are becoming destinations for Risk Professionals.
Fidelio is working with a number of companies which have grasped the implications of the new reality that business now has to be conducted through a Risk-Adjusted prism. Warren Buffett once attributed his success to the way his brain is wired which allows him to successfully compute the cost of capital. Today corporates require executives with the capability to compute the cost of risk and to take effective business decisions on that basis.
We’re looking for someone who is wired in such a way as to see risks that haven’t occurred and be cognizant of risks that have occurred.
– Warren Buffett, Berkshire Hathaway AGM, 2006
In practical terms this has led to a ballooning of the Risk function particularly in banks. By mandate the Chief Risk Officer has a seat at the table within the banking industry. This is creating demand for professionals who can contribute strategically while remaining credibly in command of Risk. One consequence has been the creation of a COO of Risk to ensure there is no loss of focus on granular risk management.
So arguably, overlooking the mixed metaphor, the first “magic bean” for 2013 is a pair of risk-tinted spectacles. Corporate leaders who can view the world through this lens and still identify and execute commercial opportunity are well placed to climb the Beanstalk of Prosperity.
The second “magic bean” which Fidelio has identified which will drive growth is access to rapidly expanding markets. According to a study by Tata Communications 83% of UK companies have looked to emerging markets for growth opportunities in 2012. It is no coincidence that both the Fiscal Cliff and the Mire of Slowdown are Western phenomena. Growth looks much rosier outside these markets.
Gaining access to new markets takes many forms and clearly presupposes a desirable product or service. There is universal recognition that it is people who open doors, and as such we are seeing a clear demand for executives and non-executives who hold the key to accessing growth markets.
Across a number of sectors, companies have been building capability and capacity, in particular in Asia and often at Europe’s expense.
In leadership terms we are seeing greater voice being given to executives heading these regions. Consider Daimler which has just appointed a Member of the Board of Management for China and is far from alone in this recalibration of the business.
Fidelio recently co-hosted a seminar looking at the Board and drivers of Growth in the TMT sector. Our impressive panel of experts concluded that Board composition could promote growth by attracting Non-Executive Directors with experience and understanding of rapidly growing markets for example in Asia or Africa.
New markets and opportunities are profoundly shaped by technology. Fidelio has seen a clear demand for senior executives who can navigate and capitalise upon the disruptive technologies unleashed upon more traditional businesses. We are also impressed by clients who have created solutions to the challenges posed by changing distribution and sourcing models which are often borrowed from different sectors.
New markets also represent new sources of capital. Frequently that capital looks very different to the institutional investors of Europe and the US and therefore has to be accessed differently. Fidelio is currently conducting research into how leading corporates are strengthening their finance, treasury and strategy functions to stay ahead in the global competition for capital.
87% of business leaders from both developed and emerging markets are actively engaging in emerging markets.
– Tata Communications/Vanson Bourne, March 2012
Thus, Fidelio’s second “magic bean” for 2013 is an ability to attract talent throughout the organisation and in particular at the leadership level which will open doors to growth markets. By definition these executives must have different backgrounds and experiences. Corporate winners will be those that recognise the gaps in the organisation and are able to think critically and laterally about how to source the door-openers to growth markets.
In our greatly condensed rendition of Jack and The Beanstalk, Fidelio hopes to have brought a smile to 2013. We are also convinced that grasping the new reality of risk and accessing growth markets do indeed represent the “magic beans” that will become the Beanstalk of Prosperity. Fidelio’s Resolution for 2013 is to provide our clients with the talent that they need to meet these challenges. We are confident of the outcome and wish you a Happy and Prosperous New Year.
Coming Up…
Overture explores how talent drives valuation. Future editions of Overture will deal with
• Building leadership teams for new markets
• Unlearning CEO behaviours
• Communications in China – the talent bottle neck
• Articulating the value of the IR profession
Please contact us with comments or for more information on Fidelio Partners on info@fideliopartners.com