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The business world has made far-reaching changes. A confluence of technological, social, political, and economic events have caused radical changes in the way in which companies, markets, and customers behave. In the face of that changing environment, some companies have known how to adapt and distinguish themselves in contrast to their competitors, and others have not been able keep up with the transformations.

Those who have fallen behind their rivals usually are not able to perceive any important strategic change or disruption in their industry, wrote Nicholas Kachaner, senior partner and managing director at The Boston Consulting Group, and Peter Kunnas, former BCG executive and currently senior director at Oracle. And even if they do notice new shifts, they are incapable of putting in place an appropriate strategy, and if they define a strategy, they aren't able to execute it. In other words, such companies do not have the strategic plans, leaders, or the execution capacity needed to confront the convulsions in their environment.

?How can a firm survive in environments where it is increasingly difficult to plan for the medium and long term, with constant market swings, disruptive trends, and unpredictable behavior of consumers confronted with technological developments never seen before?

The answer, according to experts consulted by Latin Trade is in the face of change, change. Although this solution seems easy, it's not. For years, organizations have been anchored to rigid long term strategic planning models that defined where the company wanted to be in 20 years, where they were at the outset, and how to get to that point, under leadership that followed the road map and ensured full compliance with the plan.

However, in an environment in which companies must face demanding stakeholders, more markets with more customers and more choices, more obstacles to creating value and increasingly frequent and disruptive changes, even the best theories, models, and management practices have stopped being effective because, according to these experts, what is needed is not more control but more flexibility.

"Strategies must be more adaptive and flexible to interpret the changes in business models and in technological paradigms. The process of strategic planning has evolved. Now what's needed is versatility and adaptability. It's better to do something quickly and well managed than perfectly but late," said Jorge Becerra, senior partner and managing director of The Boston Consulting Group.


This is the context that gives rise to the concepts of Minimum Viable Products (developing a product with enough features to satisfy the first customers, who provide feedback for future development) and sprints, agility to focus on quickly finding a solution to a problem, and then perfect it with the feedback from the market.

A paradigm shift to flexibility implies an organizational change and a change in the talent that companies require.

"The hierarchy and the organizational structure are no longer the most important elements; instead, it's the physiology, how the parts relate to one another, and how the personality, talent, and culture favor this new (corporate) behavior," Becerra said.

The world of business has moved from vertical organization systems to ecosystems where different departments integrate and even include outside players in multidisciplinary teams. "We have to break down the myths and adopt more integrated ways of working, where talent goes beyond knowledge of one industry and is capable of putting together and creating cross-disciplinary work teams," says Andres Cadena, senior partner at McKinsey & Company in Bogota.

And the multilatinas?

Most large multilatinas are competing today with companies from Europe, Asia, and the United States in different markets. "They are almost at the same level as the global companies. Dedicating themselves to exporting has given them a very cosmopolitan vision," says Cadena.

However, there are significant factors that differentiate them and that obstruct their levels of execution. "They survive the volatility of their external circumstances in the short term, but they lack perspective," said Professor Lourdes Casanova, director of the Emerging Markets Institute at Cornell University.

"There are many family companies with patriarchs who will not give up control to the new generations so that they can innovate. They lack internationalization, invest little in their own research, and have a love-hate relationship with governments. If the government does something they don't like, they stop supporting it," she added.

When the time comes for these leading companies to turn their strategies into reality, their biggest obstacle is rooted in the need for flexibility to make and execute plans and recruit the right talent.

"They are stuck in design models and follow an outdated strategy, and are not wired internally to be able to adapt to the changes the consumer, the market, and technology are calling for," said Becerra. "When we speak of digital transformation we think the big challenge is the technology, but it's in the dimensions of people, leadership models, and collaboration."

The 21st century leader needs more emotional intelligence, a leadership of service that's not overbearing or authoritarian, that listens to different sources and is tuned in to the signals that appear in the ecosystem to be able to put together a vision that inspires and motivates. "For this new era, the characteristics of feminine leadership--creativity, innovation, flexibility, and adapting to errors--are more appropriate than the traditional leadership models," said Becerra.

What can Latin American companies learn from the most advanced corporations?

According to BCG's experience, to respond to today's changing context the most adaptive leadership models place a value on the team, adaptability, experimentation, and learning from mistakes. Innovation demands an ecosystem which promotes collaboration, the ability to attract and retain talent that is digital and able to respond to non-traditional career objectives, the incorporation of digital technology in all areas of the firm, and particularly in human resources which today requires more analysis of profiles than of salaries and benefits.

"In Latin America there are more advanced and less advanced companies in the same sector. What sets the leaders apart is a determination to close the gap with the world's best practices and, in contrast to the American and European firms, they have the advantage of having less legacy, their baggage is lighter, and that enables them to innovate more," said Becerra.


Caption: Andres Cadena McKinsey&Co

Caption: Lourdes Casanova, Cornel University

Caption: Jorge Becerra. The Boston Consulting Groups
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Publication:Latin Trade
Geographic Code:0LATI
Date:Jan 1, 2018
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