‘Flexible businesses will survive’Korean businesses should change their organizations to be more flexible to meet opportunities in nearby emerging nations such as China and India, the head of a multinational management consulting firm says.
Dominic Barton, McKinsey & Company’s global managing director, said on Thursday that rigid management systems will prevent innovation and hinder structural changes that are necessary in the fast-changing business environment over the next 15 to 20 years.
“The next 15 to 20 years will be one of the most interesting times in history, given all the forces and current [quickly changing global economic and geopolitical situations],” said Barton, at a lecture he gave hosted by the Institute for Global Economics. “This means we need new types of leadership to be able to navigate ourselves through these times.”
Barton said he believes the Chinese economy will still be bullish, as at least 50 percent of cities there are still undergoing an urbanization process and are seeing growth in the middle class. India and Africa were other markets where he expected to see great growth in the workforce and in purchasing power.
Nearly half of the world’s billion-dollar companies will be headquartered in emerging markets by 2025, he said referring to studies done by McKinsey.
“Seoul could have the opportunity to become one of the top financial locations in Asia, considering the proximity to neighboring countries and [economic] scale, like Singapore’s example in 1998 [Asian Financial Crisis],” Barton added. “We need to build a deeper financial market in Asia.”
He said China’s infrastructure-based opportunities like AIIB and “One Belt One Road” projects will become a catalyst to establish another financial center in Asia, and Korea should try to expand its financial market to take advantage of the opportunity.
To be able to benefit from such growth, Barton said that companies should look at their decision-making organization and focus on agility. Global companies tend to reduce layers in the decision making processes, like Dupont cut layers from 11 to four. He also said companies need to foster agility, particularly in the allocation of resources.
?Flexibility is key for companies to survive in the quickly changing global business environment, Barton added, saying that the average lifetime of companies continues to fall as the economic and business environment changes so fast.
The average lifetime of a company listed in S&P 500, was about 18 years in 2011, according to McKinsey’s analysis, compared to 25 years in 1980 and 90 years in 1935.
BY KIM JI-YOON [firstname.lastname@example.org]
with the Korea JoongAng Daily
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