There’s a new book out by BCG consultants called Globality. The idea is that doing business is not the same anymore, because as a firm, whether you like it or not, whether you know it or not, you are “competing with everyone from everywhere for everything.”
The consulting company I founded with two other partners, Red Bridge Strategy, is based on the exact same premise, corroborated by my own academic research on globalization. Harold Sirkin, James Hemerling and Arindam Bhattacharya, authors of Globality, argue that the leanest, hungriest, and sometimes the most profitable competitors you’ll meet are usually from the emerging markets. They list 100 such “challengers.”
Hyper-competition has been real for quite some time. Challengers from emerging markets, in the shape of companies as well as national policies, have also been around for quite some time. But what’s unclear is what this means for you, the medium-sized business, and how you navigate successfully in these treacherous waters.
Large, established multinationals are used to competitive environments and have the resources to engage in elaborate strategic planning and execution processes to shape and react to complex competition. But many smaller businesses, most of whom may be focused not just on a domestic market segment, but even more narrowly, on a regional market segment, are unaware of what globality means for them.
In our work, we emphasize this as the first step: understand the extent of your competitive environment and the implications for the business. But this requires some analysis that most businesses are still unwilling to take on a regular basis.
The second challenge is that the few who are well-aware of hyper-competition often fall into a risk-exaggeration trap. That is, their analysis is driven by competitive threats and not complemented by detailed analysis of competitive opportunities. But this is where the value of analysis begins to show compellingly.
The third challenge is to then figure out a way to both manage the risks and unlock the opportunities. And here, in a hyper-competitive world, it is crucial that strategies are fully customized. In the olden days, many consulting firms used a toolset or standard methodology successfully. It worked when the number of players (markets and firms) was limited. It does not work as well under hyper-competition where uncovering opportunities require innovative thought. It is here–in understanding opportunities from ‘globality’ and acting to seize them–that a lot of value remains dormant for medium-size businesses.