Diversity of markets
The growth in emerging market economies may have slowed—and big challenges abound—but the long-term potential remains significant.4
By 2025, the world’s middle-class population is expected to reach 3.2 billion, up from 1.8 billion in 2009, with the majority of this growth coming from Asia, Africa, and Latin America.5 As income levels rise, so does consumer demand. This growing population now represents the single biggest growth opportunity in the portfolio of many companies around the world.6
Reaching these consumers profitably, however, is anything but straightforward.7 Markets are characterized by significant cultural, political, and economic differences. Tension exists between local adaptation and international scale. Home-grown players can provide stiff competition and strong local talent is scarce. Indeed, in a 2015 survey of 362 executives, just 10 percent believed that they have the full suite of capabilities needed to win offshore.8
So what does this mean for those with global ambitions? While there is no single formula for success, research shows that having people with a more global mindset and capability is critical.9 John Lewis, Jr., global chief diversity officer of The Coca-Cola Company, agrees: “Right now, our fastest-growing markets around the world are sub-Saharan Africa, India, and China. How we win in these markets is as much a matter of how we embed ourselves in these cultures [as any other factor]. The question I put to our business leaders is: Even if we get all the tactics and logistics right, can we win if we don’t get the people part right?”10
Diversity of customers
Customers have always been able to vote with their feet. Today, this power is even greater. Empowered through their digital devices and with more choice, customers expect greater personalization and a voice in shaping the products and services they consume.11 Facing millions of individual expectations and experiences across an increasingly diverse customer base, the challenge for companies is to deliver individualized insights and a personal touch with the efficiencies of scale.
To remain competitive in this environment, organizations have realized, customer centricity is paramount. Customer promises are being written into vision statements, operating models are being redesigned to ensure that customers are at the heart of the business, and the role of the “chief customer officer” has been created and elevated to the executive team.
But more than just changing systems and structures, organizations are increasingly focusing on cultivating more customer-centric mindsets and capabilities. The new buzzwords of “empathy” and “connectedness”—concepts that underpin popular methods such as design thinking—are taking hold as organizations strive to better understand customers’ worlds and future needs. And while development programs of the past may have focused on traditional customer-facing roles, a leader-led approach is increasingly being adopted.
Telstra has embarked on a journey to orient the entire organization around the customer, including the way leaders are developed. “Leaders are central to the connected strategy,” says Rob Brown, director of customer advocacy.12 “They are the linchpin that sets the pace and culture of our organization. If leaders don’t understand how we need to think differently, if they don’t get that we need to connect with customers’ needs to understand what they want and how best to simplify things for them, then it’s hard, if not impossible, for the teams to get it.”
Diversity of ideas
Organizations must “innovate or die,” extols Bill Gates.13 A bold statement, but we need not look far to see its validity. Seemingly overnight, digital disruption has reshaped whole industries and iconic brands and brought forth new players.
For most leaders, it’s an imperative that’s well understood. In a 2014 survey of 1,500 executives, three-quarters said that innovation was among their company’s top three priorities.14 Despite this, 83 percent perceived their companies’ innovation capabilities to be average (70 percent) or weak (13 percent).15
So what sets apart breakthrough innovators from the rest? The survey found that, compared with others, “breakthrough” innovators “cast a wide net for ideas.”16 In the race for new ideas, diversity of thinking is gaining prominence as a strategy to protect against groupthink and generate breakthrough insights. However, while many agree intellectually that collective intelligence enhances group performance, few understand how to consistently achieve it with any degree of specificity.17
In this context, a leader’s understanding of how diversity of thinking works will be critical to success. As François Hudon, an executive at Bank of Montreal, states: “For leaders, it’s making sure you have little risk of being blindsided by something that a diverse team would have known about and would have identified as an opportunity or a risk. I think it brings far greater confidence to the decision making when you know you are being supported by people who have far more diverse points of view.”
Diversity of talent
Diversity of talent is at risk of being overshadowed by other shifts. This is because demographic change has a slow-burn effect on workplace profiles. And, of course, diversity of talent is not a new topic. Anti-discrimination laws and the “war for talent” have seen organizations pay attention to historically marginalized groups for some time. Leaders underplay this shift at their peril.
Changes in population age profiles, education, and migration flows, along with expectations of equality of opportunity and work/life balance, are all deeply impacting employee populations. More than ever, future success will depend on a leader’s ability to optimize a diverse talent pool.
By way of example, the world’s population is aging rapidly. In 2050, those aged 65 and over are predicted to reach 22 percent of the global population, up from 10 percent today,18 with implications for workforce participation. Against that backdrop, the expansion of higher education is creating a group of highly mobile, educated workers.19 By 2030, China will have more graduates than the entire US workforce, and India will produce four times as many graduates as the United States by 2020.20 The Millennials, too, are coming of age. This generation will comprise 50 percent of the global workforce by 2020.21 With high expectations and different attitudes toward work, they will be integral in shaping organizational cultures into the future.
To date, however, data suggest that many companies have struggled to include diverse employees. For example, while their number in the workforce is increasing, women hold just 12 percent of corporate board seats worldwide.22 In the future, demographic shifts will put greater pressure on leaders to be inclusive of diversity. According to one leader interviewed, “Fundamentally, inclusion is a principle that anybody who is good enough to be employed within the team is capable of becoming a leader and developing to the best of their potential. And that is anybody.”
Bernadette Dillon & Juliet Bourke
Deloitte University Press