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Are You Prepared to Lead in the 'Global Tilt?'

Source: Cave Henricks

Guest Author Blog: by Ram Charan author of, "Global Tilt: Leading Your Business Through the Great Economic Power Shift."

Many business leaders have been focused on the uncertainty caused by the ongoing political drama in Washington. Tracking the daily ups and downs of policy making has become a spectator sport. But meanwhile, a shift of enormous magnitude is underway, and leaders are at risk of missing it along with its vast implications for the future of their business.

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We are in the midst of a global tilt—an irreversible shift of economic power from North to South: from the U.S., Europe, and Japan in the Northern hemisphere to China, India, Brazil, Indonesia, Malaysia and other countries mostly in the Southern hemisphere. The center of gravity for jobs, wealth, and market opportunities is moving, disrupting the world economic order as we have known it with dizzying speed.

If you're an American or European, any assumptions you may have about national and managerial superiority are obsolete.

Businesses in the South have ready access to the capital and expertise they need to grow. Their leaders have just as much knowledge, talent, and drive as you do. And somewhat under the radar, they are unleashing their entrepreneurial verve to scale up fast and grab once-in-a-lifetime opportunities.

The empires they are building could rival those created in the nineteenth-century by the likes of Cornelius Vanderbilt, J. P. Morgan, Andrew Carnegie, and John D. Rockefeller. These businesses will soon be competing with yours everywhere on the planet, even if you're not aware of them yet.

But the global tilt is not to be feared.

Those who embrace it and learn to navigate in it will find tremendous opportunities, whether they are from the North or the South. One billion new consumers have joined the world economy in the past 10 years, and two billion more are coming in the next 10. This new consumer base—much of it middle class—will add roughly $10 trillion to the global economy in the coming decade.

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The challenge is to adapt how you run your business to the reality of the global tilt.

The usual approaches to strategy, for example, may put your company at risk. The idea of seeking markets where you can apply existing core competencies keeps you rooted to the past and tends to drive incremental growth. Those competencies might in fact be on their way to being obsolete. Just consider what happened to Kodak, once one of the world's great technology companies. It took great pride in expanding its film business to China in the 1990s but failed to reckon with the fact that film was being displaced by digitization.

You need a new methodology to be vigilant in spotting bigger opportunities and a willingness to build the capabilities you'll need to pursue them. You must be mentally prepared to make bold moves and strategic bets when they're called for, including letting go of core competencies that are not key to your future.

"If you're an American or European, any assumptions you may have about national and managerial superiority are obsolete." -Ram Charan, Author, "Global Tilt"

Finding Windows Before They Close

Spotting big opportunities in the ever-changing global landscape is now an imperative. The concepts of Outside-In and Future-Back can help you expand your lens and lengthen your time frame as you seek to cut through the complexity of the macro environment to find opportunities for your business.

Outside-In thinking means looking at the business through the lens of a leader sitting elsewhere and identifying global trends without the existing assumptions, biases and rules of thumb.

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Future-Back requires you to extend your time horizon as you assess the world and imagine what the competitive landscape will be some twenty years out. This longer time frame will help you see what trends are enduring, or unstoppable, and what actions you must take now to take advantage of them.

Bear in mind that new players from the South are not mired in "strategy as usual." They are taking bigger chances and moving fast to seize bigger opportunities.

Strategy Is Not Enough

Windows of opportunity close as quickly as they open in a tilted world, so speed and decisiveness matter. Your leadership mettle will be tested: Can you drive important and often painful shifts in decision making power and resources, even when it means relinquishing some power from headquarters? For the first time ever, General Electric posted its vice chairman in Hong Kong to be closer to the fast-growing Asian markets that are pivotal to GE's future. As Keith Sherin, GE's chief financial officer, said, "This is where the growth is. We are shifting our center of gravity to emerging markets."

The winners in the global tilt will be those who can adapt quickly to the changes already underway and make their plans now for the global businesses of tomorrow. With an open mind and a keen ability to adapt to change, that winner could be you.

Ram Charan is a highly sought-after business advisor and speaker famous among senior executives for his uncanny ability to solve their toughest business problems. A bestselling author, his new book, "Global Tilt: Leading Your Business Through the Great Economic Power Shift" is published from Crown Publishing.