Organizational resilience should be the watchword for every CEO. Not just because of the lessons learned over the previous three years, but because of what is to come. When the International Monetary Fund released its latest estimates on global economic growth, it was clear where the real opportunities lay. While the “advanced economies” may only muster GDP growth of 1.3 percent in 2023 and 1.4 percent in 2024, the emerging and developing Asian economies are estimated to achieve 3.9 percent and 4.2 percent respectively; Sub-Saharan African markets will achieve 3.6 percent GDP growth in 2023 and 4.2 percent in 2024. The United States is predicted to achieve 1.6 percent this year and 1.1 percent the following year, while it is 0.8 percent and 1.4 percent respectively for the Eurozone. The United Kingdom was in negative figures for this year (-0.3 percent) and only predicted to achieve one percent in 12 months’ time.
If you are a CEO of an international commercial business, are your people, processes and tools ready to help you explore the opportunities in the global economy wherever they may emerge? If not, there is a stark warning in the last Unit4 Business Future Index: only 28 percent of organizations that did not focus on rapid growth since the pandemic described themselves as outperforming 2021 targets. This compares to the global average (51 percent) who did embrace such changes and, in turn, reaped benefits including better workplace digitalization, improved wellbeing, stronger team collaboration and enhanced customer/end-user experiences.
As someone who grew up in South Africa, I have been a keen observer of changes in the global south.
Of course, we can argue about the validity of such forecasting as the figures are constantly amended, but as someone who grew up outside the “Globalized North”, in South Africa, I have been a keen observer of the economic and political changes in the Global South and outside the G7. These developments are now reaching a level of significance that is hard to ignore. By one calculation, 50 percent of global growth in the next five years will come from China, India, the US and Indonesia. Growth in Brazil, Russia, India and China is also expected to outperform the G7 nations. Take India, for example. In this assessment of the size of the Indian middle class, one analyst suggests it makes up 432 million people and, given that 60 percent of GDP is based on consumption, it has the potential to be a significant market opportunity.
The growth is not just confined to BRICS nations. The World Bank has described the Philippines as “one of the most dynamic economies in the East Asia and Pacific region” and that, in the short term, it will become an “upper middle-income country”.
By another estimate, in 2030, Indonesia will be the fourth largest consumer market in the world with almost 200 million consumers, while Pakistan will have 121 million consumers by the same date. The African Continental Free Trade Area (AfCFTA) has ambitious plans for a single trading area covering nearly 1.3 billion people which, when completed, has the potential to be the world’s largest free trade area with an approximate GDP of $3.4tn. If it comes to fruition, the World Bank estimates this could raise $450bn by 2035. South American countries are talking about similar trading arrangements, even discussing a common currency to ease commerce.
New partnerships will be struck to avoid over-reliance on individual countries or suppliers.
Change is coming and every CEO needs to be ready. Of course, I understand geopolitical and macroeconomic tremors can easily disrupt potential opportunities, and there are suggestions that we are moving away from globalization to more locally or regionally focused economies. However, astute businesses understand that future growth will likely come from diverse markets or supply chains. Every government is moving to ensure supply chain security across every sector, which means new partnerships will be struck to avoid over-reliance on individual countries or suppliers.
It is critical for CEOs to start to develop their strategies for organizational resilience now. So, what does this actually mean? I’ve been using the Boston Consulting Group definition: “Resilience is a company’s capacity to absorb stress, recover critical functionality and thrive in altered circumstances.”
Fundamentally, organizations must have the agility to analyze and respond to diverse market opportunities in real-time. Making faster, more accurate decisions requires streamlined, integrated data that produces a single source of information. Consequently, organizational resilience requires robust core ERP foundations. Get that right and it means you can introduce the emerging tools such as automation and artificial intelligence to deliver significant process efficiencies and productivity gains. Tools like ChatGPT will eventually enable businesses to examine and consolidate processes by either automating actions or crunching vast amounts of data to reach a more accurate decision faster.
If CEOs get this approach to resilience right, they will not only be creating businesses that can survive shocks, but be more dynamic in finding opportunities anywhere around the world. With a solid ERP core, business leaders can enable agile planning. They will be able to empower teams by automating mundane tasks so individuals can focus on more rewarding, higher-value work. Leaders will also require accurate, real-time data to enable dynamic decision making, which in turn will elevate the responsibilities of the office of CFO to provide colleagues with a complete view of the business.
Ultimately, this form of organizational resilience requires a willingness to take risks, move fast and learn quickly; the example I cite often is SpaceX and its Starship rocket launch. If you judged the result by the Twitter commentary, then the rocket exploding shortly after take-off was a resounding failure. However, that is not what’s important. If you listen to the executive team and celebration after the launch in the control center, you understand that SpaceX has created a strong culture of organizational resilience, which has delivered results. Today, its Falcon 9 rocket is the market leader. Why? The team has been willing to take risks and explore opportunities, ignoring the external chatter. As the world economic landscape continues to evolve, those CEOs willing to do the same will be the ones who create more resilient businesses.
