OBSERVE - Social media in 2020: The Odgers Berndtson Global Magazine
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
OBSERVE
The Odgers Berndtson Global Magazine_ Issue 01 2015
Social media
in 2020:
the experts’ opinion
Contents Welcome
16 45
Observatory 6
News, information and ideas that
affect global business today
COVER: Social media 10
Where will social media be in
the year 2020? Our expert
panel provides some answers
Vox I: All in the mind 15
What HR can learn from the
science of neurobiology
Delphi’s Rodney O’Neal 16
An exclusive interview with the
outgoing President and CEO of It’s fair to say that over the past five years social
Delphi Automotive media has dominated the business and consumer
Passing the litmus test 20 landscape. Never before have there been so
A detailed look at emerging many social media players offering such a wide
markets’ approach to governance array of opportunities to engage with friends,
The Medtech challenge 24 colleagues, customers and communities.
What next for the fast-growing Our cover story for this issue of Observe tries
medical technology industry? “If you are not to picture what the social media landscape will
be like in the year 2020. We asked experts from
Digital business transformation 29
The external digital techniques prepared you cannot a range of different disciplines to gaze into their
being used to drive internal
change seize opportunity and crystal balls. Turn to page 10 to read their
intriguing findings.
Arise Brazil! 32 you will squander it” As ever, we cover a wide range of topics
The challenges that lie ahead for
South America’s largest market RODNEY O’NEAL PAGE 16 in this issue of Observe. We have an exclusive
interview with Rodney O’Neal of Delphi
Culture clash? 37 Automotive, tackle the ever-changing world of
We talk to Richard Lewis about
24
working with different cultures interim management and investigate corporate
governance in emerging markets. There is also
Vox II: Infographics 40
an in-depth study of the Brazilian market which,
Why the picture can often be
mightier than the word despite problems both social and economic,
continues to offer enormous opportunities to
The interim imperative 42
A look at the changing world multinationals looking to do business in
of interim management South America’s largest market.
Observe celebrates its first anniversary with this
It’s lonely at the top 45 PHOTO: BLOOMBERG/GETTY IMAGES
20
New research from Odgers issue. It’s been a fascinating journey made all the
Berndtson looks at the lonely more worthwhile by the incisive comments we
world of the CEO receive from readers. Please keep them coming.
Bookshelf 48
New books on the recession, Julie Steiner
Coca-Cola, Melissa Meyer, Managing Director,
strategy and much more
Odgers Berndtson, Australia
Vox III: Making connections 50
Julia Hobsbawm, the world’s
first professor of networking, @odgersberndtson
talks to Observe #obobserve
10
Observe at your
Vox IV: India’s auto revolution 52 fingertips
The opportunities for the Download the free
emerging Indian automotive sector Observe app for
your device from the
Under observation 54 App Store or Google
If you think of five things this Play by searching
quarter... “Odgers Berndtson”
4 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 5
Observatory Observatory
Observe ROBOTICS ECONOMY
travels the RISE OF THE SUPER TEENY
Microroboticist (yes, there really Bergbreiter and her team build
A GREEK TRAGEDY?
By the time you read this the full the bailout terms, raising
globe in is such a title) Sarah Bergbreiter
packs advanced technologies into
incredibly robust, super teeny,
mechanical versions of creepy
impact of Syriza leader Alexis the prospect that
Tsipras’ sweeping victory in the Greece could end up
search of tiny robots that can overcome crawlies…and then they Greek elections will have been leaving the eurozone.
obstacles 80 times their height. add rockets.
eye-catching By studying the movement and Find out more including a jaw-
fully felt. The immediate effect in
late January was that the euro fell
We shall see…
business
PHOTO: ©AJOTTE/ALAMY
bodies of insects such as ants, dropping video at ted.com sharply against the dollar. Greece’s
current bailout programme ends
stories in February, and economists
say a short-term deal will be
negotiated, but difficult talks lie
LANGUAGE ahead. Germany has indicated that
it is not prepared to renegotiate
GOOGLE TRANSLATE
The Google Translate app, the MONEY
much-used tool that has saved
us from many a tricky linguistic WELCOME LITHUANIA
moment, has been updated with While Greece’s problems unfold,
a new version that includes January 1 2015 saw Lithuania
automatic language detection in become the 19th member state
PHOTO: TED.COM
conversation mode. Apparently it to join the eurozone. Alongside
means having a conversation its Baltic neighbours Estonia and
between two people who don’t Latvia, who are already in the
speak the same language is monetary union, Lithuania will
PHOTO: ©GAVIN HELLIER/ALAMY
actually possible. Once you have hope to continue its good
selected the two languages being economic progress. Last year,
BOARDROOM
spoken Google Translate can according to the European Bank
detect which is being spoken at for Reconstruction and
CULTURALLY AWARE
any moment. Hmmm. Observe is Development, Lithuania’s
According to INSEAD, “without a corporate strategy without economy grew by around three
not convinced…
deep and accurate assessment of employees who believe in the per cent – one of the fastest
their organisation’s culture, boards mission and understand how to rates within the EU driven largely
and management teams will find it achieve it. As Louis V. Gerstner, by strong domestic demand.
very challenging to initiate and former CEO of IBM once noted,
implement strategic change. A ‘Culture isn’t just one aspect of the
company however big or small game, it is the game’.” DATA
cannot successfully implement knowledge.insead.edu
DROWNING IN NUMBERS
According to research from created, replicated or consumed in interaction with customers and
Forbes the digital universe 2013. The report claimed that “the every act of regulatory compliance
expanded to six trillion terabytes increased reliance on digital data has truly complicated the task of
of data by the end of 2014. That’s to run nearly every system, every ensuring business continuity.”
50 per cent more data than was marketing initiative, every forbes.com/forbesinsights
SMUGGLING
PHOTO: ©BLEND IMAGES/ALAMY
PHOTO: ©IKON IMAGES/ALAMY
PHONE A FRIEND
According to Time magazine, a
man from Hong Kong had 94
iPhones strapped to his body as
he attempted to smuggle them
into mainland China. Aah! the lure
of the mighty Apple.
time.com ➝
6 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 7
Observatory Observatory
SOCIAL MEDIA
AUSSIE RULES
Tony Abbott, the Australian Prime
Minister, has dismissed a medium
that his own government and
corporate Australia spend millions
ILLUSTRATION: ©KATIE EDWARDS/IKON IMAGES
of dollars a year monitoring and
engaging in, as “electronic graffiti”.
PHOTO: ©TORSTEN BLACKWOOD/GETTY IMAGES
Responding to the negative
comments on social media sites
about his decision to award Prince
Philip an Australian knighthood,
Abbott said: “I’ll leave social media
to its own devices. Social media is
kind of like electronic graffiti and I
think that in the media, you make a
big mistake to pay too much
attention to social media. You
wouldn’t report what’s sprayed up
on the walls of buildings.”
theage.com.au
INDIA THE DIGITAL BANK
MANAGEMENT DIGITAL THE NUCLEAR OPTION BRANCHING OUT?
THE GOVERNANCE AGENDA THE TRANSFORMERS President Obama’s recent trip the US concerns on both According to Simon London
to India led to the two countries tracking and liability. “In our of McKinsey: “The [bank] branch
The 75th Annual Meeting of Business leaders for 2015 are
reaching “a breakthrough judgement, the Indians have of the future may be a very
the Academy of Management focusing their transformation
understanding” in freeing up moved sufficiently on these different model, where they have
which will be held between projects on digital presence as well
US investment in nuclear issues to give us assurances that six to 10 strategically located
August 7 and 11, 2015 in as delivering a consistent customer
energy development in India. the issues are resolved,” said branches in a city that supports a
Vancouver, British Columbia, experience across all channels,
The White House said the Ben Rhodes, Obama’s deputy very strong digital presence. I
Canada has adopted Opening according to a Constellation
ILLUSTRATION: ©GARY WATERS/IKON IMAGES
understanding on India’s civil national security adviser. believe that many of these types
Governance as its theme. Research survey of 200 CXOs. The
nuclear programme resolves usatoday.com of models might end up being
Delegates are invited to consider survey was designed to highlight
successful. But over the next seven
opportunities to improve the boardroom priorities and how they
to 10 years, we’re going to find out
effectiveness and creativity of affect technology investment and
exactly which ones will be more
organisations by restructuring leadership. Some of the takeaways
successful than others.
systems at the highest from the survey are already visible.
mckinsey.com/insights
organisational levels, and to For instance, several retailers have
try to answer the many announced that they plan to close
questions organisational stores. The savings will be invested PUBLISHING
governance faces in today’s in omni-channel and digital
digital and informational climate. strategies. FINALLY…
Find out more at: aom.org ncc.co.uk British magazine The Economist
has named Zanny Minton Beddoes
as the role of editor, marking the
INNOVATION
first time in the publication’s
WHAT LIES AHEAD 171-year history that it is led by a
PHOTO: ©TRAPHAEL HUENERFAUTH/GETTY IMAGES
woman. Beddoes has worked at
In an extraordinary video to how we grow food and from the magazine since 1994, having
produced by Bloomberg a “cell phone tower in the sky” to previously been an economist for
BusinessWeek, Sam Grobart the new field of ‘soft’ robotics. the International Monetary Fund.
takes a look at the top ten A must watch.
technologies and innovations businessweek.com/videos
that are set to shape
PHOTO: ©TXINHUA/ALAMY
and disrupt our
lives in 2015.
It covers
areas as
diverse as
wearable
technology
8 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 9
Cover story Cover story
the next wave
Observe asked five people
inextricably bound up with the
world of social media to tell us
what they thought the industry
might look like in the year 2020.
Compiled by KILLIAN FOX
So ia :
c ia l m e d
the green light to further erode
TODD BERGER is co-founder our privacy. I don’t think people
of Ello, a social media platform fully understand how this is That’s why we’re seeing
that launched in March 2014 impacting our lives today and new communities arising on
and, though still in beta phase, how it will in the future. This the internet with different
has become a major talking degradation of rights could visions of privacy and different At Ello, we’re trying out a
point in the conversation about lead to further separation of philosophies around user ‘freemium’-type model, akin to
internet privacy. Its declared the haves and have-nots. content and data. These freer the App Store or a gaming fragmented with lots of
point of difference is that it will Advertising on social media spaces are where you’ll see environment, where we’ll sell very niche players taking
never carry paid-for ads or sell is just the tip of the iceberg. innovation happening, and I additional features so users can very specific viewpoints and
user data to third-party Hidden behind advertising are believe a lot of thought customise and improve their approaches to communication
organisations. data sales. We have been leadership is going to come experience. It’s a very successful and philosophy, and to
entrusting private corporations from them rather than the model in other industries, so it’s community-building in general.
Our privacy is being with our individual information traditional places such interesting that it hasn’t been I see a scary side to it and a
degraded every day. and then letting them do what as Facebook. embraced in this one yet. bright side to it, but if we
We’ve given a lot of they want with it. That’s From a business point of view, Over the next five years, don’t move the privacy
our rights away to private scary to me, and I think people there are all sorts of sustainable I believe the social media conversation
companies and in so doing in general are becoming fearful business models in which landscape, like television, is forward fast, it
we’ve given the government and looking for alternatives. advertising plays no part. going to become exceptionally could be scary.
10 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 11
Cover story Cover story
around games. I’m seeing a
lot of evidence that games are
becoming even more immersive
and more social. They bring
like-minded people together
and create a sense of belonging GLEN GILMORE is an Instructor Internet of Things, meaning
that stretches beyond the of Digital Marketing at Rutgers nearly every object we use in
borders of the physical world. University School of Business, our home and office, and even
This will continue to increase author of Social Media Law for our clothing, will be connected
over the next five years. Business, social media to the internet and sharing data
In general, we will see more strategist and attorney. about lifestyle preferences. This
people getting into social abundance of information
media, particularly as To contemplate the should ultimately allow us to
smartphones penetrate future of social communicate to each other and
emerging markets and reach media, we have to to our customers in far more
lower price points. In addition contemplate the future of meaningful, personalised ways.
to the big social media sites technology, since so much of Augmented reality
such as Facebook and Twitter, social is technology-driven. technologies will allow us to
there will be more long-tail The marriage of mobile and enter not only new
BLANCA JUTI is CMO of Rovio communicating a lot through sites dedicated to specific social has catapulted our conversations but also new
Entertainment, the Finnish pictures, but the possibilities usages. For example, privacy is conversations to spectacular worlds and experiences, in
mobile games studio that will be even greater when we’re very important for many heights, where, literally, an ways we really can’t fathom
scored a massive hit in 2009/10 all wearing glasses and smart people at the moment, so they astronaut in outer space has today. ‘Social’ will become far allow us to bridge language
with Angry Birds. The watches. For example, we will will form new groups where tweeted to Twitter and posted more physical and immersive. barriers more easily, creating
smartphone game has been be able to communicate privacy is a priority. I think to Instagram! Who could have ‘Wearables’ will become new collaborative
downloaded more than 2.5 through our emotional states. If social media is already proving imagined, five years ago, that ‘invisibles’ that will tap into opportunities.
billion times from the Apple I measure my heartbeat and to be a democratising force. instead of quotes such as “One biometrics and make our social Artificial intelligence will also
App Store and has spawned a feed it into a social network, As the traditional media loses small step for man”, we’d be conversations even more make a social conversation that
franchise that includes toys, then you could say “let’s not more of its power and new getting an astronaut’s selfie? seamless, rich and personal weaves in our ‘things’ as well as
theme parks and a forthcoming call Blanca now, she must be types of media arise, Within five years, we will all than they are today. The communities. The challenge in
Hollywood movie. busy or angry because her we will see more be fully immersed in the ‘superpowers’ we’ll have from the future, as it is today,
heart is racing”. That will bring opportunities newer technologies should will be to keep the
First of all, I think a whole new dimension to the arising as well. social conversation
wearables will way we interact. ‘human’.
become very We will also see the growth
important and people will move of communities in and Secondly, we will see it
further away from using often been said that the power develop as a communications interconnectivity with the
keyboards. We’re already of social media is its one-to- platform rather than a mobile consumer. In the
millions communications marketing one. Social media fast-paced mobile world we
media platforms change and capability; however, we are really is about people. The want to have more options to
ANNA MARSDEN is a co- adapt to their mobile, always- seeing a rise in the desire for successful social media weave social into our constantly
director of Social-i-Media, a connected and niche one-to-one or ‘one-to-a- networks will provide their connected lives. If a social
boutique media communications customers’ needs. If social chosen-few’ communications community with a place to media network can successfully
agency based in Cambridge and media networks fail to evolve (ie. WhatsApp and iMessage). communicate with others add other related services to
London that helps brands they will die. And some will die! We no longer want to share our rather than a place for their existing range of apps
communicate effectively across While it is impossible to say content with the world; we commercial endorsements. We then their profits could go
traditional and digital channels what the social media want to have choice. Google+ have already seen this start to through the roof. We have seen
in addition to producing landscape will actually look like has the right idea with Circles happen with the clampdown on WeChat (China’s version of
journalistic content. in five years, we can take some and Instagram have kept pace vloggers (video bloggers) WhatsApp) doing this with
hints from existing customer with the introduction of publishing videos without any mobile micro payments and
Social media is trends in behaviour. Instagram Direct. Successful kind of disclaimer. The enjoying relative success
maturing, and over My predictions about the social media sites will allow platforms that limit marketing by aligning itself
the next five years future of social media focus on more consumer control messages will thrive. with other services
we will see the existing social function over form. Firstly, it’s over audience segmentation. Thirdly, we will see more such as TenPay.
12 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 13
Profile Profile
The art of
being prepared
As Rodney O’Neal, President and CEO of Delphi
Automotive, prepares for retirement he talks to NICK
KOCHAN about his illustrious career heading up one of
the world’s largest automotive supplier companies
W hen Rodney
O’Neal was a
young African-
American growing up in Ohio in
the 1960s, his father would
absolute focus and commitment
informs his view of executive
development and recruitment.
“Professional executives should
do what they love to do. If you
fourth, fifth, sixth, seventh order
of consequences. The good
managers – that I value and
want to recruit – are the ones
that keep reality in front of him/
stress the importance of are in a high-tech company, her. They must be dealing with
education and of opportunity. you should love technology; reality and not what they would
A career and lifetime later, this otherwise you won’t be very like reality to be. I value
American executive has proven good at delivering on it. The managers who care about ideas
the value of both. As he very best executives and the that work. You have got to be
prepares to retire at age 61 ones I have hired over the years able to execute your plans as
from the helm of one of the have a real love and fascination well as create them. Anybody
world’s largest high-tech for their work.” can write down a bunch of
automotive companies, Delphi The other qualities he values things on a PowerPoint
Automotive plc, he reiterates in colleagues are sheer presentation that we ought
the power of opportunity. intellectual rigour and down-to- to do, or make things better.
“I was taught that earth realism. He has no time But making that happen is a
opportunity will come along for over-hasty conclusions completely different game.”
but the only way to seize it is based on ill-prepared data. “All His remarkable career reads
by being prepared. Preparation decisions have consequences. like the true American tale,
is key no matter what you are You must think through the an object lesson in seizing ➝
going to do. You need to find
what it is that you love, and
then work hard at being good
ALL PHOTOS: BLOOMBERG/GETTY IMAGES
at it. Being prepared is
important, because if you
are not prepared you cannot
seize opportunity and you will
I was taught that opportunity
squander it. You pick a path in
terms of what you are going to
will come along but the only way
do in life. The best managers in
the world, no matter what they
to seize it is by being prepared
do, they work hard at it.”
The same emphasis on
16 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 17
Profile Profile
opportunities. Born in 1953, his environment and they would today’s landscape, he says. into corporate strategy. as the primary travel mode by If what lies ahead is as
family comes from the south in care about being connected.” “They are going to become Technology presents the its capacity to “reinvent itself, remarkable and as
the United States and moved to O’Neal became CEO in 2007. more relevant and hotter automotive industry with its to become modern and safer. unpredictable as his past,
Ohio in search of work. He The company restructured tomorrow. That doesn’t greatest challenge, says O’Neal. Today’s cars recognise that O’Neal has indeed nothing to
received his degree from a with a more globally diversified guarantee victory, but it means He witnessed with awe an people want connectivity. It fear. Indeed his charisma,
highly-regarded technical and footprint, focused its product you have a chance, you have on-the-road drive in Las Vegas is absolutely incredible what energy and vision will be
business college, General offering (from 119 products to an opportunity. The challenge of a driver-less car made by is happening in the industry sought by many in the
Motors Institute. It was a 33), and significantly reduced is to seize that opportunity and Delphi, but believes there technically.” Managers have to automotive industry, if not
co-operative programme and its operations and employment. make something of it. The will be challenges on whether be equally flexible if they are much wider afield. What’s next
paid his fees. He then joined “Through the Chapter 11 world has changed radically it can be made to pay its way. to triumph. “Companies have is something he is not saying.
the company on the shop floor. process we were trying to in 20 years.” “Technically it is not an issue. to work and stay relevant and “My life is a bucket list. You
His energy and commitment fix certain problems in the O’Neal’s professional The question is, does it create contemporary. You have to make a list of things that you
impressed his managers and he company. We didn’t have any origins lie in the world of value for investors, does the always make sure you are want to go do in your life and
climbed the corporate ladder problems with unions, or with manufacturing operations. world really want it, is it relevant reinventing yourself from your you check them off, one at a
quickly, first at General Motors our customers. It was just that “I fell in love with operations. and can you pay for it? It is not business model from your time, as you get one done.”
and then at Delphi. the rules of engagement didn’t Working in operations, every a technical question any longer. operational perspective and One task for his retirement at
work, so they had to be day is a different day; every It has become a social question, your products and services.” the end of February is to tend
Life after Chapter 11 altered.” The company came hour is a different hour. It is a legal question, and that his hybrid tea roses, a long-time
Another opportunity came in out of bankruptcy in 2009 as action. I just love the pulse, the becomes a financial question.” What lies ahead passion. “You have to bury
2005, when he took Delphi into a leaner, high tech business. intensity of it, and the direct The need for connecting A keen observer of how them in the winter because
Chapter 11 (the American form The company made its initial feedback: either you made infrastructure between driver- companies use their people, they don’t like the cold. I told
of bankruptcy) with a trio of public offering in November your numbers or you didn’t less cars to ensure safety adds he sees a lack of diversity in you they are a lot of work,”
‘megatrends’ which Delphi 2011, when O’Neal rang the bell make your numbers. Whether costs and technical challenges. many of the companies he visits he says with a loud laugh.
continues to operate under to open that day’s trading of you had a good day or a bad He also believes electric cars round the world. “I have lived The future holds only
today. As the company was DLPH at the New York Stock day – depending on your face the same financial and worked around the globe. opportunity for O’Neal.
struggling, O’Neal, who by Exchange. “That was an feedback, you got it back viability challenge. All industries in all regions need “Opportunity will be there
then was president and chief incredible moment of almost instantaneously!” The Developments in automotive to be more diverse. It is not just for me should I choose to do
operating officer, asked himself, excitement and satisfaction, latest just-in-time approach to manufacturing continue to minorities, it is also females and something. I haven’t made
“what did the world care about, of a journey worth taking to operations was being adopted inspire him. “The car is now it is different nationalities. my mind up what I am going
what were we good at, what make this company into what it and O’Neal was on the front so sophisticated. It used to be Companies are too monolithic. to do. I can’t be spending time
was relevant. Three megatrends is today. That was confirmation line, first turning around a plant viewed just as a transportation There needs to be more worrying about something
caught my attention: safety, that we had done a great job in Portugal where he was a vehicle, a mode. Now it is an diversity everywhere. The else when I still have this very
green and connectivity. We and got it right.” The company’s production manager and then integral part of the global corporate global landscape important job to do at Delphi.” ■
thought they were relevant stock performance in the one in Canada where he was society. It is so sophisticated. needs to be more inclusive. The
anywhere you went in the subsequent three years has a general superintendent of There is not a piece of world has become a lot smaller, Nick Kochan is a financial
world. Governments and validated that claim. manufacturing. He went on to technology anywhere that is the borders are almost journalist based in London. He
writes regularly for the Banker,
consumers cared about The megatrends he espoused acquire an MBA at Stanford. more sophisticated than a car.” seamless and you need the Economist and the Financial
safety, they cared about the back in 2005 remain part of This paved his way to a move The car has retained its role perspective from everywhere.” Times
18 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 19Strap Governance
GARY MEAD looks
at the differences
between corporate
governance codes in
the East and West
W hen Alibaba, the giant
Chinese e-commerce
company, decided in
2013 to float on the New York Stock
Exchange rather than in Hong Kong, it
was widely trumpeted as a victory for
American savvy banking. Wow! New
York steals the biggest-ever IPO from
under the noses of the leading Asian
stock market! Hong Kong’s bankers wept
into their Tsingtaos as they counted the
losses in advisory fees – around $300
million. The total cost to Hong Kong was
incalculable: unquantifiable losses in
trading volumes and embarrassing
humiliation for the trading community.
But for those interested in long-term
corporate stability and transparency,
this was actually a clear victory for Hong
Kong’s market regulators. Far from loss
of face, it could be argued that they
deserved a massive pat on the back.
According to Philip Armstrong, Senior
Advisor on Corporate Governance at
the International Finance Corporation,
in Washington D.C.: “Hong Kong
remains highly regarded for good
corporate governance because it
ILLUSTRATIONS: ANDREW BAKER
declined to list Alibaba.”
The Asian regulators took a long hard
look at Alibaba’s pre-IPO structure and
decided they didn’t much like what they
saw. Hong Kong was desperate to host
Alibaba – but the local regulators nobly
refused to bend their rules. For the
structure proposed by Alibaba’s
founders, Jack Ma and Joseph Tsai,
ensured that they would retain control of
ACROSS THE BOARD
the company, despite holding a relatively
insignificant percentage of shares. Big
shareholders of the floated Alibaba will
find themselves unable to influence the
company’s direction. They may be happy
about that – for now. ➝
20 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 21Governance Governance
This kind of corporate control – a cosy choice of markets in almost 30 years “There’s no clear definition of what an look to grow – and the benefit of that is
arrangement that suits a company’s – the leading emerging markets’ index, emerging market is. Is Italy an emerging the development of the economy overall,
founders rather than necessarily MSCI, today identifies 23 emerging market, for instance?” There is also a and, at a corporate level, private
benefitting the shareholders – is not markets, against just 10 countries almost certain fluidity about the relevant list of enterprise often needs external financing
permitted in Hong Kong. More cautious three decades ago – the trading volumes indicators concerning good or bad – is that inevitably you can only rely on
finance minds might consider that the on those markets have exploded. Back in corporate governance. As Dallas puts it: reports received and the integrity of
looser rules in New York are indicative of 1988, those original 10 countries “You really are trying to quantitatively disclosure and transparency, furnishing
greed getting the better of corporate represented just one per cent of the total capture issues that are essentially or providing additional information. If
probity. The Alibaba event was a triumph value of shares available to private qualitative in nature. But we have to be you have a board that is behaving badly,
of power without responsibility, a investors; today, the 23 represent 11 per aspirational as well as pragmatic, and then no amount of rules can alter that.”
watershed moment for those who want cent. Since 2003 emerging markets have endeavour to systematically factor Dallas says: “Good corporate
to see improved standards of corporate moved from 24 per cent to 43 per cent governance into investment analytics. governance at a systemic level can make
governance. It demonstrated that, when of global GDP. It’s also two-way traffic. The World Bank has developed a toolkit all boats float higher. But, if you don’t
it comes to finger-wagging, the Just as investors can make a mint from that lets you juxtapose different have good governance standards, then
‘developed’ West cannot necessarily feel emerging markets, those markets also markets, but drilling down into specific even the good boats are in danger of
superior to the supposedly undeveloped benefit from being classified as such. In companies and being confident about sinking. The whole point about
East. Hong Kong was right to say no to 2013, HSBC estimated that the inclusion their disclosures is even more improving corporate governance in
Alibaba, even though it paid dearly for it. in MSCI’s Emerging Market Index of challenging.” The danger of cronyism emerging markets is that it should
creeping in is ever-present, even in hopefully result in a virtuous circle. If you
markets and companies that are have good standards – strong regulatory
supposedly well-developed. quality ensuring equal shareholder
Are there specific emerging markets rights, the rule of law holding sway,
that are doing better than others when it corruption being controlled and dealt
There’s no clear definition of what an emerging comes to good corporate governance?
Both Armstrong and Dallas point to
with, vested interests not allowed to
determine company policy – then this
market is. Is Italy an emerging market, for instance? South Africa as a good reference point,
as well as Brazil’s Novo Mercado (New
can be tremendously beneficial to the
overall economy, even if is very difficult
Market), a listing segment of BM&F to achieve. It can lower the cost of
Bovespa. If a company wants to be capital and help to attract capital.”
listed on Novo Mercado, it must comply It was always likely that Alibaba would
with a tough set of regulations that far end up with a New York listing. The US
Why should we worry about the Qatar and the UAE – nudging up from exceed those required by law – for permits multiple-tier stock structures
standards of corporate life? Armstrong, the higher-risk category ‘frontier market’ example that the capital of the company that allow a small number of people to
who was closely involved with status – could attract $800 million of is composed only of common shares. All control a company’s fate. In Hong Kong,
developing the King Reports on new inflows into the two countries. shareholders are to be treated equally, it’s ‘one share, one vote’ and the Hong
Corporate Governance in South Africa, George Dallas, now Policy Director at and a company’s Board of Directors is to Kong Securities and Futures
held to be some of the most advanced the International Corporate Governance have a minimum of five members with Commission stuck strictly by the rules.
principles on corporate governance in Network and former Director of the requirement that they Who’s to say which is right? Which
emerging markets, is clear: “Because Corporate Governance at F&C stand for re-election after system will bring the greater benefit to
poor management leads to corruption Investments, points out that there is a two years. At least 20 per shareholders? New York believes that
and the inappropriate use of assets. You definitional problem about what cent of board members the combined forces of public disclosure
need to have governments to ensure constitutes an emerging market: should be independent and tendency towards fierce litigation
that boards fulfil their duties, that they directors. Strict will keep its listed companies honest. It’s
are good stewards of the company on quarterly reporting just rather odd that, when it comes to
behalf of investors and shareholders. So standards of financial corporate governance, Hong Kong
the government needs to create information are needed. insists on a much more democratic style
credibility for company reports, and to For Armstrong, a concern is than the US. As the world shrinks,
recognise good practice to encourage that a jurisdiction might develop corporate governance issues are going
boards behave responsibly.” good corporate governance to become increasingly topical. ■
As is so often the case, globalisation codes in theory – such as India’s highly
has heightened awareness of and the ambitious new company law – but may Gary Mead is a business journalist and
need for corporate standards. Just as fail to implement them in practice. He former commodities editor of the
Financial Times
investors have seen a doubling in their says: “The issue, as emerging markets
22 OBSERVE 1/15 odgersberndtson.com OBSERVE 1/15 23Medtech Medtech
WHAT NEXT
FOR MEDTECH?
As the healthcare sector shifts in response to new
economic and social trends, recruitment needs are
shifting with it. The result is that the medtech
industry needs to adapt its business model and its
human capital requirements in order to survive and
thrive within a radically reshaped market.
sven maenhout investigates
C hange is inevitable in any
organisation whether you
will it or don’t. The question is
whether the change can be harnessed
quickly enough to help strengthen and
people born deaf hear their own voice
for the first time, or allowing a 29-year-
old paraplegic man make the opening
kick to the 2014 World Cup in Brazil! But
the main driver in the sector in recent
build. The medical technology sector, years has been the public cost
or medtech – broadly defined as any containment enforced by the financial
technology used in treating medical crisis. With an ageing general population
conditions which ranges from latex causing healthcare expenditures to
gloves and syringes to total body continue to rise, the pressure to limit
scanners and implantable pacemakers – costs and thereby new technologies will
is facing huge challenges from shrinking only increase over time.
budgets and ageing populations to new As cost containment of healthcare
technologies and demands from rises, the pressure on gross margins will
customers. As medtech companies move only increase, making it harder for
to address these factors, different medtech companies to continue to
responses are emerging. finance their existing business models.
Medtech is certainly affected by the “Bringing new products to market in the
transformations in the global healthcare European Union is becoming
landscape, with new approaches for increasingly difficult,” says Omer Saka, a
managing, financing and competing. Director at Deloitte Consulting. “There
This is pushing all stakeholders in the are many companies that are
sector to question their models, and one questioning the large investments
effect has been to pile pressure on needed for increasingly smaller returns.
ALL PHOTOS: ©ALAMY
suppliers of healthcare products. This carries a very real risk that patients
Medtech innovation today is fast and in the future will no longer have access
brilliant, with new products and to these new life-saving technologies.”
treatments emerging better than ever. The shift in overall healthcare aims is
New technology is being used to help having a deep effect on medtech. ➝
24 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 25Medtech Medtech
broader supply of products and services President Communications for Europe,
across different domains. But in both Middle East and Africa. “We have readily
instances, the industry has been moving available in-house knowledge and talent
from a co-operative business model to a which hospitals can benefit from.”
true collaboration with all stakeholders, Of course, as companies adapt their
working closer with hospitals and business models to start providing
healthcare authorities to anticipate value-added collaboration and not just
needs and build relationships. “Hospitals products, it means adapting skill sets
look for long-term partnerships which and structures in medtech firms. Renaat
offer win-win solutions for both parties. Vermeulen says that is already
This demand will increase over time,” happening, with more segmentation and
says Paul Timmermans, the COO of specialisation of sales representatives to
University Hospital Leuven, in Belgium. deal with a broader group of highly
Renaat Vermeulen, who runs the differentiated stakeholders. “The times
European operations of orthopaedic of a generalist sales rep doing
device firm Biomet with global everything within a hospital is fading.
headquarters in Warsaw, Indiana, says Through having a more specialised
specialisation will drive efficiency. people we are better able to get the key
“Specialisation of hospitals is a clear messages across to the different
trend throughout Europe, something groups,” he says.
Specialist hospitals have which we definitely support,”
Vermeulen says. “The literature has
Frédéric Hoffmann, Business Unit
Director at Baxter, a US healthcare
higher quality results clearly demonstrated that specialist
hospitals have higher quality results for
leader with headquarters in Deerfield,
Illinois, adds, “We are definitely driving
for patient outcomes patient outcomes.”
The logic is that performing higher
our sales organisation to develop
consultative sales skills with hospitals
volumes of specific procedures gives – through this we add value to our
teams more experience with treatments customers and strengthen our long-
and possible complications ensuring a term business relationships.” Indeed,
deeper understanding of specific one consequence now is that medtech
ailments. Having more specific sales reps now have second highest
Product innovation and quality was new customer relationships with a experience allows for better patient industry average salary level within the
once the key to growth, but this is being dramatic increase in the number of treatments. “The future for companies is life science industry – higher than
replaced by a goal of balancing costs stakeholders playing a role in decisions. where they offer integrated solutions to pharmaceutical and biotech reps.
and bringing value-add services to Until recently, physicians were the sole hospitals along the entire disease The risk of this specialisation, though,
hospitals. As hospitals strive to become decision-makers for the products they management chain from diagnosis, is that the focus on individual sales could
more efficient, improve patient used to treat patients. But with pressure treatment, manage the symptoms mean losing sight of the broader
outcomes, and be more cost-conscious, to improve patient outcomes while post-treatment, and providing feedback relationship. “Sales reps are driven
medtech needs to adapt too. Indeed, simultaneously controlling costs, an to hospitals and government.” says through their bonus: they fight for each
there is now an increasing willingness to increased number of stakeholders – Deloitte’s Omer Saka. and every device, and hence are not
pay premiums on products that are purchasing committees, hospital One example of this is Minneapolis- willing to give up accounts, no matter
labour-saving or save larger, administrators, etc. – are now involved in based Medtronic, a world leader in how small. But does this really make the
downstream costs. “Price pressure the purchasing decisions. And with medical devices, which created the most sense from an organisational
within the health system is incredibly buying decisions being increasingly Hospital Solutions group helping perspective?” asks Zimmer’s Heidi
high. At the same time demand for driven by tender processes, the hospitals outsource their catheterisation Jauch. To take an example from Pharma
value-add services from hospitals to purchasing process has become much laboratory or cath lab. Maastricht industry – which is struggling with some
suppliers continues to increase,” says more complex, raising the administrative University Medical Center in the of the same issues – GlaxoSmithKline
Heidi Jauch, Vice President and burden on both companies as well Netherlands estimated that they had (GSK) is addressing this issue by
Compliance Officer at Zimmer, a as hospitals. saved €4.5 million in one year working remodelling its sales teams, no longer
specialised joint replacement So how are medtech companies with Medtronic. “A hospital clearly incentivising them for individual sales
technology manufacturer based in responding to the challenge? Two broad benefits through bringing in our targets but focusing on building the
Warsaw, Indiana. approaches have emerged: expertise in change management,” says relationship with the prescribing
Medtech companies are also facing specialisation in particular areas, and Yvan Deurbroeck, Medtronic’s Vice physician and adding clinical value. ➝
26 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 27Business Business
D espite possessing slick
websites, obtuse social media
accounts and black turtle neck
wearing digital advisers, many large
companies have only so far tinkered
customer. However, a similar focus should
be aimed at staff to support digital
transformation. Angela Ahrendts,
credited with turning Burberry into the
first high end, online fashion retailer and
Agile delivery should be at the
heart of digital transformation
around the fringes of digital. The current now Apple’s VP Retail and Online Stores
trend by many of running digital says, “Everyone talks about building a
transformation programmes relationship with your customer. I think
demonstrates that it has finally clicked in you build one with your employees first.”
the boardroom that the impact and The digitisation of organisations has to you making significant investment in new
opportunities presented by digital date typically been about task systems or processes.
touches all parts of the enterprise. automation and overhead reduction.
However, effective digital However, if back office processes and Be agile – if successful digital As well
transformation differs markedly from supporting systems aren’t created with businesses have recognised that digital as giving
other large scale business change internal users in mind, staff won’t use is far too important to leave solely to businesses and
projects, with which most senior them to full effect, resulting in lower ‘techies’ then the mechanism for doing staff a lot more
executives will be familiar. Digital productivity. By using internally, some of this is using agile delivery methods. control and ownership,
transformation is about taking the key the digital methods that have evolved to Whilst it may seem quite far from the this ‘configuration’
digital drivers that have changed radically better understand and support boardroom, agile delivery should be approach also reduces supplier
how companies acquire, engage and customers externally, digital at the heart of digital transformation. lock in, making it easier and more
support customers externally and deploy transformation will not only drive the It focuses on end user needs and cost effective to switch suppliers.
them internally, across the organisation. system and organisational change business outcomes, rather than very Of course as successfully as you
Digital drivers comprise: required but will also create a more detailed technical requirements. may utilise some of these methods
• having a relentless focus on the satisfied and engaged workforce. This is Testing starts on day one, with iterative honed on the external digital
customer good for staff and good for the development reducing risk and coalface, you need to recognise that
• a business vision that embraces digital company’s bottom line. improving quality because feedback adapting to digital isn’t a one-off activity.
• and a flexible mindset, approach and The now established digital techniques, from business owners is received early, Embracing digital transformation marks a
organisational structure to execute it. matured in delivering external facing making it easier, quicker and cheaper to new maturity in many organisations’
Underpinning these drivers are a number services, but to be used internally as part adapt to new or changing requirements. understanding of the fundamental,
of methods that have evolved out of the of digital transformation, are: Agile is gaining increasing traction far-reaching and continually evolving
sharp, experimental end of rapid digital across company culture, with Forbes impacts and opportunities presented
evolution in the last two decades. The Focus on analytics – make user recently quoting a survey of chief by digital.
good news for companies is behaviour of internal systems and marketing officers titled ‘The Agile “Today, companies have to radically
that these methods are now processes, part of your management Advantage’ that found 87 per cent of revolutionise themselves every few years
mature and ready to information and use this to improve staff respondents said that ‘Adopting agile just to stay relevant. That’s because
deploy internally. experience and performance. We now made their teams more productive.’ technology and the internet have
The driving mantra know more about user behaviour online, transformed the business landscape
of digitally led but also have the capability to Configuration versus customisation in forever. The fast-paced digital age has
business change understand more about how staff supporting systems – this might sound accelerated the need for companies to
is the need to operate internally. Many business systems very technical; it isn’t. Many services are become agile,” says Nolan Bushnell, serial
focus ever vendors have learned from digital about now built on a core platform so that entrepreneur and founder of Atari Inc.
more on the the importance of collecting data on user business users, rather than technical staff, Oh and as for your digital advisers...
behaviour, making this available and easy can configure their system to work in a black turtle necks are out, beards (now
ILLUSTRATIONS: BEN CHALLENOR/HEART
to digest. way that best suits the business. The that digital gurus are old enough to grow
growth of highly configurable systems is them) are in, but only use them if they
User testing – upgrading or changing derived directly from the success of web can tell you how to harness what digital
internal systems is often far more content management systems that techniques have been used to drive
expensive than building even the most support web sites, but give the business success externally – to transform your
transactional website. Deploying some of owner/user the ability to easily change, organisation internally. ■
the techniques that optimise user add and update new features without
experience with customers online with relying on costly technical development. Henry Cook is a Digital Strategist with
your staff internally enables you to focus High profile users of such services include 20 years’ experience in leading the
transformation of large, complex
on what works and what doesn’t prior to The White House and the Bauer Group. organisations
30 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 31Brazil Brazil
Despite its economic and social problems, Brazil is a vast
market with much to offer multinational corporations
looking to do business there. Observe spoke to a number
rising to the challenge of leading Brazilian industrialists about the prospects for
the largest nation in South America
T
São Paulo skyline
hese are difficult times
for Brazil. For years it
has been the ‘almost’
country, never quite living up to
expectations. There always
seem to be stumbling blocks
that arrest Brazil’s
development, preventing it
from becoming one of the
economic success stories in an
otherwise lacklustre global
economy. The question is: why?
In a recent report in The
Economist headlined ‘After the
election, the reckoning’, Brazil
was cited as one of a number of
so-called emerging markets
“facing headwinds”.
Last October the country’s
President, Dilma Rousseff, outpacing other, more mature of Odgers Berndtson’s Brazil brazilbubble.com, a business be fatal to its ability to service the industrial sector. It failed to
whose Workers Party (or PT) markets still stuck in the office in São Paulo: “Brazil and financial website its debt in 2015.” To make deal with important matters,
had won a second term in office, doldrums. But the predicted suffers from poor infrastructure, specialising in Latin America: matters worse, a huge like the complexity of the
had her victory celebrations good times haven’t yet arrived… corruption at several levels and “Petrobrás holds the title of corruption scandal was Brazilian tax regime. There are
quickly tempered by troubling Instead growth has remained a lack of long-term planning.” one of the most indebted uncovered in December 2014, also snags in the labour area,
news on a number of fronts. stubbornly low. What’s more, He adds: “It also lacks talented companies in the world, it involving Petrobrás and the where direct charges are more
Yet following the financial some of these chilly economic manpower. Regrettably, the also faces the issue of a largest Brazilian contractors, than 100 per cent over the
crisis of 2008, Brazil appeared conditions were entirely of the country has one of the worst depreciating currency (the putting the company in an even payroll, versus 30 per cent on
at first to be coping well, in country’s own making. As part productivity rates in the world, Brazilian Real). 80 per cent of more negative spotlight. average in other countries, like
contrast to many developed of a pre-election giveaway, further aggravated by this rate Petrobrás’ debt of BR$240 So why Mexico for instance. All these
nations. At the time the front spending grew twice as fast as having deteriorated even more billion [US$90 billion, €73 does Brazil factors created the so-called
cover of The Economist took a revenues in 2014 leading to a during the past decades. This billion] is denominated in US have such ‘Custo Brasil’ [a combination of
rather more optimistic stance, budgetary hole equal to 4.9 per fact, combined with the low dollars or Euros. In 2014 the problems? factors that make Brazil a
showing ‘Christ the Redeemer’ cent of GDP in the 12 months to quality of education and the company spent over BR$35 Jaime Szulc relatively expensive place to do
taking off like a rocket from September 2014, a 12-year high. high cost of labour derived from billion [US$11 billion, €13 billion] (left), President business], which prevents us
the hills above Rio de Janeiro – Ms Rousseff’s government an ancient and protectionist just to service its debt. With the of Goodyear Latin America, is from growing and from
graphically has missed its self-imposed legislation is making companies depreciating currency, this bill unequivocal: “Brazil did not achieving better
indicating that target of 1.9 per cent primary less competitive as each year will go up.” make good use of the competitiveness.”
Brazil would surplus goes by.” Adriano Pires, an energy economic strength that was Marcelo
ALL PHOTOS: ©ALAMY
soon be for 2014. The crash in oil prices consultant, added: “The evident over the past 10 years. Barboza (left),
demonstrating According to (hovering around just $55 at company is so leveraged and It did not capitalise on the President of
a coherent, André Freire the time of writing) hasn’t with such a high need for resources available – and there the Brazilian
structured (left), partner helped one of Brazil’s largest investment, that an abrupt were many – in infrastructure, wing of the
growth plan and president companies, either. According to change in exchange rates can technologic innovation, or in giant US ➝
32 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 33Brazil Brazil
pharmaceutical group well developed, which is an Osmar Says Freire: “The market CEO of Coca-Cola Andina knows that Coca-Cola is a
Valeant, agrees: “Dealing analytic capability. Therefore, Stefanini (left), needs to visualise the horizon. [which includes Brazil, product that needs to reach out
with commodity prices and everything has to be worked Vice-President For some time, the corporate Argentina, Chile and Paraguay], to all consumers at a price that
instigating essential fiscal on from scratch. The country for Human world has been looking for is clear: “The government will is compatible with their current
and tax reforms have not needs to improve its Resources at efficiencies at all levels of an have to adopt strict measures purchasing power. This
happened. It’s a complex performance on the Laureate enterprise. Brazilian companies to make the country grow presents a clear challenge to a
scenario that has weighed educational side.” University in Brazil, gives an have already shown greater again. Many measures that company that has to carefully
heavily and caused the Valeant’s Barboza is more educationalist’s perspective on concern towards corporate could have been made monitor its costs and yet be
country’s growth to slow explicit: “I believe that local the country’s plight: “Brazil is at governance, particularly if they gradually were not highly productive. In addition,
down.” companies will now have to put a defining moment. The are going to succeed in accomplished and now they Coca-Cola, like other big
Marcelo multinationals operating in
Bertini (left), Brazil, must obey the country’s
President of Computer science-lesson for young tax and labour rules, keep
people, social project in a favela,
Cinemark, Poxoréo, Mato Grosso margins aligned and somehow
which owns provide the consumer with a
the largest quality product at a fair price.
chain of movie theatres in With all of this uncertainty
Brazil, lays a great deal of the surrounding Brazil’s longer
blame for the country’s term economic prospects, the
economic woes at the upcoming 2016 Olympic Games
government’s door: “Political might be seen as a potential
management and other things Holy Grail.
were lacking, like no planning Coca-Cola is the first global
for boosting economic sponsor of the Rio 2016
development. We have had 12 Olympics and will deploy a large
years of a government that contingent of personnel at the
centralised decisions with a event, involving professionals
high degree of interference in from the entire Coca-Cola
Itaipu hydroelectric dam
the day-to-day running of Andina system in South
business. This government has America. “In this regard,” says
not been capable of adequately their efforts into leadership government needs to create a attracting investments from must put them into place all at Barbosa, “many things are
using the resources that the development tools like favourable environment for outside Private Equity Funds or once. In this new mandate, the already being activated. Special
country accrued over the past coaching and mentoring and investment. An investor does Venture Capital. This has made government faces an adverse packaging, the deployment
few years. For example, there develop a strong feedback not require the country to be them look to diverse talent and scenario, with a monetary and of a team of professionals
were several factors that process: in effect, do what the ‘totally ready’ in order to invest, human capital management financial model that has been experienced in large events,
hampered the necessary multinationals have been but it is very important that tools such as coaching or weakened by the fiscal deficit. plus an operation formed
evolution of infrastructure; doing and doing well. Local they can visualise a scenario assessments, among others. There are several difficulties to by great talents.” With the
Brazil attracted many companies will just have to with clear rules and no “In addition there has been a be overcome, such as the assistance of Odgers Berndtson,
investments, but they were adopt this route.” concerns about abrupt or clear trend for setting up increase in public tariffs, the the company has been busy
badly redistributed.” For Cinemark’s Bertini, radical change. The last thing Advisory Boards with the risk of shortages in water and setting up a robust
Coupled with these there is no point discussing investors want is a series of intention of professionalising energy resources impacting the management ‘corps’ over
regulatory, infrastructure and leadership when the problems disruptions and instability that Brazilian companies, thereby country’s productivity, as well the past few months, with
tax problems Brazil also suffers are much more serious. “It is might bring the market to a achieving better access to the as the productivity of competencies well aligned to
from a severe lack of talented right down at the basis of frenzy.” capital markets and to less organisations themselves.” the project and to the goals the
human capital. Says education. The country needs Nevertheless, there is a expensive financing. I see this Barbosa is clearly concerned company has established for the
Goodyear’s Szulc: “Education to evolve with regard to public consensus between economists trend accelerating over the about the effect high inflation years leading up to the Games.
is the point. As a rule, education; in other words, and business people that Brazil next few years.” has on the life of the population But what will the Brazil
Brazilians are highly creative review the learning system that simply has to shape up. It has to Meanwhile all the indications and to their capacity for Olympics really contribute to
individuals and good problem is poor. Investments in declare clearly what the routes are that 2015 consuming. “With a tighter the nation?
solvers, mainly as a result of education are meagre. The to growth are for its economy will not be an budget,” he says, “people need Opinions vary wildly.
navigating through years of people are not to blame; it’s the and for the country’s society as easy year for to cut expenses and establish Cinemark’s Bertini has
high inflation rates and other system that doesn’t work. It just a whole, or it will continue to anybody in priorities at the time they are positively vitriolic views: “I’m
adversities. But there has been doesn’t perform its role of promise great things but Brazil. Renato actually in front of the sorry, but something that costs
one point that has not been actually educating.” never quite deliver them. Barbosa (left), supermarket shelves.” He BR$37 billion [US$14 billion, ➝
34 OBSERVE 1/15 odgersberndtson.com @odgersberndtson OBSERVE 1/15 35You can also read
