APEA 2011

Published June 28, 2011

Evolution of leadership qualities Having a good grasp of people, functional management skills and market knowledge will go a long way in tackling cross-border challenges for entrepreneurs, says NA BOON CHONG THE profile of a successful entrepreneur is one who sees and acts on opportunities, is oriented towards achievement, has concern for a high quality of work, is committed to work contract and is self confident, according to an early study by David McClelland. Armed with such a drive, it is natural that entrepreneurs seek out opportunities in new frontiers to expand their businesses once they have achieved success in their home markets. While the initial overseas foray is propelled by entrepreneurship, leadership competence needs to evolve in the life cycle of the overseas business. We would define leadership competence as comprising three major skill sets: people management, functional management and market knowledge. We take, as an example, a client whose HR practices and business expansion we have helped support for a number of years. People management We saw its products and services migrate from serving a homogenous market to customisation and then mass customisation for greater efficiency. Its value chain activities moved from being highly concentrated in its home country to a networked and distributed model. As a result, the requirement on leadership changed progressively in the following manner. Level 1 Works effectively with people from cultures other than his/her own Builds effective relationships with people from other cultures Willing to travel on work assignments Level 2 Seeks to understand cultural differences and the impact on work processes Recognises the impact of his/her own cultural attributes on others Builds effective relationships across diverse cultures and work groups Performs effectively in cultures other than one's own in work groups where there is multi-cultural membership in face-to-face or virtual environment Level 3 Leads and works effectively in groups where there is multi-cultural membership in face-to-face or virtual environment. Respects and is sensitive to others' cultural values in leading Addresses impact of own cultural values on others Looks for best practices outside of own area Recognises the local business implications of regional and global trends and events Level 4 Plans for portability of processes and products Customise solutions based on cultural norms Keeps current on the global, economic, political and legal events occurring in the region and the world, and the impact on the company's business Supports collaboration across borders and regions to improve customer satisfaction Creates development opportunities for culturally diverse members of the organisation Level 5 Builds a vision for the company's long-term success as a regional and global player Balances geography goals with corporate goals Understands the business impact for the company's long-term position in various markets Promotes respect throughout the company for value-added by way of culturally diverse elements of the workforce The above became the basis to develop management styles in an increasingly complex regional business as well as to assess a leaders' ability to perform. Functional management As the company grows its regional footprint, the following key functional skills need to be developed internally or 'bought' from the outside. Financial: Characterised by advanced financial management skills that bring together cross-border accounting, risk management, international capital markets knowledge, ability to manage across exchange rates and related risks, and international financial structures. It also includes trade and export related skills. Business development: Ranges from relationship building with international policy bodies, governments and corporate players to cross-border business planning, multiple alliance management, mergers and acquisitions and go-to-market strategies for international companies. Product development: Ability to understand and analyse international customer behaviour and preferences, international trend-spotting, intellectual property rights and related skills. Also includes fundamental skills such as product customisation, research & development and product design. Marketing: Integrates the elements of marketing management across borders with the ability to set up and manage complex distribution channels for cross-border operations; ranges from international branding and brand management, sales force effectiveness, customer relationship management, advertising and promotion (international messaging) and distribution management. Human resource: Reflects the challenges of managing across multiple cultures, legal environments and labour economies; includes international rewards, international careers and staffing, international organisation design and structures and international talent and leadership development. Manufacturing or supply chain: Brings together the complexities of managing and integrating multiple manufacturing operations across multiple countries with the added complexity of multiple supplier relationships; includes also international vendor and supplier network management, manufacturing management for international operations, supply chain planning and management and labour relations. Market knowledge Last but not least, with the rapid development of many emerging markets, what is known about a particular market becomes obsolete very quickly. Take China as an example. The early stage of economic development was around the eastern coastal cities, such as Shanghai. But as development moved inland to cities such as Chengdu, the market characteristics and challenges became different - and quite quickly. Aon Hewitt's People Risk Index global study found differences in the risk profiles of these types of Chinese cities. (Refer to table: the higher the number, the riskier). Chengdu's highest risk categories are employment practices and talent development, whereas demographics are the least of its worries. The Chengdu market has seen difficulties in attracting and retaining talent, and has pushed up the salary costs for certain industries. However, Shanghai displays a different sort of profile. Putting them all together An entrepreneur that keeps up to date with the market, applies the appropriate degree of functional oversight, and underpins all that with the right people management skills, will go a long way in growing his or her overseas business. The writer is managing director, executive compensation and performance, South-east Asia, Aon Hewitt

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