Since the emergence of the single market in Asean, many companies are expanding their markets outside of their home country whereas others are still struggling. Some firms have already entered neighbouring markets while others are looking even farther beyond the Asean Economic Community.
Research shows that firms in different industries look at the AEC from different perspectives. For example, firms in the financial industry seem to support the AEC as long as liberalisation of their sector does not go too far, while companies in the oil and gas business seem more ready for AEC integration than others. Businesses in the property sector, meanwhile, are concerned about protectionist laws on land ownership.
In sum, a study found that Asean companies are expanding overseas for six key reasons: growth, diversification, routes to markets, access to resources, access to skills, and access to technology.
In this sense, international or regional companies are placing more emphasis on building the capabilities and resources needed to further their ambitions, whereas global companies see expansion first as a means of securing new customers and sales growth.
Regardless of the different business intents, expanding into a bigger market can lead to both opportunities and threats, particularly in terms of human capital.
Certainly, when expanding overseas, the need for an international mindset is crucial. Asian companies with a more diverse geographic footprint want their people to have a better understanding of global markets and a more international outlook.
Research and the conversations I have had with executives, especially Thais, indicate that most organisations currently do not have enough future leaders identified to meet tomorrow’s demands, while the current leadership development approaches cannot produce great leaders fast enough.
In short, the most critical problems are not enough leaders, not enough good ways to build them, and not enough leaders in the market available to be brought in. Is there a truly efficient approach to filling this impending leadership shortfall?
First, we have to admit that there are only a limited amount of people with sufficient capabilities who can realistically be selected for leadership talent pools. So instead of building bigger pools, it’s better to improve the capabilities of existing talents so that they become better talents.
At the same time, you need to find approaches to keep these talents learning, or else they will become less enthusiastic as time goes by. This approach may not provide more leadership candidates, but it will provide more leadership candidates who are likely to succeed. The following three important considerations are a good place to start:
The speed of applying existing knowledge: Capable and talented people selected to be in talent pools are there because of their intelligence and ability to perform to begin with. However, in developing better talents, the speed of acquiring theoretical knowledge is not as critical as the speed of applying what you already know.
In a world that never stops changing, people can never stop learning and, in fact, they need to learn faster. Thus, people who can apply existing knowledge quickly and put it into practice overcome this challenge more easily than those who are merely equipped with theoretical knowledge.
Outcome-based people planning: Given time constraints, every leader does not have to attend every training session or learn everything in order to improve leadership capabilities. Instead, establish an outcome-based leadership development approach that does not focus merely on equipping leaders with knowledge and skills. Rather, determine a developmental method and process by setting the final outcome as the goal. As a result, you get a systematic development approach that requires fewer resources and meets business needs more effectively.
Developmental approach that focuses on efficiency and effectiveness: Building capabilities is different from building competence. Competence is having knowledge while capability is the ability to apply that knowledge and deliver quality performance. Let’s face it: many leaders have a high level of competence and comprehensive knowledge of every management theory but their performance is lower than required at performance appraisal time. Why? Because all they really know are just theories that they rarely put into practice; they do not know how to apply theories in real situations.
Given the changing business landscape, future leaders need to be truly capable of managing whatever an uncertain future throws at them, which means that the approach to developing them needs to be changed as well.
In my experience, the traditional approach to leadership capability development, such as training or workshops, must be changed. It does not yield the behavioural change or capability improvements desired because it is too focused on learning in the classroom. Rather, we now need out-of-the-classroom or more practical approaches.
In order for companies to compete in the changing business environment and the bigger market as quickly as possible, we need a better approach to help talents to develop faster by accelerating their capabilities. This implies that your key talents need not learn every theory in order to be competent. What we need instead is to develop leadership capabilities that can meet current and future business needs in terms of speed, outcomes and effectiveness.
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Arinya Talerngsri is Chief Capability Officer and Managing Director at SEAsia Center (formerly APMGroup) Southeast Asia's leading executive, leadership and innovation capability development centre. She can be reached by email at arinya_t@seasiacenter.com or www.linkedin.com/in/arinya-talerngsri-53b81aa
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