HomeArticles Strategic opportunity peaks for Australia 2012-2020
Strategic opportunity peaks for Australia 2012-2020
TMG January 2012
In 2009, we wrote about strategy in the face of the “Global Financial
Crisis” (GFC) (See Recession Strategy) In 2010, we wrote about strategy
coming out of the GFC. (See Strategy post global economic uncertainty )
In January 2011, (See Strategy in Australia’s Golden Age ) we wrote about
the expected instability but not collapse in the US and Europe and the
importance for Australian business executives to use the local “Golden
Age” to advance its their globalization off the back of innovation.
In Australia, management has been slow to respond, seemingly, too uncertain in the face of global financial instabilities - so TMG draws no comfort from being ‘on the money’ in terms of economic outlook.
The current economic outlook
We take the view that the EU membership, whilst very uncomfortable with the constraints created by having to act on fiscal policy as a group, are more afraid of the effects of disintegration as a group. The EU leadership is therefore committed to the long haul of economic restructuring through spending cuts, stage managed write-downs, loans and money supply. We expect very low growth and continual threats of doom that are unlikely to be realised for several more years yet.
We take the view that the US will endure a long, slow and bumpy ride out of its debt problems – after all, these are huge losses to absorb – even for a huge economy like the US. There are early signs that trends in manufacturing output and employment are beginning to show sustained (but very slow) improvement. We expect low growth but less uncertainty and within a few years, the momentum in the US economy to pick up.
We take the view that China is well able to sustain annual growth at 6% and above for many years hence, India, despite its inefficiencies, is a leader in creative capitalism and will sustain growth at similar levels. South Korea has a deep and strong growth engine – indeed the region is filled with opportunity.
Many other growth economies (eg Indonesia, Mexico, or Brazil) will, over the period to 2020, make very big contributions. Although Australia is remote and with a small population, it is important for business leadership to be anything but remote from the business opportunities emergent in growing economies and to think big, not small, in a global financial marketplace.
The Opportunity
Now, in January 2012, we feel the need to point out the URGENCY with which Australian business leadership needs to grasp this opportunity and build on its existing internationalization. What is the opportunity?
Australian business are operating in a strong economy (not evenly distributed we agree), with
Historically good global buying power (for acquisitions, new technologies, R&D, innovation, travel, etc). We are
In an age where ‘open innovation’ is accelerating access to so many opportunities at a time when
Other economies are imposing significant constraints and burdens on business post the GFC.
Australia’s government is investing record amounts in innovation support as well as sustaining subsidies to old or struggling industries (such as the car industry). Even if the Feds run up a deficit, it will not be large. Private savings are much larger than usual in response to the GFC as households and businesses alike have paid down debt. Our banks are amongst the strongest in the world. The mining sector outlook remains very favourable (albeit not at the recent break neck speeds). We have a world class educated workforce and tremendous research facilities. We are located in the fastest growing region of the world. Despite the noise, the outlook here is stable and favourable for investment, well suited to intelligent risk taking, supportive of global expansion.
These are just some of the reasons for Australian businesses to use the current circumstances as a competitive advantage and accelerate their own growth.
Whilst many are already acting (see above diagram from EFFIC 2010 ), too many have been slow to act. All existing business models are under pressure and likely to need significant innovation.
For example, as Australian retailers have recently found, today, all business is global business. Gerry Harvey’s outburst in relation to the unfairness of GST free international on-line retailing is ‘the canary, dying in the mine’ for too many business executives. It is a signal telling you that death is imminent and you should get out now! If your business is not successfully acting to sustain competitive advantage in a global market place, fully informed by international change and innovation, then there is a ‘dead canary’ in your office, right now.
There is real urgency. This “Golden Age” is now, and lead times to the creation of create businesses are years, not months. By 2020, local circumstances are likely to be VERY different. The resources boom may not have bust, but demand growth is likely to have slowed to less than half the current level. The US and Europe will have recovered from debt constraints and the current massive investments in stimulating innovation will begin to pay off. Asia will likely have gone from an emphasis on copying the west to being and innovation power house in its own right – off the back of better infrastructure, education and globalised businesses.
Our current, local circumstances, in Australia, should be encouraging us (business leaders) to stretch, look further out on the horizon, raise our sights, ‘cease the day’ if you like. When you set out on a strategy development process this year, see not only this 10 Point Strategy Checklist on our web site, but add, right now, these three additional items to check;
11. Innovation
Are you establishing processes and systems to harness ‘new to the world’ IP (products, systems, technologies) in support of your bearking new ground in building value and competitive advantages?
12. Leadership commitment
Are investors and senior managers committed to advocating and resourcing significant advances in the business – not just financially, but in its people and capabilities?
13. Worldliness
Are you investing in learning to engage with different legal, cultural and social systems as well as both adapting your existing norms to being more global and strengthening your processes and information systems to maintain clarity in an increasingly diversified and distributed way of working?
It is incredibly challenging to break free of your local and historical constraints, an Aus-centric view of the world, a colony, operationally focused, an incrementalist’s bias, fear of standing out – so much baggage to jettison to even be able to see, let alone act on, the scale of the present opportunity available. But failure to do so will see your more strategic contemporaries, your competitors, move ahead, leaving you behind.
2012 – 2020 should be a truly golden age for the development and expansion of Australian businesses. Will your organization be a beneficiary or a casualty?
Peter Boyce is Director of Consulting at TMG and can be contacted by using Contact Us on the menu bar above.
T|M|Gstrategyfacilitation Contact us Tel 03 9010 9010 (Aust.) Fax 03 9857 3733 (Aust.) Web: www.tmg-strategy-facilitation.com.au Email:
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