Get Your Head in the Globality Game

(page 2 of 2)

When Toyota made the decision to go head-to-head with Chrysler, Ford (F), and Volkswagen (VOWG), it was difficult for the company to gauge the tastes and needs of the U.S. market—and its first U.S. import was far from a hit. When a Chinese or Indian automaker makes its move, it can acquire whatever expertise it needs by outsourcing—by working with an experienced styling shop in Los Angeles or Rome, for example.

Get Ahead of the Wave

The next wave is already here. Think of Embraer (ERJ), the Brazilian airline manufacturer that was nearly bankrupt in 1995 but today is the third-largest commercial aircraft manufacturer in the world after Boeing (BA) and Airbus. Think of Tata Motors, the Indian automaker that recently purchased the Jaguar and Land Rover luxury brands from Ford. Or think of Goodbaby, a Chinese manufacturer of baby strollers (it has a 28% share of the U.S. baby stroller market) and other products for infants and children that develops new products at a dizzying pace.

What should you do? You can wait and get hit—and possibly knocked over—by this new wave, you can try to ride it, or you can get ahead of it. The choice is yours.

If you choose the latter, here are three things you should do:

First: Understand who your potential competitors are and take them seriously. Some will never become a threat. They will flash and fizzle like a Fourth of July firecracker. Others are the 2008 equivalents of Sony in 1958 and Nissan and Toyota in 1969. Make it your business to know the coming challengers in your industry.

Second: Make it your business to know their business. By this I mean, to the best of your ability, try to understand what they do, how they do it, and what their long-term capabilities and objectives may be. This will help you determine whether they are potential suppliers, customers, collaborators, takeover targets, or competitors—and help determine a course of action.

General Electric (GE) CEO Jeffrey Immelt understood this when he read our first report on the emerging global challengers back in 2006. He and other top GE managers reviewed the list carefully, dividing the companies into four categories: customers, suppliers, competitors, and others. "Our goal," he told a major magazine, "is to have lots of customers, lots of suppliers. And no competitors."

Third: Visit them. Get close. Build relationships. Recognize the rise of Argentina, Brazil, China, India, Mexico, Poland, Turkey, Vietnam, and other rapidly developing countries as an opportunity—and recognize the rapidly growing businesses emerging from these countries as more than just a threat. As you get to know the companies, decide what you want to do with each: buy them, co-opt them, use them as suppliers, sell to them, or view them as long-term competitors and find ways to neutralize their potential advantages and immunize yourself against possible attacks.

Take an Interest

The Japanese are still learning and still building relationships. In July I met in Japan with the CEOs of several companies, and they are taking nothing for granted. The CEO of an equipment manufacturer, for example, expressed keen interest in his potential competitors from China as he looks to build his brand among consumers in the developing world.

The worst possible strategy is to ignore the challengers in the hope they'll ignore you—they won't. The best strategy is to get ahead of them, determine whether you want to work with them or compete with them, and decide the best way to achieve your goals. In most cases, you still have the opportunity to be in the driver's seat. But if you wait, you may lose control of where you can go.

Harold L. Sirkin is a Chicago-based senior partner of The Boston Consulting Group and author, with James W. Hemerling and Arindam K. Bhattacharya, of GLOBALITY: Competing with Everyone from Everywhere for Everything (Business Plus, June, 2008).