Global Solutions for a small planet

Macro perspectives:

2016 will go down as the year of nationalistic voting both in the UK and the USA. With 2017 elections to be held in France, Germany, The Netherlands, Luxembourg and the Czech Republic the process of Brexit and the personalities involved will be very different from today. We are in uncharted territory but it is likely a ‘brexit-lite’ political compromise will prevail. At the moment many organisations are responding with a stoic ‘business as normal’.

In other parts of the world, China is repositioning itself, India has huge unrealised potential and the impact of low oil and gas prices creates both winners and losers. In response to this ever increasing business complexity we are seeing the rise of the Chief Operating Officer to mind the business, whist the CEO engages more widely and with more intensity with external stakeholders. Whatever the political and business pressures for 2017, the 3 elements of: unlocking value, improving shareholders return and creating competitive advantage remain pivotal to sustainable success.

We believe 2017 industrial growth markets will be centred around 3 key themes:

1. Global urbanisation: We are very active with the engineering, procurement and construction contractors on large infrastructure projects across the globe – this will in turn lead to ‘pull through’ of the associated equipment supply chain; across power, resources and transportation.
2. Security: At all levels from the national perspective (defence, supply of energy) through to the corporate issues (cyber, risk management). In turn this requires new skills in both combatting threats and opening up new markets.
3. Climate control: The impact of living (for the moment) in a low cost oil and gas environment vs. the cost of transitioning to low carbon initiatives, such as nuclear, smart energy management, electric vehicles and new technologies centred around battery storage and solar.

Corporate perspectives:

International organisations in every sector are actively pursuing strategies to increase the application of digitisation in order to deliver tangible improvements in performance and competitiveness above and beyond the historical norm. For example, we have seen with the maturity of global business services (GBS) becoming an increasing trend. This is in a very different league to shared services. GBS is characterised by the increasing complexity surrounding robotics, technology conversion, compliance and talent management to ensure sustainability of change. We are finding an increasing demand for a wider breadth of skills to achieve this. At the same time, organisations are moving at different speeds and success can be measured in different ways.

External catalysts for change during 2017 will come from a wider number of differing directions. The fear or the need to embrace disruptive technology, represented by The Sharing Economy, garners significant attention as an area of early-stage VC investing, as well as the concerns of CEOs reappraising the viability of their businesses. The 5 largest sectors where this is becoming more mainstream will witness early adopters : travel, finance, music and video streaming. Smartphone adoption remains one of the keys to the sustainability of the sector.

Other 2017 external catalysts, will include the growth in investor activism, which has seen a seven-fold increase over the last decade. Activist investors can drive significant change (e.g. Microsoft), break up under performing organisations or prove to be a leadership asset on the board, rather than a disruptive force – if the firm’s strategy and activist’s agenda are aligned. Boards and executive teams need to learn how to both respond and work with activists; relatively few corporates have this expertise in-house.

Closer to home, the apparent “muddled thinking” regarding our Brexit strategy prolongs the uncertainty of what a post-Brexit UK will look like. In turn we are not seeing any evidence of a likely strengthening of the £ and therefore, the 15% cost increases on imported goods will hit the high streets by Q2. This, along with a general increase in world commodity prices, will fuel inflation which could impact on economic growth. Less disposable income in consumers’ pockets will deter spending. These factors will put renewed pressure on businesses to, once again, review their respective cost bases. Talent across the entire supply chain will be in demand. Challenging negotiations with retailers will increase the need for experienced commercial talent. Unrest in the workforce and the living wage factor will re-write the role specification for many HR Directors. So, change will be the order of the day.

Executive perspectives:

The raison d’etre of Hoggett Bowers is the identification, tracking and securing of high calibre talent. A year ago under our theme of ‘Expanding the Executive bandwidth’ we highlighted 10 female high potentials at the level below CEO as the leaders of the future. During 2016 they duly delivered:

5 received internal promotions to larger roles, including 2 who became Group CEOs:

• Emma Walmsley, Group CEO, GSK
• Isabelle Kocker, Group CEO, Engie
• Serpil Timuray, Chief of Commercial and Strategy, Vodafone
• Rima Qureshi, SVP and Head of Region, North America, Ericsson
• Jennifer Tippin, Group Customer Services Director, Lloyds Banking Group

2 moved externally for more wider ranging positions:

• Nicola Shaw, Executive Director, UK, National Grid
• Beatriz Butsana-Sita, Updata, Managing Director

2 had no change (having only been in their positions for less than 2 years):

• Rachel Duan, SVP, General Electric; President and CEO, GE Greater China
• Stacey Caywood, CEO of Wolters Kluwer Legal and Regulatory Solutions

1 retired:

• Pascale Witz, Executive Vice President, Global Divisions and Strategic Development, Sanofi

We wish the above every success for 2017 and we are sure they will have greater impact on their respective organisations and markets.

In conclusion:

2016 will go down in history as a pivotal geopolitical year which shook up both Europe and the USA with global ramifications. Maybe upsetting the status quo is not such a bad thing. 2017 is gearing up to be no less eventful. Against this backdrop with the dust settling, we know that rational thought wins the day after the initial emotional reactions. In consequence, this is not the time for organisations to limit their ambitions or to give in to doubt.

We wish you a very successful 2017.