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DE 4

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How can global conglomerates survive and thrive in the era of fast changes?

 

122 years ago, Edison founded GE, which was the last to be founded in the original Dow Jones. However, last June, GE had to exit the Dow Jones index, to be replaced by Walgreens Boots Alliance. This move reflects a structural change in the global economy.

 

For example, the above graph compares the top 10 companies in the capital markets in 2007 with the same category in 2017. The top 10 in 2007 were global oil & gas companies, global banks, and global industrial conglomerates, and Microsoft. Except for Microsoft, these industries ruled the economy in the last century. They created the trends, and they shared some common characteristics: central and hierarchical functional organization, with rigid governing system, complex processes and long response times.

By contrast, the top ten companies in 2017 are mainly digital giants which emerged and grew with agile practices. They are responsive in their DNA.

More specifically, the digital giants of the 2017 top ten have created the trends of our fast changing world; whereas the top ten in 2007 were not able to adopt to these new trends and have been replaced by the new trend makers.

The question today is what can global industrial conglomerates do to adapt to the new normal?

While maintaining the bottom line by reducing costs is a necessary measure to boost competitiveness and to avoid deterioration in the share value, the long terms survival needs a structural change at the top: Culture and organization.

In the following analysis, I discussed one dimension of the above mentioned trends: the lack of competitiveness. As for solution, four concepts are introduced on two levels: the strategic level and the operational level. Would you like to read more? Click here

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