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New Era of 'Globality' Has Competing with Everyone from Everywhere for Everything
Wave of Powerful Challengers from Rapidly Developing Economies Is Rising; Industry Leaders Need to Learn Their Secrets or Lose Leadership Position

New Book from The Boston Consulting Group Provides Wake-Up Call and
Prescriptions for Making Sense of the New Competitive Reality

BEIJING, October 17, 2008—Global business has entered a revolutionary new phase of competition—one that is fast replacing the globalization model, according to experts at The Boston Consulting Group (BCG).

BCG calls this new era—and competitive reality—globality. It's the subject of a new book, GLOBALITY: Competing with Everyone from Everywhere for Everything (Business Plus, June 2008), by three BCG partners: Harold L. Sirkin, James W. Hemerling, and Arindam K. Bhattacharya.

The book describes how the established business model—centralized, top-down, and process driven, with influence running from West to East—is receding.

"Globality is what comes next," said Hemerling, a BCG senior partner, co-leader of BCG's Global Advantage initiative, and former leader of BCG's China practice. "Business is flowing in every direction; companies are losing their centers, and the idea of foreignness is becoming foreign. No market is too small or too remote to offer resources, cost advantages, or opportunities, and the rapid expansion of commerce—everywhere at once—will swamp companies that fail to see it and respond."

An Unprecedented Wave of New Competition from Developing Markets

"The situation is on the scale of the United States' first challenging European companies and Japan's first challenging U.S. companies," explained coauthor Hemerling. "This wave is more like a tsunami with companies rising up from China and many other rapidly developing economies. It will make earlier waves from developing countries look like mere ripples." 

The New Imperative: Learn from the Developing-Market Challengers

New challengers from rapidly developing economies are jumping to worldwide leadership positions, providing established players with valuable lessons in competing in the era of globality. The lessons are in cost control, local customization, borderless executive suites, and impressive global growth:

• Chinese baby products producer Goodbaby rose to leadership in China with a focus on low-cost manufacturing, and innovative design and now is the leading provider of baby strollers in the US and Europe.
• Brazilian jet maker Embraer rose to be number one in small jets (those with fewer than 120 seats), using revolutionary new design concepts.
• Indian company Aravind Eye Care System reengineered cataract surgery and now performs 250,000 surgeries annually—60 percent of them for free—still making a profit.
• Chinese customers of appliance maker Haier were using clothes washers to wash sweet potatoes. Now the machines come with a vegetable-washing cycle.
• India-based Bharat Forge, the world's second-largest automotive-forgings company, believes in acquisition but not integration; its acquired units are highly autonomous, and (like many other challengers) the company sees itself as polycentric.
• Chinese telecom equipment manufacturer ZTE leveraging China's large telecom market and low cost engineers to rapidly develop into a leading technology company in China and globally.

"We know that the United States and other established markets are less and less the global center," said coauthor Hemerling. "But companies from established markets stand a good chance of competing successfully if they study what the challengers are doing and make a serious commitment to the transformation of their own businesses."

Why Many Challengers Have Key Advantages in the Globality Era

The book points out that the strongest competitors from rapidly developing countries like China have some important advantages that current leaders did not have. "These challengers grew up in cost-challenged, hypercompetitive home markets and are custom-built for the challenges of globality," said Hemerling. "Equally important they have unprecedented access to the world's best expertise, technology, and business practices. And their executives, many of whom were educated in the West, are hungry for success—determined to control their own destinies."

How Some Established Players Are Adapting to and Benefiting from Globality

The book shows how some incumbent leaders are adapting to globality: decentralizing decision making, redeploying assets to build businesses within the rapidly developing regions, and absorbing knowledge from abroad.

"Established companies can continue to win," stressed Hemerling, "but only by changing mind-sets of how they view the world and drawing on the unique assets, capabilities, and perspectives of the developing world."

To receive a copy of the report or arrange an interview with one of the authors, please contact Gu li at +86 21 2306 4000 or gu.li@bcg.com.

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