Stephane Garelli, widely regarded as a world authority on competitiveness, has pioneered both research and theory in this particular field. He is currently Professor Emeritus at the Institute of Management Development (IMD) in Lausanne, Switzerland, as well as Professor Emeritus of World Competitiveness at the same university.
Someone actively engaged in the business world, Stephane Garelli was, amongst many other positions held, Chairman of the Board of Directors and a shareholder of ‘Le Temps’, a leading French language Swiss newspaper, He was also Chairman of the Board of the Sandoz Financial and Banking Holding, and a Member of the Board of the Banque Edouard Constant.
Besides the positions mentioned above, Stephane Garelli also served as the Managing Director of the World Economic Forum and the Annual Davos meetings and was the permanent senior advisor to Hewlett-Packard European management.
Amongst the various institutes of which he is a member, he includes, amongst others, the China Enterprise Management Association, the Board of the ‘Fondation Jean Monet pour l’Europe’, The Swiss Academy of Engineering Sciences, and the Mexican Council for Competitiveness. Stephane Garelli is also on the advisory committee of the Thai Management Association, and a member of the International Olympic Committee commission on Sustainability and Legacy.
Stephane Garelli was a member of the Constitutional Assembly for his local state Vaude in Switzerland from 1999 to 2002.
A conference speaker of note, Stephane Garelli brings actionable ideas regarding the future of business to each of his talks. He resides in Switzerland and presents in both English and French.
Today it is different. It is a “K” recession. One part of the economy is on the brink of bankruptcy, such as air transport, tourism, events, and culture, while another, e-commerce, food, and of course pharmaceuticals, is booming. Economic forecasting is thus complicated since you must deconstruct the figures sector by sector to get a clearer picture.
The first consequence of a K-shaped recession is to concentrate power, especially financial power, in a small number of companies. Apple has a higher stock market value than the combined valuation of the 2000 companies with the smallest capitalization of the S&P (the Russell Index). The overcapitalization of some groups, particularly in the digital sector, raises the issue of a weakening of competition, mainly through abuses of dominant position.
The other is that state aid is blurring the real impact of the recession for some artificially supported companies. These are the so-called “zombie” companies that would probably have disappeared even without the crisis.
The traditional fiscal rules, such as a maximum public debt of 60% of the GDP, have disappeared – and for a long time. The OECD estimates that its members’ total public debt reached some 137% of their combined GDP in 2020. Governments are estimated to have spent some $6000bn to maintain the economy afloat during the pandemic.
Beyond debt, the risk of such a policy is to fuel inflation. From 2022 we will see central banks returning to more “conventional” policies.
Governments will be more interventionist. They will add stringent conditions to their support, such as interfering with strategic options or preventing such practices as the distribution of dividends and companies’ acquisitions. Working with governments and understanding how they function will be a priority for companies’ leaders.
The world is becoming more political.
The last one was characterized by one global market with cost-efficiency and high profits. It could be summarized as “Just in Time”. The new chapter is characterized by a decoupling of economies and a duplication of technologies. The aim is to reduce the overdependence on supplies from other nations. The objective is to develop a “Just in Case” model, more secure, more resilient, and more expensive.
Besides, since crises may continue to occur in the future, a new concept is emerging disaster management. It implies the management of events with low probability (a pandemic) but very high impact. It will imply the allocation of resources blocked for a long time (such as stocks of masks, vaccines, etc.), and thus more cost.
Shipping, which represents 80% of global trade, has suffered from the congestion of harbors and the lack of employees, including truck drivers, to transport the goods on land. Prices have surged, fueling the expectation of renewed inflation.
Such a situation may ease down in the coming month. Meanwhile, companies are struggling.
The entry barriers in many businesses are thus falling and can also affect public institutions, for example, in the case of the creation of digital money.
The challenge: who will be my competitors tomorrow, and where will they come from?
However, today, the shortage of supplies, bottlenecks in delivery, wage increases, and inflation indicate that low-cost globalization has reached its limit. In addition, the harmonization of global taxation and the proliferation of regulations will increase the cost of operation.
Thus, the new business model will emphasize the security of supply and resilience over price efficiency. Reliability is becoming the name of the game.
In short, “you have the choice, provided that it is mine.”
The circular economy is one example of how consumers force companies to introduce sustainability and environmental protection in their value chain and business proposition. It is part of a more significant movement advocating ESG (Environmental, Social, Governance) policies. Companies should consider society’s priorities for broader issues such as climate change, transparency, or ethics.
More precisely, the security of products (through certification processes, including health and sanitary standards) and transparency will gain in importance.
Consumers will be adamant about better knowing and monitoring how a product is manufactured and distributed until it reaches them. And they will hold companies accountable for managing this innovative approach to the value chain.
In addition, it will imply being more receptive to the demands of civil society, which imposes new priorities, such as climate change, biodiversity, ethics, and transparent governance.
Profit will remain a fundamental objective; however, it will need to be combined with societal goals.
Such a multidimensional new structure will put a lot of stress on management and employees and will probably call for new competencies.
This new generation is driven by:
“Meism”; a self-centered approach to life,
An eagerness for transparency, which means that nothing should be confidential,
A willingness to improve the state of the world, primarily through sustainable development,
A conviction that “free is cool”, which implies a reassessment of profitability models for companies.
This new paradigm reinforces Peter Drucker’s statement: ” Changes in society now have more impact than management changes.”
Companies that ignore this new fact will face strong headwinds from consumers, society, and governments.
Winners will need to deal with more uncertainty and a higher degree of discomfort. They should nurture a healthy sense of ambition for their organization and themselves. Resilience and the ability to quickly re-invent oneself are crucial to success.
Companies need to stimulate a mindset of imagination (why not?), energy (why not now), and commitment (why not me).
Companies are increasingly questioned, especially by the millennials, about their contribution to society, beyond their financial results. The “legality” of the actions of companies – conforming to the law – is no longer enough in a world where public opinion also demands “legitimacy” – adapting to a higher standard.
In such a world, companies will need to answer the broader question: “why us”?
The winners of tomorrow are those who will identify the numerous opportunities in a fast-changing environment quickly. They will also implement their ideas faster than others.
Even if the pandemic will not stop at a precise point in time (and it is the difference from a war), it will accelerate change and innovation in companies. It will also imply spending more time on mindset and values, especially if employees will increasingly work remotely.
In short, it is time to be bold!
“The "world" has never been as competitive as today. Thanks to technological advances, the playing field has grown considerably wider. New and hungry entrants are claiming a share of the business. Established companies, as well as states and individuals, need to develop a new frame of mind and find new ways to enhance their competitiveness if they are to survive. The merit of Stephane Garelli’s book is to remind all of us that, unless one can make it and stay in the Top Class, the years ahead may become quite painful.”
“Global competition has significantly changed most industries. Stephane Garelli, with his IMD World Competitiveness Yearbook background, brings interesting, eye-opening insights to this key topic.”
“Every global leader will find this work not just important, but a necessity.”
“Today, competitiveness is on the top on our agenda at Nestlé. Stéphane Garelli is one of the most stimulating thinkers that I have met on the subject and his research, writings and teaching have had a major impact on the way we approach this fundamental challenge at Nestlé.”
“In a world, which is becoming increasingly globalized, Dubai is constantly reinventing itself in order to sustain its competitive advantage over other cities. Stephane Garelli's work has had a strong influence on our strategies by allowing us to focus on non-traditional means of building competitiveness.”