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e x e C u t i v e f o r u m

A little over a quarter century ago, entrepre-neurs in South asia began to quietly change the world. No newspaper recorded the day in

1981 when N.r. Narayana Murthy and six others cre-ated a company in Bangalore, India, that would help change forever the way business is done. they pooled together US$250 and created Infosys technologies Ltd., a software development company creating special-ized programs that streamlined business operations for Fortune 500 companies around the world.

Nor was there much to indicate in 1981 that the Chi-nese city of Shenzhen would attract foreign investment. Back then, it was still a small fishing village where the Pearl river delta pours into the South China Sea. Yet in 2007, according to a report by Shenzhen Customs, one out of every eight mobile phones in the world was produced in Shenzhen, and export increased 150 percent—with a total of nearly 26 million phones shipped—in the first half of 2007.

the cities of Shenzhen in China and Bangalore in India represent the new poles of the growing power of asia to the business world. the brains of Bangalore and the manufacturing brawn of Shenzhen frame the axis of the burgeoning development happening in economies around the region.

technology and globalization are rewriting the rules for 21st-century business. Both have opened rich new veins of products and places where they are sold. the playing field has been leveled across borders.

Yet a leadership crisis is emerging in and beyond the asia Pacific region, fueled by the twin forces of eco-nomic expansion and demographics: adding to the demand for leadership generated by growth, the Baby Boomer generation is retiring faster than the execu-tive pool can be replaced. the future of the region is also being shaped by innovation and charity that are growing to meet concerns about communities and the global environment.

Economic Expansion Creating a Leadership ChallengeChina’s economy has grown enormously in the past 20 years. Many economists believe China is on track to be the world’s largest total economy by 2030. the influx of outside investment in China alone has created the world’s largest pool of foreign reserve funds, which surpassed US$1.7 trillion in april 2008 (and is now growing at the mind-bending rate of US$10 million per hour, according to China Business News).

redeFINING

LeaderSHIP IN tHe

aSIa PaCIFICGerry Davis and Stephen Langton

4 4 l e a d e r t o l e a d e r

are happening as rapidly as in the rest of its economy. and because of the scale of China’s population of 1.3 billion, even modest improvements make substantial differences.

a 2007 study by Heidrick & Struggles and the econo-mist Intelligence Unit, mapping global talent in 30 major markets across the world, shows that China rated in the top 8 out of 30 countries studied. the study ex-amined each market’s natural potential for producing talent in sociodemographic terms and the conditions necessary to realize this potential.

But will young Chinese leaders be willing to leave home? In taking on the world, China already has a head start—its people are already there. the number of ethnic Chinese living outside China worldwide is conservatively estimated at 40 million—double the population of australia and two-thirds the size of the United Kingdom. History and unique facets of Chinese culture have forged a global community that transcends religious, cultural, and geographic boundaries.

the Generation Y of Chinese youth, like their counter-parts across the world, are tech-savvy, more interested in career than company loyalty, and place as high a value on lifestyle as they do on livelihood.

Here is where foreign multinational firms will have an edge attracting Chinese executives abroad. China’s massive rush toward urbanization will have a variety of lifestyle implications. China is already home to 16 of the world’s 20 most polluted cities, according to the Economist—and it’s hard to fathom that China’s

Based on a number of prevailing trends, China as a world-leading economy will be very different from the record-breaking developing market we see today. Be-sides cheap labor and goods, China’s most valuable resource for multinational corporations in the future will be its swelling pool of executive talent.

this talent will be sorely needed as the Baby Boomer generation (born 1946 to 1964) will begin to hit re-tirement age (65) in 2011. In wave after wave over the next two decades, this generation will leave the workforce—the last tide leaving the office in 2029. Mandatory retirement ages will edge upward, but this will be a temporary patch—mortality rates and age will do their work well.

already the impacts of economic expansion and de-mographics are being felt. More than 75 percent of global companies say the lack of executive talent and their organization’s inability to develop future leaders is a critical concern, according to a 2008 IBM Global Human Capital Study.

The Next Wave of Leaders Will Come from Chinatwo forces will lead the search for qualified executives in the next generation to China: workforce deficits in europe (anticipated to be 100 million) and the United States (between 25 million and 40 million), and the globalization of Western companies.

and China is uniquely positioned to churn out future business leaders. advances in China’s education system

Technology and

globalization are rewriting

the rules for business.

China is uniquely

positioned to churn out

future business leaders.

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Bartlett believes that the most critical attribute in a global executive is open-mindedness, or what he calls “the ability to see that the differences in other cultures are strengths, not obstacles.”

Former Lenovo Chief Financial officer Mary Ma, who has since moved on to the texas Pacific Group, where she is a partner and managing director, says that one of the biggest difficulties for Western executives working with their Chinese team is cultural difference rather than language difference.

“For example, differences in communications styles are to be expected. an oversimplification is that the West-ern style is characterized by talking, understanding, and listening. the asian style starts with listening, un-derstanding, and then talking. therefore, we strongly encouraged our staff in China to be more outspoken at meetings, so as to share their views and opinions. on the other hand, we encouraged our foreign staff to listen to their China counterparts’ views at meetings.”

Professor George Foster of Stanford University, a glo-balization expert, says that executives in companies that operate in two or three different continents need a range of abilities and aptitudes that are often difficult to find in the talent pool.

Foster, who directs the executive Program for Growing Companies at Stanford’s Graduate School of Business, says that global executives need to

enjoy dealing with different cultures—not just •tolerate them.

growing environmental conscientiousness will keep pace with this rapid period of construction. as cities grow, so will competition in Chinese schools—from preschool to university.

If crowded, dirty cities aren’t enough to drive young ex-ecutives abroad, gender may become a powerful driver. thanks to the success of the “one-child” policy and cultural preferences for male children, young Chinese men will grow up with an unprecedented drought of potential brides. about 120 boys are born for every 100 girls today, in what the Los Angeles Times labels “the worst gender imbalance in human history . . . within five years, the country may have 30 million men who cannot find wives.”

In a role reversal, we will see multinational firms offer-ing extravagant expatriate packages to Chinese execu-tives willing to relocate their families abroad. Mature markets in the West will need to modify immigration policy, tax incentives, and market access to meet the huge workforce deficit they face.

The Modern Global ExecutiveHeidrick & Struggles conducted a series of interviews with chief executives and business experts across the region to find out the challenges companies face as they expand business in a globalized world. Ceos interviewed say the era of expatriate or “parachutist” executives being dropped into offshore markets is fast coming to a close, intensifying the demand for local executives.

Most of the Ceos we talked with were optimistic about the future, but emphasized that huge cultural challenges would face the incoming executive teams. as one said: “the thinking of executives will have to change at a greater pace than is currently being ex-hibited. the new dogs will have to learn many more tricks than the old dogs and be good at teaching these tricks as well.”

Professor Christopher Bartlett of Harvard University’s Global Leadership Faculty says those companies best at “accessing the scarce resources of intellectual and human capital” will gain sustainable competitive ad-vantage in a “flat earth” business era.

Chinese culture transcends

religious, cultural, and

geographic boundaries.

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this has led to a convergence of shared values between the business community and groups that traditionally have been at odds. Corporations are working hand in hand with community groups to address issues such as global warming, water conservation, recycling, and energy efficiency.

In recent years, Heidrick & Struggles has partnered with the asia Society to host conferences that bring together the best and brightest leaders from business, government, and nonprofit organizations to examine the issues that will shape the landscape of asia in coming decades.

there are examples around asia of cities and nations tackling such issues head-on with surprising results. In Singapore, a city-state with 4.5 million people squeezed onto just 270 square miles, conservation has long been an issue. according to Grace Fu, Singapore’s senior min-ister of state for national development and education, Singapore has had to make a constant and conscious trade-off between growth and environmental sustainabil-ity even during times of explosive economic expansion. as a result, half of Singapore is covered by green space today—proof that economic vibrancy and a livable, en-vironmentally friendly city are not mutually exclusive.

the squalor in New delhi, by comparison, seems to be insurmountable, given the hordes of immigrants who crowd this city of 16 million. Yet since 1999, New delhi has been able to increase the green cover from less than 3 percent to nearly 30 percent of the city.

all of the city’s public transportation is run on compressed natural gas—with 100,000 public vehicles on the road, this makes the city the world leader. Still, 1,000 new own-ers of private vehicles hit the streets of New delhi every day, so the government has started a comprehensive pro-gram to educate schoolchildren to reduce and recycle.

Building the Future: Why High Flyers Are Getting Charitableas the next generation of asia Pacific business leaders look to carve a better future not only for themselves but for their communities, they are following in the footsteps of a growing number of today’s senior execu-tives, who turn their backs on the corporate world to

Have a global outlook. •

enjoy ambiguity and management paradoxes— •“change requires stability” and the like.

Have the ability to cope with the tensions that ac- •company a 24/7, globe-hopping job.

Heidrick & Struggles interviews showed that chief ex-ecutives in asia Pacific are already introducing talent management strategies to meet leadership pressures. these strategies include

exposing executives to deeper levels of strategy •making and business planning.

recognizing that people’s long-term career and life •expectations are inextricably linked, and assisting where possible.

rewarding top talent in more creative ways, such •as banks offering executives 75 percent of pay for a yearlong leave after four years to pursue other interests.

developing the management team to appreciate •and respond to the emerging demands of leader-ship across the five generations that will be simul-taneously employed by organizations to meet their needs over the next 10 years.

Innovation and Asia’s Future Business Leadersthe role of business in the world at large has expanded in recent decades, with stakeholders now demanding that leaders of corporations be good stewards for the communities they serve, not just interested in the bot-tom line. reputations depend on it.

What’s driving the sudden

rush of altruism?

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waves of executive migration across the countries of asia Pacific. as the need for human capital expands, governments will respond to the demands of business for more liberal policies to encourage the movement of talent.

Companies will seek the best people from both devel-oping nations and mature asian economies. this will spark a compensation war as asia Pacific countries work to keep their locals as well as to poach talent from Western countries, and Western countries respond in kind. Companies will need to listen closely to the needs of their leadership talent—not just their compensation needs, but also their needs for developing a fulfilling career and lifestyle.

the best people are those who demonstrate courage, purpose, flexibility, emotional intelligence, and innova-tion. these leaders and potential leaders will be looking to their employers to display similar flexibility toward them in their career and life plans.

move into nonprofit organizations. Hardly a day goes by without a multimillion-dollar salary being swapped for a more modest emolument.

What’s driving the sudden rush of altruism? the answer is partly an increasing demand by the nonprofit organiza-tions themselves for better business practices in a sector traditionally driven more by values than the bottom line.

But the real reason behind the influx of top talent into the sector is that the wealthiest generation in history is now striding across the world stage, and our corporate leaders have the financial ability to do whatever they want. they’ve got everything, seen everything, been ev-erywhere, and now they want to do some good without any financial constraints.

Seeking the Best PeopleIn the short term, the solution to the current and fu-ture shortage of top executive talent will be increasing

Gerry Davis is managing partner, global prac-

tices, for Heidrick & Struggles. He is coauthor,

with Stephen Langton, of “Redefining Leadership:

Competing in Asia in the 21st Century.”

Stephen Langton is global practice managing part-

ner, leadership consulting, for Heidrick & Struggles.

He has led major succession planning, management

audit, and leadership development programs for

some of the world’s leading organizations.