The establishment of a new cabinet in South Africa has sparked a wave of optimism, with high hopes that it will be a catalyst for significant economic growth.
Given the pressing need to expedite economic growth, it’s crucial to identify the readily available opportunities that will steer the economy in the future.
Sustainability
The article points out that, at Davos, environmental, social, and governance topics were prevalent, even though the acronym “ESG” was rarely, if ever, mentioned. Instead, discussions were much more specific, focusing on areas such as biodiversity, food systems, and carbon transition, among others. Companies are expected to understand their role in helping the world transition to a more sustainable, lower-carbon economy.
While Japan may have initially lagged behind, there’s now no denying that sustainability has become a top priority for all C-suite executives. The proliferation of business roundtables and events dedicated to this topic in the past one to two years is a testament to this shift.
A less globalised world with greater geopolitical risk
The article adds that, from wars in Ukraine and the Middle East to ongoing economic tensions between the US and China, there’s plenty of risk to go around. For these executives, an important aspect of this shift is the diversion of private capital from China to other Asian markets. Japan, Singapore, and India, in particular, are beneficiaries of this trend. Additional private capital provides an interesting opportunity for many businesses to become more efficient and accelerate growth.
A second aspect is the recent supply chain disruption that has industries such as semiconductors looking for alternative suppliers, creating additional demand in Japan. Finally, as China stimulates its slowing domestic economy, greater manufacturing output is fuelling price competition globally in a number of industries, among them automotive, steel, and solar panels. This puts tremendous pressure on all the dinner table executives and creates sharp competition in markets including Southeast Asia, India, South America, and Africa.
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Technology and Artificial Intelligence
The article points out that generative AI has fuelled the urgency to leverage technology for competitive advantage better. This is not just a chief technology officer issue—it’s relevant to the entire C-suite. Generative AI has gone from experimentation and proof-of-concept development to real, fundamental business model disruption.
The race to scale solutions across large global organisations with complicated, often legacy IT infrastructures is afoot. This has implications for both enterprise technology and change management. Japan is pushing to keep up. Start-ups and corporate giants like NEC are all making big investments but risk falling behind in a field where agility and speed are paramount—not always the top characteristics of traditional Japanese industry.
Diversity, Equity, and Inclusion
The article adds that it’s become stylish in some quarters to argue that such efforts are losing favour, but not at this table. In a country famous for conformity, those efforts are nevertheless taking hold in very profound and real ways that are influencing the labour markets. In Japan, the thinking is broad. It’s not only gender equity, as important as that is, but also global, experiential, and leadership diversity. The share of female board members at Japanese companies is low, but so is the breadth of management experience and global representation.
Corporate governance
The article points out that, around the world, boards are under increasing shareholder and public pressure to address issues one through four above. In Japan, this is a very present topic.
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While other markets, such as the US and UK, are rather new to thinking about properly representing the interests of multiple stakeholders, Japan has arguably always been ahead of the game. If anything, shareholders have been somewhat neglected. Building governance that creates value for all stakeholders will require the focus of executives, independent directors, and institutional investors alike.
The rising cost of money
The article adds that the rise in interest rates has increased funding costs for corporations. While interest rates were nearly zero and borrowing costs were minimal until a few years ago, interest rate hikes are now widespread globally, leading to higher borrowing costs.
Even in Japan, interest rates are expected to rise slowly. It was national news when the country ended eight years of negative interest rates aimed at stimulating growth and combating deflation.
International best practice is key
It will be interesting to see how this plays out going forward.
Many other economies worldwide have made bold moves to kick-start their economies post-COVID-19. South Africa has faced and continues to face its own challenges, which are impeding economic growth. Addressing our internal challenges is critical; however, this needs to be balanced with adhering to international best practices regarding business trends.
The Mystery Practitioner is an industry commentator focusing on the shifting dynamics and innovative thinking that BRPs and turnaround professionals must embrace to achieve business success.
