RENEWAL: An Effective Transformative Change Framework

RENEWAL

An Effective Transformative Change Framework

All Rights Reserved.

Copyright © 2024 R. E. Biasca

v2.0

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To Andy and Vicki

CONTENTS

Preface

Chapter 1. Introduction: Forces for Change

Chapter 2. Business Transformation Approaches

PART I. FIRST PHASE. DIAGNOSIS.

Chapter 3. Competitive position assessment

Chapter 4. Diagnosis: Synthesis and References

PART II. SECOND PHASE. PRESCRIPTION.

Chapter 5. Improvement Proposals

Chapter 6. The General Formula

Chapter 7. The Formula: Special Cases

Chapter 8. Prescription: Synthesis and References.

PART III. THIRD PHASE. THERAPY.

Chapter 9. Action.

Chapter 10. The Execution Process

Chapter 11. Therapy: Synthesis and References

FINAL COMMENTS

Chapter 12. Conclusions

Previous Books by the author

Acknowledgments

The Author

Preface

"Life’s Tragedy is that we get old too soon and wise too late." Benjamin Franklin (1706-1790).

Some days after obtaining my first master’s degree in 1967, I landed in a big paper mill in southern Chile. My first assignment was to make recommendations to improve a production area, and my second was to streamline the raw materials handling system. That era is called during these days 2IR (Second Industrial Revolution, see Chapter 6). I still remember that experience! In 1969, I went to Germany to work in a new area dedicated to computer applications. It was a new world for those like me who had studied using a slide rule! The 3IR was beginning. In 1973, I published my first paper describing the success of a cost reduction program I was coordinating in a multinational company. In 1979-80, I was in the first group of the Humphrey Fellowship Program and studied business administration at the University of California, Berkeley, and economics at Stanford University. President Carter signed the diploma, and that experience expanded my views. In 1984, I published the book Productivity, a comprehensive approach. That book is still being downloaded for free from the Internet Archive.

In that way, I began a journey of more than 50 years that has not ended yet. I still find the subject fascinating: improving organizations to obtain better results. I have studied and worked in 26 countries. I have worked in around 150 companies as a professional, manager, management consultant, top executive in different areas, and CEO. The companies were in various industries of different sizes, private and governmental. As a side activity, I participated in 40 non-profit organizations and was an officer in some.

Since the beginning of my professional life, I have been involved in academic activities. I have taught over a thousand courses and seminars in 68 universities and other institutions in 21 countries. I published 15 books, 42 booklets, and almost 200 papers. I began teaching with chalk and a blackboard; I now teach online with sophisticated multimedia tools and use websites and social networks.

In that way, I tried to complete a learning cycle: using tools and applying concepts, thinking about the results obtained, reflecting, researching new approaches, discussing topics with course participants, and writing the findings. I continuously updated my knowledge. I am now using the 4IR tools and exploring new 5IR approaches. In 1989, I went to Japan to learn about production management techniques and TQM. In 1997, I went to the INSEAD in France to learn more about information technology. In 2007, I finished a master’s degree program in online teaching. With an endless curiosity, I experimented continuously with new tools: I had my first website in 1997 and began using artificial intelligence in my classes in 2023. Part of that knowledge is inside the book, which describes the topics with simple language.

My most recent books were published twenty years ago. During that period, I moved to the US, became an American citizen, worked in different countries, and taught at American universities. During those years, volatility, uncertainty, complexity, ambiguity, and rapid technological change were characteristics of the modern business landscape. Based on the evidence of the last three centuries, it can be predicted that unanticipated events will continue (wars, pandemics, climate change, and others). The gap between the needs and what most organizations can do is increasing. Sometimes, it is like feeling that the environment requires a speed of 150 miles per hour, and the organization moves at 50 miles per hour. Transformative change will be needed more than once, and organizations should constantly renew.

In this book, I tried to achieve some objectives: a limited number of pages, a selective description of the accumulated research, a small number of cases, and an easy-to-understand description. The approach uses concepts of science, engineering, business administration, economics, information technology, education, and medicine. Managers and students could use it in executive programs, MBA studies, and other graduate programs in different disciplines.

After two introductory chapters, the book is divided into three parts that follow the suggested transformation model:

First Phase. Diagnosis and Prognosis. Is the organization sick or healthy? How much change is needed, and what is the urgency?

Second Phase. Prescription, Innovation proposals. In a company in crisis, which significant improvements are needed? If the company is competitive, which continuous improvement is required? Is there a transformation formula?

Third Phase. Therapy and Prevention. Transformation implementation, Consolidation, and Renewal. What are the phases and steps of the execution process for sick and healthy organizations? Why do more than 50% of transformations fail?

After finishing this book, I have two feelings. One is satisfaction with publishing my first book in English, which updates and improves my previous work. The other is frustration with not being able to describe all my numerous personal experiences and not covering some statistics, cases, or research that could interest the reader.

Our complex world needs imagination and innovation to progress more than ever. Therefore, I dedicate the book to my Generation Z grandchildren (Andrew and Victoria). Their generation and the next will transform the organizations in which they work, and previous knowledge could be helpful for them.

R. E. Biasca, 2024

CHAPTER 1

Introduction: Forces for Change

"No man ever steps in the same river twice, for it’s not the same river, and he’s not the same man. There is nothing permanent except change." Heraclitus (born 535 BC)

"As the water shapes itself to the vessel containing it, a wise man

adapts himself to circumstances." Confucius (born 551 BC)

"If the rate of change on the outside exceeds the rate on the inside, the end is near." Jack Welch (1935-2020)

After reading this chapter, readers will be able to:

Analyze significant forces for change.

Differentiate environmental and organizational pressures for change.

Know stories of change.

Draw out change issues.

Understand the impact of VUCA world on management practices.

CONTENTS

1. THE ORGANIZATIONAL CHANGE and ITS NAMES

2. THE CHANGING EXTERNAL ENVIRONMENT

3. WHY IN THE SAME INDUSTRY and COUNTRY, SOME COMPANIES ARE SUCCESSFUL, and OTHERS FAIL?

4. THE NEED TO INNOVATE AND BE COMPETITIVE

5. THE IMPACT OF THE VUCA WORLD ON MANAGEMENT PRACTICES

SUMMARY

REFERENCES

Introduction: Forces For Change

In 2009, there were 17.8 million cruise passengers worldwide; in 2019, there were 29.7 million. In 2020, the amount dropped to 5.8 million. In 2022, there were 20.4 million. Forecasts for 2024 indicate almost 35 million, with an estimated figure of 40 million in 2027.

In December 2019, Zoom had around 10 million participants per day; in 2024, it had more than 300 million per day.

Even the most adaptable companies can face difficult times. Kongo Gumi, a Buddhist temple construction company founded in 578, was ranked the World’s oldest family firm. However, in January 2006, burdened with decreasing demand and $343 million in debt, it became a subsidiary of the Takamatsu Construction Group.

Organizations have tried to adapt to external environmental changes for decades. This book describes a practical approach to transforming organizations.

Different books published in various languages have analyzed the possible responses to these adverse situations. My book Downsizing was published in 1989 when Argentina had a period of severe hyperinflation (almost 5,000% in that year), offering a model that distinguished disruptive from continuous change. In the following fifteen years, I refined the approach by publishing several books (see the references at the end of this book). The model is based on thorough research and intensive practical experience. Numerous business cases indicate that it has been helpful in the last four decades. It is an adequate answer to the impact on organizations in uncertain times.

The subject continues to be studied. In May 2024, a search at the Purdue University Library revealed that in the EBESCO databases, the words Change Management for Organizations gave 4,338,904 references published between 1/2000 and 4/2024. In the same period, Business Transformation gave 1,568,075. However, success is not easy.

A survey published by McKinsey & Company in December 2021 says: Success remains an exception, not the rule. Less than one-third of respondents- all who had been part of a transformation in the last five years- say their companies’ transformations have successfully improved organizational performance and sustained those improvements over time. The 70% change failure had already been detected by Harvard Professor John P. Kotter and other scholars decades before.

Do these failures deter new changes? The answer is no. For example, research shows that over 50% of mergers and acquisitions have poor results. However, according to The Institute for Mergers, Acquisitions, and Alliances (IMAA), the value of global M&A deals amounted to 3.7 trillion U.S. dollars in 2019 (and 3.2 trillion in 2023). The effort to improve has different names.

1. THE ORGANIZATIONAL CHANGE and ITS NAMES

Organizations must adapt to a changing environment that is difficult to predict to survive and prosper. That adaptation process could be labeled as Change. If that change is profound, not cosmetic, the word Transformation is used.

Change has different faces. It could be accidental (not predicted in advance) or deliberate (planned, intentional). The magnitude could be large or small. It could affect some parts or the whole company (partial or total). It could be quick (disruptive, drastic, revolutionary) or slow (continuous, evolutionary, tuning). The new organizational situation could be significantly different (fundamental, quantic change) or slightly different (minor, incremental change). The change could be forced (obligated by environmental changes) or voluntary (decided by the organization).

These changes have different names. More than 50 words are used, often simultaneously, creating semantic and conceptual confusion. New words are created in addition to the traditional words. Bolivia launched in the year 2004 a governmental program called Hospital for Companies for turnaround efforts. Examples of some names are the following.

Related to the characteristics or magnitude of the change process.

Adjustment, change, transformation, rescue, revolution, reinvention, perestroika, adaptation, regenerative transformation, recreation, renovation, intentional renewal, tuning, reorientation, revitalization, improvement, discontinuous change, continuous change, disruption, innovation.

Related to strategic change.

Turnaround, retrenchment, repositioning, reframing, reimagining, revisiting, reviewing, reconceptualizing, re-envisioning, revising, redefining, rethinking.

Related to structural change.

Restructuring, rebuilding, reshaping, resizing-downsizing-rightsizing, deconstructing, demolition, creative destruction, reengineering, process innovation, value-driven.

Related to technology change.

Digital transformation.

Related to new organizational structures.

Learning organization, horizontal organization, agile organization, lasting organization.

Related to specific improvement programs.

Cost reduction, Value Analysis, Productivity Improvement, Profit Improvement, Quality Management approaches (Quality Circles, Zero Defects, Total Quality, ISO, Six Sigma, Quality Awards, GMP, Toyota System), Process Reengineering, Lean management, Time-based management, Kaizen (continuous improvement), Tatsumaki (tornado), gemba (the place where the action happens and value is created), hoshin kanri (aligning employees’ work with the company goals).

2. THE CHANGING EXTERNAL ENVIRONMENT

Some talk about the VUCA (vulnerable, uncertain, complex, and ambiguous) world.

A. The Pandemic.

During the first semester of 2020, the COVID-19 pandemic changed the world. Different countries reacted in various ways to fight the virus’s effects and the economic consequences. In 2022, the situation was not entirely solved, and a new virus variant (Omicron) appeared. At the end of 2023, another variant (BA.2.86) was being tracked. The future is difficult to predict, but it will undoubtedly differ from the end of 2019. In 2024, it was clear that the world had suffered different shocks: the pandemic, supply constraints, the Ukraine War, the Israel-Gaza war, inflation and tightening monetary conditions, artificial intelligence products, and climate change effects. Some explanations are necessary.

(a) The world.

From the macroeconomic point of view, there was a negative Aggregate Demand shock, a significant drop in production, and a vast increase in unemployment. The GDP decrease was sharp in every country during 2020. Most of the countries expanded the role of government and tried to stimulate Aggregate Demand through:

Fiscal policy stimulus (tax changes, government expenses, and government transfers to individuals and businesses) that increased the budget deficit and the external debt and,

Monetary policy decisions (interest reduction, changes in banking regulations, open market operations, and money printing) produced inflation that would not be temporary. It will also create depreciation of some currencies in the long run.

The recovery differed in each country; it was relatively fast in the U.S. In 2019-2023, the GDP growth in developed countries differed: good in the U.S., poor in the UK and Germany. Italy’s GDP for 2022 was $2,049 B; in 2019, it was $2,011 B, i.e., almost no growth.

(b) The US

The US is an example of the impact of the pandemic in a developed country. An increase in US inflation began in 2021, and it was not at acceptable levels in 2024. The Bernanke-Blanchard explanation of inflation was released on May 23, 2023, by former Fed Chair Ben Bernanke and former IMF chief economist Olivier Blanchard. The study analyzes the causes and consequences of the U.S. pandemic-era inflation that began in 2021 and peaked at 6.8% in November 2021. The main findings of the study were:

Most of the inflation surge resulted from shocks to prices given wages, such as increases in commodity prices and sectoral shortages, rather than overheated labor markets.

However, the effects of tight labor markets on wage growth and inflation are more persistent than product-market shocks, and controlling inflation will require a better balance between labor demand and supply.

The Fed and other policymakers underestimated the inflationary impact of the fiscal stimulus programs enacted in response to the pandemic. They were slow to react to the rising inflation expectations and pressures.

The Fed should have started raising interest rates sooner and more aggressively and communicated its policy strategy and inflation target more clearly.

The Fed should also have used its balance sheet more actively to reduce long-term interest rates and support economic activity.

The study concludes that the U.S. economy must slow further to bring down inflation and that the Fed faces a difficult trade-off between stabilizing inflation and supporting growth. The study also warns that the U.S. experience may have implications for other advanced economies facing similar inflation challenges.

(c) Developing countries.

Argentina could be an example of the impact of the pandemic on a middle-income developing country in a complicated context. The pre-pandemic situation in 2019 (recession and high inflation) added complexity to the pandemic effects. Additionally, the Government change at the end of 2019 generated new public policies. Its competitiveness has been declining in the last decades. The effects of the virus continued until the end of 2022. A typical Argentine company had an external environment with these characteristics: (a) recession (the GDP has not recovered pre-pandemic levels); (b) high budget deficit (more than 8% of GDP in 2020); (c) high inflation (more than 40% for the year 2020 and 2021, more than 200% in 2023); (d) significant unemployment; (e) a Central Bank with scarce reserves maintaining strict exchange rate controls; (f) price controls; (g) high tax level and export duties; (h) few foreign investments (the country has a poor record as a payer, country risk is high); (i) legal insecurity; (j) worse social indicators (poverty rate of more than 40% in 2021-23, increasing crime, increasing illegal occupation of private and public land); (k) political decisions related to the November 2023 elections.

B. Unsettling changes in the context.

The context change has been sudden, unexpected, and unsettling. Google announced during the pandemic that its 200,000 employees would work at home for a year and extended the deadline for some of them later. Within a few months, none of those employees imagined that situation in 2019. Around 20% did not return to the offices.

Several companies with normal operations had a crisis a few months after the pandemic was announced. The tourism industry (hotels, cruises, tours) is the best example. Carnival, the biggest cruise company, began to sell 19 ships; Royal Caribbean sold the Azamara line. Latam, the largest Latin American airline, carried 69 million passengers in 2019 and had 41,000 employees; since then, it has applied for bankruptcy protection and canceled all the flights inside Argentina. On March 13, 2020, Cirque du Soleil had to cancel 71 performances worldwide as governments tried to stem the spread of the virus. The next day, it had to cancel the six Las Vegas shows; CEO D. Lamarre describes that shocking experience in a book. Some companies located in Argentina announced that they are shifting production to Brazil (examples: Axalta Coating Systems and Saint-Gobain Sekurit).

Boeing and Airbus were another example. They produced airplanes, but some clients postponed their possession. In the second quarter of the year 2020, Boeing produced 20 airplanes. In the same period of 2019, the production was 90 planes. For 2020, the company delivered 157 aircraft, compared to 380 and 806 in 2019 and 2018, respectively. According to aerospace research firm Agency Partners, confirmed orders (1,028) at the 2023 Paris and Farnborough air shows were the highest since 2011.

LVMH Moet Hennessy Luis Vuitton SE, which sells luxury goods (Vuitton handbags, Dior, Hennessy cognac, Moet & Chandon champagne), reported 84% lower profits in the first semester of 2020. Boutiques that usually sell luxury goods in Paris to Chinese tourists were almost empty. Xingcheng, a factory town in China, produces a quarter of the global swimwear; pool and beach closures hurt that industry.

Despite these changes, in a few months, unexpected opportunities developed. Lysol, a disinfectant produced by the British Reckitt Benckiser Group, increased sales by 70%. As people used more bicycles than before, Polish production increased by 33% in May 2020 compared to the previous year. Microsoft Teams (for teamworking) had 13 million users per day in July 2019 and 75 million in April 2020. Slack also increased the number of customers sharply. Lowe’s Cos. reported the highest quarterly sales growth in decades. Kroger (the second-largest supermarket chain in the U.S.) finished the quarter that ended on May 23, 2020, with a sales increase (identical stores) of 19% compared to 2019 and a 92% increase in online sales. Netherlands-based Ahold Delhaize NV, with 7,000 stores worldwide (owner in the U.S. of Food Lion, Giant Food, and Stop & Shop), is allocating more resources to its e-commerce operations since online grocery sales increased. The company also owns bol.com, an e-commerce platform similar to Amazon in the Netherlands and Belgium.

C. Long-term context changes.

Some authors argue that the current way of living is not sustainable and that major changes are necessary.

The world in 2024 presents complex, simultaneous, interdependent, interconnected alarming forces: wars (Ukraine, Gaza), global warming, erosion of human survival systems such as water, health issues, technology disruptions, inequalities, decreasing trust in governments, etc.

For example, global warming is not new, but it is accelerating. July 2021 was Earth’s hottest July since global record-keeping began in 1880. Scientists have found that the Colorado River is very sensitive to rising temperatures as the planet heats up with the burning of fossil fuels. A 2020 study by the U.S. Geological Survey scientists found that the Colorado River has declined by about 20% over the last 100 years. Without considerable change, the river could dry up, impacting communities’ drinking water, power, and irrigation abilities across the U.S. Southwest (around 40 million people). The federal government declared a water shortage on the Colorado River for the first time in 2021, triggering mandatory water consumption cuts for states in the Southwest, as climate change-fueled drought pushes the level in Lake Mead to unprecedented lows.

Even with all the climate pledges made at Glasgow’s COP26 summit, the world will not meet the Paris Climate Agreement’s target of limiting global warming to 1.5 Celsius degrees above pre-industrial levels; the probable figure in 2022 would be between 1.8 and 2.5 Celsius degrees. In that case, the demand for metals such as cobalt, copper, lithium, and nickel will increase sharply.

Ambitious environmental, social, and governance (ESG) goals will force organizations to create sustainable operations. Sustainability has become an issue of strategic and operational importance for most companies and not just an issue of compliance. However, few companies have an organizational structure that treats sustainability as a material business issue.

Technological changes created creative destruction. Innovation leads to the obsolescence of older technologies or products, driving economic growth and development and making companies adjust. Some examples were (a) Smartwatches replacing wristwatches, (b) Streaming replacing CDs and DVDs, and (c) Online shopping leading to the decline of brick-and-mortar stores.

In a few words, the mentioned examples illustrate a changing and complex external environment.

3. WHY IN THE SAME INDUSTRY AND COUNTRY, SOME COMPANIES ARE SUCCESSFUL, AND OTHERS FAIL?

Newspapers, business magazines, academic journals, and different media (such as newsletters, webinars, and podcasts) describe companies in crisis, adjusting to new situations, and successful companies. These descriptions also existed before and after COVID-19.

Which companies are best at meeting the challenge of adapting? Researchers evaluated the S&P500 and Forbes Global 2000 firms along three dimensions: the creation of new offerings (as a share of total revenue), a stock compound annual growth (CAGR) since the start of the transformation, and CAGR of benchmark index (for example, S&P 500). These leading 15 companies are in Figure 1-1.

Which companies are best at meeting the challenge of adapting?

Figure 1-1. Source: The Top Business Transformations of the Past Decade, 2020).

Success stories are in every country: Concha & Toro (the largest producer of wines in Latin America), Embraer (Brazil), ByteDance (the Chinese owner of TikTok that sells around 100 billion dollars). Didi, which provides transport, has more than 550 million users.

In the same activity, why are individual companies successful and others not? Compare Walmart or Target with Sears/K-Mart. U.S. retailers closed more than 9,500 stores in 2020. Seventeen significant retailers filed for bankruptcy: Ann Taylor (Ascena Retail), Neiman Marcus, GNC, J.C. Penney, Stein Mart, GNC, and Francesca’s. Pier 1 Imports, created 60 years ago, closed its 540 stores. In Southern Denver, an empty Sears store and a Macy’s store were sold, and apartment buildings will replace them.

Why are some companies not competitive? What are the main problems: size, technology, financing, or products? Is lack of competitiveness common to Latin American companies or other companies worldwide? United Airlines has poor results, and Southwest is expanding in the same Denver Airport. Alitalia, the Pope’s official airline, had no profits in the last 15 years; in 2021, the best assets were transferred to a new company (Italia Transporto Aereo or ITA). Sony has struggled with different restructuring processes, but it seems to be profitable again.

Brooks Brothers, created in 1818 in the U.S., declared bankruptcy in July 2020. Has it reached that situation because the pandemic reduced events (such as parties and weddings)? Or are there other reasons: men using less formal attire, increased online sales, poor management?

Do cultural differences matter? Some companies are profitable in certain countries, and others are not. Wal-Mart lost money in Germany and finally sold the stores to Metro AG in 2006. After 18 years, it left Japan, where it bought SEIYU. In 2021, it left Argentina too. Several American fast-food chains (Pizza Hut and Donkin Donuts) were unsuccessful in Argentina.

What is the role of technology? In recent years, some authors indicated that successful companies that create high-value-added products are based on new technology and adapt quickly to the new external environment. Typical examples are Adverum, Amazon, NetEase Games. The words digital transformation have been used to refer to anything from a simple technology installation to the complete overhaul of a company’s business model. Recent surveys indicate that manufacturers see digitization, artificial intelligence, and automation as top drivers of productivity and profitability for the coming years.

Sometimes, being part of an industry cluster helps to increase productivity. A cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. They innovate and increase the productivity of companies, both nationally and globally. The classic example is the Sassuolo Ceramic District in Italy, where 80% of the Italian ceramic tiles are produced. Around 300 plants produce 18% of the world’s production. The concept can be replicated. China’s tile production was less than 10% of Italian production in 1990; in 2010 (with Foshan as the center), it was more than ten times Italy’s tile production. The second-largest cluster in the World is in Morbi, Gujarat, India.

Lipstick Valley is the latest industrial cluster to emerge in Italy. Although France makes more cosmetics, including skincare and body lotions, Italy has a niche in makeup (maquillage). Crema, a medieval city near Milan, is the valley’s center. Around 350 cosmetics startups were created between 2012 and 2017. Today, there are more than 1,000 companies. Ancorotti Cosmetics makes one-fifth of the World’s mascaras in an old factory once owned by Olivetti, a defunct Italian industrial giant.

4. THE NEED TO INNOVATE AND BE COMPETITIVE

Evidence has demonstrated that there is no permanently excellent industry; the attractiveness of all industries rises and falls. Similarly, there are no permanently excellent companies; companies rise and fall.

In the last 50 years, books and articles related to business innovation have been continuously produced. There is no lack of improvement ideas. However, many organizations do not use the so-called best practices, and implementing ideas is challenging. Countries and organizations continue to discuss change because they need substantial change.

As indicated, 2024 presents a turbulent, challenging time for business organizations to predict the external environment. Technological innovation continues, and there are trade and military wars; the benefits of globalization are not evident for everybody. On the other hand, consumer behavior is changing, and the increase in e-commerce is just one example.

Organizations everywhere are making efforts to improve. These changes occur in universities, hospitals, mines, manufacturing plants, agricultural companies, or government organizations. The external environment, technological innovations, mergers, acquisitions, or strategic alliances can force substantial changes. Privatizations (such as those in East Germany and Vietnam) forced a change in thousands of state-owned enterprises.

a. Examples

There are several examples of the need to innovate.

The Boston Consulting Group (The CEO’s Dilemma, October 2022) mentioned as forces to change: (a) rising uncertainty; (b) global disruptions: geopolitical tension, supply chain bottlenecks, tech disruption, consumer behavior shifts, people challenges, climate change; (c) macroeconomic headwinds (varies by sector and region): inflation, rising interest rates, uncertain recession outlook.

The Chinese New Infrastructure Initiative emphasizes 5G, Artificial Intelligence, Big Data Centers, Industrial Internet, Ultra-High Voltage, Intercity High-Speed Rails, Rail Transportation, and Electric Vehicles Charging Infrastructure.

The Export-Import Bank of the United States (EXIM) announced in May 2020 the launch of the Strengthening American Competitiveness initiative. Priorities are Renewable energy, Wireless communication (5G), Biotechnology and biomedical sciences, Semiconductors, Artificial intelligence, High-performance and quantum computing, Water treatment and sanitation, Emerging financial technologies, and Space technology.

Edward Yardeni mentions (a) Home-based work, education, and entertainment; (b) Telemedicine; (c) 6G; (d) Robotics, automation, and 3D manufacturing; (e) batteries.

Magazines mention several emerging technologies: solar geoengineering, 3D printing (houses, bone implants), vaccines for HIV and malaria, delivery drones, the metaverse, artificial meat, vertical farming, and others.

b. Economic growth.

The IMD and the World Economic Forum measure competitiveness with indicators. In the 2023 IMD Competitiveness Ranking, some countries’ positions improved (Denmark, Ireland, UAE, Belgium, Malaysia, Indonesia), and others declined (Germany, UK, Hungary, Bulgaria, Croatia). Argentina is in position 63 (over 64 countries), and Chile (the best position in Latin America) is 44.

Economic growth theories and empirical evidence show a relationship between a country’s competitiveness and its population’s living standard. There is also a relationship between a company’s competitiveness and its performance indicators. Consequently, managers have more, not less, pressure to obtain good results.

Some authors have tried to explain the reasons for low private investment and entrepreneurship (example: Hausmann-Rodrik-Velasco Growth Diagnostics Decision Tree). The World Bank ranks 190 countries that qualify for the ease of doing business. The first two positions are for New Zealand and Singapore. Argentina is number 126, and Bolivia is number 150.

c. Foreign competition.

Arvind Subramanian of the Peterson Institute of International Economics created an index that predicts that China will be the most dominant economy. The increasing role of companies from China and India presents new threats to traditional companies in new and traditional industries. IBM sold the computer business to Chinese Lenovo. Arcelor was created in 2002 by a merger of the former companies Aceralia (Spain), Usinor (France), and Arbed (Luxembourg). Mittal Steel from India acquired Arcelor in 2006, and ArcelorMittal is the biggest steelmaker in the World. ArcelorMittal owns and operates 25 facilities in the United States, including mines, integrated steelmaking plants, mini-mills, and finishing operations.

Two more examples come from Colorado. Portland-based Oregon Steel Mills Inc., the owner of Rocky Mountain Steel Mills in Pueblo, Colorado, was acquired by Russian steelmaker Evraz Group S.A. The Brazilian company JBS is the biggest meatpacker globally, with $35 billion in sales in the U.S. It operates about 40 beef, pork, and chicken processing plants and has its headquarters in Greeley, Colorado.

d. Fierce competition in different industries.

Successful companies sometimes face fierce competition. Amazon, for example, has regional competitors: Jio in India, Shopee in Southeast Asia, Mercado Libre in Latin America, Alibaba, JD.com, and Pinduoduo in China. PDD (founded in 2015), which owns Pinduoduo, launched in September 2022 and has been a smash hit. Shein and Temu are fast-growing shopping platforms. In China, Tencent Video, with 900 million monthly mobile active users, battles iQiyi (Parent: Baidu), one of the largest video sites in the world with more than 500 million monthly active users.

Certain countries help innovation, and others create obstacles. Brazil allows a payment system through WhatsApp, which has 120 million users. Brazil’s Congress passed a law in 2013 that authorized payment institutions. In 2012, only licensed institutions could issue credit and debit cards. At the time, banks did not consider the change relevant. In 2014, Nubank was launched as a credit card company operating in the digital environment. It offered a no-fee card via an online application. Young consumers with no credit history were accepted. Nubank, a good fintech example, also provides services to businesses and will go public in 2022. At the end of 2021, it had almost 50 million customers; its valuation is around 40 billion dollars, above the traditional lender Itau Unibanco holding. In 2020, there were roughly 198 million active mobile banking accounts in Brazil, an increase of more than 100 million accounts compared to the previous year. The ease of doing business facilitates innovation.

In some cases, changes are preventive. Some years ago, Coéxito / Mac, which was profitable in Colombia, tried to improve the distribution system to maintain competitiveness. The Danish Lego has made a substantial investment in redeveloping its product line. It has found a way to create bricks from recycled plastic bottles. By 2030, it aims to remove oil from its supply chain.

To sum up, managers are under more, not less, pressure to obtain good results. The pressure to innovate and compete is relentless, as the examples mentioned.

5. THE IMPACT OF THE VUCA WORLD ON MANAGEMENT PRACTICES

Volatility, Uncertainty, Complexity, and Ambiguity (VUCA) are characteristics of the modern business landscape. Based on the evidence of the last three centuries, it can be predicted that unanticipated events will continue. The gap between what is needed and what most organizations can do is increasing. Sometimes, it is like feeling that the environment requires a speed of 150 miles per hour, and the organization can move at 50 miles per hour.

Consequently, specific topics in management practices have obtained more emphasis. The US Academy of Management indicates that some of them are:

Leadership. Effective leadership in such an environment requires agility, adaptability, and strategic thinking.

Global Business and Geopolitics. Understanding the impact of geopolitical events on business, managing international operations, and navigating cross-cultural challenges are essential for companies operating in a globalized world.

Innovation and Disruption. The ability to innovate and adapt to disruptions is crucial. Topics of fostering innovation, managing disruptive technologies, and staying competitive in dynamic markets will remain important. Work will be different. Exploring the challenges and opportunities of remote and flex work, managing virtual teams, and maintaining productivity in a remote environment are relevant topics.

Digital Transformation. The rapid advancement of technology continues to reshape industries. Topics like digital strategy, data analytics, artificial intelligence, and the impact of automation on the workforce are essential for modern management.

Sustainable and Responsible Management. With increasing awareness of environmental and social issues, sustainable business practices, corporate social responsibility (CSR), and environmental stewardship have become essential considerations for modern businesses. Attracting, developing, and retaining top talent are crucial for organizational success. Topics related to employee engagement,