Despite respondent sentiment that business is becoming less complex, many IMT executives recognize a lag in the application of new industrial technologies and processes. If this is the case, where should manufacturing and industrial corporations start as they reinvent themselves? Baker McKenzie’s Nikolaus Reinhuber and Peerapan Tungsuwan outline several methods and practical considerations corporations can take to drive change within their organizations.
To give their business models a boost, IMT corporations need to adapt to and embrace what might look like a disruptive challenge. For instance, a major German automaker is currently transforming itself from a pure carmaker to a mobility services and solutions provider that caters to the younger generation’s view on mobility versus car ownership. Indeed, as the world marches into Industry 4.0, Asia’s manufacturers must look beyond their comfort zones. An injection of innovation – combining robotics, 3-D printing and IoT with digitalization through big data, cloud computing, analytics, and AI – can provide such a boost and be leveraged to automate manufacturing processes, making them more efficient and interoperable in “smart factories”.
A corporation is only as global as its workforce, and this goes far beyond a presence in multiple jurisdictions. Today, corporations must fill their ranks with an international set of employees with local insights and perspectives to create global strategies. This involves sending top talent abroad to understand foreign markets, consumers and cultures and return with international experience to take up leadership positions and implement what they have learned.
Closing an M&A deal is relatively easy, but for transactions to truly add value, the key question is how to orchestrate postmerger integration successfully, especially when dealing with diverse work cultures. Cultural integration can make or break a deal. Acquirers must understand the employees, ethics and business practices at the target, as well as how to mesh these with the parent organization. To this end, getting support from local managers is critical to keeping key personnel who will contribute to the integration and merging of companies, a process that can take up to three to five years.
Asia’s manufacturers and industrial corporations have some catching up to do and the best way to fill the gap in technology use and processes is by learning from international leaders in their space. At the same time, senior executives should strive to implement a creative work environment and culture to encourage experimentation and ingenuity. This leads over time to innovative solutions. In addition, adding innovation expertise through dedicated acquisitions of creative start-ups should be considered.
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