2009 Global Champions: Seeing Through the Haze

The world's best companies of 2009 were those with the savviest strategic planning, sharpest peripheral vision, and consistent flexibility

In the last year, the Dow fell by 30%, the Nikkei by 35%, and the FTSE by 25%. The conventional wisdom is that value-building growth—consistent growth in both top-line revenue and long-term shareholder value—was almost impossible in the face of the financial crisis and market collapse, and when it occurred at all, it would take place far from the blue chips. A.T. Kearney's 2009 Global Champions report proves the conventional wisdom wrong: With the right strategic planning, peripheral vision, and flexible execution, companies were able to generate positive returns even in the most challenging climate.

Looking over this year's Global Champions, it's tempting to see only the differences between the finalists. From Nintendo (consumer electronics) to Komatsu (KMTUF.PK) (heavy equipment) to MTN (MTNOF.PK) (telecommunications) to BHP Billiton (BHP) (mining), a broad range of industries and geographies are represented. However, beneath the surface lie two common threads. First, the companies on this list are emblematic of underlying trends in the global economy. Second, they have each demonstrated the ability to look through the kaleidoscope of changing global business conditions, identify meaningful trends, and implement strategies to capitalize on them.

The global financial crisis, to paraphrase General Electric's (GE) Jeff Immelt, has caused a fundamental "reset" of the global economy. At A.T. Kearney, we believe the result is a faster pace of change in the underlying "drivers" of global business conditions: globalization, demographics, consumer preferences, government regulation and activism, natural resource availability, and the environment. And all of this is turbocharged by the leveraging of technology.

Governments vs. Consumers

In the "reset" world, demand is also polarized between two divergent consumers: governments focused on job creation through investments in infrastructure and consumers who have cut back on spending but are still willing to come out of their foxholes and buy products that appeal to their desire for a simpler, sustainable, more fulfilled lifestyle.

The Global Champions list contains companies involved in both the "hard" infrastructure of roads, ports, and buildings (Komatsu, Hyundai (HYHZF), Fluor (FLR)) and "soft" infrastructure such as telecommunications (America Movil (AMX) and MTN). On the consumer side, Global Champions Nintendo and Apple (AAPL) each sell products that aren't necessities and might be expected to wither in a recession, but both companies have continued to thrive by offering lifestyle-enhancing products that consumers feel compelled to buy.

These companies understand the world around them and implement appropriate business plans. They also have the peripheral vision and agility to respond to changes in business conditions. That is, they understand that strategy is a sense of direction that we continuously fine-tune, to paraphrase the great management scientist Peter Drucker.

The success of this year's winner, Nintendo, also suggests that it helps to have a leader who articulates the strategy in a way that is easy to understand.

At Nintendo, CEO Satoru Iwata advocates "increasing the gaming population" and that's precisely what the company has done with its Nintendo DS and Wii products.

Broadening the Footprint

Sometimes serendipity sets the stage for foresight. Sasol (SSL), for example, was originally established to develop technologies to turn coal into synthetic oil to promote energy independence in apartheid-era South Africa. South Africa's reintegration into the global economy—a fundamental change in business conditions if ever there was one—offered Sasol new opportunities. Sasol responded by broadening its footprint to create a global company with operations in 30 countries. It also expanded its portfolio to include gas-to-liquid technologies to help meet rising energy demand. Today, Sasol is well-positioned in a world of continued resource scarcity. It is also ahead of the curve in terms of sustainability, voluntarily participating in the Carbon Disclosure Project and publishing sustainability reports since 2000.

Doosan Heavy Industries (DOHIF.PK) has shown both foresight and agility as it has bought new technologies and businesses, while maintaining a consistent corporate culture that emphasizes high performance. Doosan expanded from its traditional focus on power plants to include nuclear and desalinization facilities, successfully anticipating the growth potential of both industries. At the same time, Doosan integrated vertically through raw-materials investments, providing insurance from commodity price swings, and consulting and services offerings.

Proving that success comes in many ways, Inditex (IDEXY.PK) pioneered a highly flexible business system that allows it to rapidly deliver high-fashion merchandise at a reasonable price. The company conducts continuous trend analysis and keeps new styles moving into its Zara chain and other stores. At the production level, Inditex offers best-in-class time to market, guaranteeing that its stores will carry cutting-edge styles. Local store managers also are given significant flexibility in ordering to ensure that the unique needs of each location are met.

Of course, corporate success is the result of a variety of factors, both internal and external, and the strategies that work for one organization may not be appropriate for others. However, this year's rankings show that value-building companies have the foresight to identify significant trends that affect their businesses and the agility to capitalize on them.

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