The global economy and competitive advantage in the 2020s
TL;DR: In the midst of crises and global challenges, it’s the best time to crystallize your competitive advantage. The market is for conquest.
Competitive advantage at the forefront
It is a well-known fact that economic growth best takes place in a state of high stability and confidence. Correspondingly, crises, such at the current corona recession, call for sustainable, solid and strong competitive advantage. Under pressure, the diamond crystallizes. Thus, strength and expertise are needed now more than ever.
There is a flood of uncertainty about the general state of the economy, a lack of confidence and major unresolved issues. At the same time, there are opportunities to enter new niche markets. To travel these new roads requires the crystallization of strong competitive advantage. Finland still lives through exports as our domestic markets are small and peripheral.
Our commercial growth story must once again be able to face and overcome the pressures of renewal and find ways to succeed in the eye of the storm. The worst thing to do is to remain static. Those that can make strategic moves now will likely succeed better than those paralyzed by shock. Just as our economic locomotives have always done, both after the war and after the collapse of Eastern trade and the 2008 economic crisis, we believe we can transform again.
New risks combined with a lack of confidence
World threats are constantly being studied by the Swedish Global Challenges Foundation. For example, in 2017, they published their analysis of the 12 largest risks in the world. Risks include, extreme climate change, nuclear war, a global pandemic, ecological catastrophe, global system collapse, asteroids, super volcanoes, synthetic biology, nanotechnology, artificial intelligence, poor governance of the future (global politics), and other, as yet unknown, threats. When the list is judged from the perspective of recent news, it is quite certain that the fear created by such threats will continue to affect economic activity and the climate of trust.
Edelman’s annual World Confidence Barometer, published in January, once again contained strong messages. The study assesses global consumer confidence in governments, the economy and business, the media and the third sector (NGOs). According to the analysis, none of these institutions is strongly positioned on issues that are critical for the future. According to the respondents to the barometer, organizations are neither competent enough or ethically sustainable enough to resolve issues critical to global trust. Could this be an opportunity for Finland?
Institutional capacity and ethics
Edelman emphasizes that, in each country, there are “awakened” people that trust the future and institutions more than the masses. However, the mistrust felt by large numbers of people in many countries is strongly distant from the view of the elite. Therefore, the research predicts that the gap will create great difficulties in the near future. Moreover, the rise of nationalism, the threat of a pandemic, and large budding international migrations stemming from war-torn areas, all continue to fuel the distrust of the masses.
Finland is the superpower of niche expertise
How then does this add up to opportunities for companies from our country? What is interesting for Finland is that we are at top of world in terms of the national economy and our expertise, as well as in trust. In Finland, we are in a unique position, both in terms of our own level of expertise and our value base.
We have a clean and beautiful country, smart people and a solid foundation of ethical values. We have the most confidence in our media in the world and still believe in the future brightly. What if we really took up the challenge now and strengthened our position in the face of the new global economy?
How can this be done in practice?
We suggest the following:
Develop our commercialization skills openly, enthusiastically and systematically.
Create a program and models that will only talk about innovation in the future if the idea is commercially successful. Invention and patents are not enough to drive growth, they must instead create new jobs and growth with international significance.
2) Human understanding
Invest in growing and nurturing human understanding.
The world’s best neuroscientists have found that 95% of people’s decisions are emotional decisions. Yet, in business-to-business trade, we continually underestimate the importance of emotion and human understanding. We want this to become the crown jewel of Finnish know-how in the future. We know what we are doing, but at the same time we know how to understand the needs and feelings of our counterparts.
3) Courage and risk
Boldly and open-mindedly seize new opportunities in the global market.
Despite all the risks and fears, the global market is full of opportunities. For example, how many of us know what decision-makers in Saudi Arabia or Indonesia need? What do they need to develop their fishing and food industries or their education systems? Should we offer the solutions we have in our country and export ten times more Finnish expertise than before? We need to harness proven rapid go-to-market methods and lean commercialization best practice.
Praise and build niche strategies.
Rapala, Supercell, Vaisala, Wärtsilä, Serres, Abloy, Ponsse, Machine, Nokia, Konecranes, Cargotec, Kemppi, Vexme… Finland has always had and will continue to have completely unique production and service expertise. Success is mostly based on the ability to focus on doing something more accurately and precisely than the mass market. Finnish products in this category are absolutely and uniquely excellent. This has been at the core of our exports. This is a strategic cornerstone of our economy. In the future, we will proudly be the best in the world at small niches, or at least we must strive to be so.
5) Channels and partnerships
Invest in partnerships, networks and their skilful management.
McKinsey highlighted leadership and management of partner networks as a key factor in its success in 2019. There is now an excellent learning opportunity for business in our country. In the future, we will invest significantly more in the development of trade through our business partners, invest in new partnerships, and strive to be better than the Swedes and the Dutch in terms of networking. Partnerships are now where deals are made.
6) Trust ourselves
Rely on Finnish expertise and professionalism
In Finland, things are better than ever. We belong to the golden global top tier club. It’s important to remember that this lofty position has been achieved through systematic work. The source of our competitive advantage has been great expertise over decades. We must continue to innovate and train, as we always have done during our economic history. If we stay static we will wither.
So, what are we going to do about it?
Risk is always the top consideration in business. It can take your night’s sleep and cripple a company. There are many new challenges facing businesses, forcing the reassessment of risk, potentially stifling innovation and preventing growth. We should not let the changing risk landscape make us lose sight of our precious competitive advantage.
We believe that we can commercialize our expertise and that there are global opportunities now that can bring Finland new growth. Let’s move forward together with courage and fearlessness.
Get in touch and let’s talk competitive advantage!
Tommi, Senior Advisor