FOCUS ON MARKETING BASICS
Significant analysis and discussion has been generated on the topic of state-owned enterprise (SOE) privatization as a major lever in driving economic growth, employment, and poverty reduction in emerging Asian markets. Indeed, credible evidence is pouring in to show that economic growth in countries such as China, Thailand, and Vietnam can be tied in great part to the emergence of recent market-oriented reforms, and successful privatization of SOEs. In Vietnam, GDP growth of 8% and export growth of 12-14% is being fueled by the country's on-going market reforms - with 90% of all new jobs now coming from private sector employment growth, and over 20 million people taken out of poverty.

Thus far, evaluations of successes and failures of privatization efforts and economic liberalization in Asia have primarily focused on important macro issues of transparency and accountability in areas such as governance, incentives, ownership, legal structure, regulations, corruption, and social consequence. As the saying goes, however, "the devil is in the details" - greater investment must be made in the more straight-forward and fundamental levers that truly increase the chances on the ground that SOEs and private companies in these emerging markets will compete more effectively in the intensely fierce global business environment.

If there's one path that growth-seeking companies in emerging markets should avoid, however, it's the one taken too often by their peers in industrial markets.

When managers of these incumbent industrial market companies struggle to increase profits or stimulate growth, they will often waste considerable time and resource in fruitless reorganizations, abstract consulting studies, cumbersome mergers or acquisitions, and Board or senior executive suite shuffling - with no one focused on the harder work of genuinely shifting the basis upon which the company competes in the marketplace with actual customers.

It is essential that emerging market company executives, managers and overseers - regardless of company ownership structure - learn from these mistakes and resist the temptation to become overly distracted by important parallel discussions about the goals and objectives of privatization. Instead, they should focus on tackling the daunting challenges that define winners in all markets - staying relentlessly focused on end-user needs, leveraging core competencies, and creating sustainable differentiation and increased profitability.

However, for every incumbent - IBM, Kmart, Navistar - whose hubris, lethargy (or both) convinced them that the risks of change were too high, there is also a new player plotting a radical, once-unthinkable course for the industry. What do these new guerrilla companies have that incumbents don't? A revolutionary spirit. It's all about new ideas, new ambitions, new boundaries. Consider back to when Microsoft, Charles Schwab, Wal-Mart, Federal Express were the upstarts.

OVERCOMING INERTIA
Winning in the marketplace starts with putting "truth on the wall": understanding how to create tangible value for end-users (i.e., customers). Indeed, companies with more of a marketing orientation - whether they compete in industrialized markets such as Japan or Germany, or emerging ones such as Vietnam - will put significant and sustained effort into finding powerful new ways to create this tangible value, and they will relentlessly drive for greater differentiation and earn higher economic rewards.

While a simple concept, even in intensely competitive Western markets it is deceptively hard to sustain investments in differentiation when managers are constantly drilled to "keep the operating model running smoothly". The best leaders of the largest and most successful global companies must continually fight the forces of inertia that inevitably reduce a business, market, or industry to an unattractive and commoditized price game.

Opportunities for emerging market companies to differentiate themselves from competitors will lie in dominating one of three basic arenas (as articulated best by Michael Treacy and Fred Wiersema) - product innovation, customer intimacy, or low cost operations. Given the propensity of large, incumbent businesses in the West to fall into the trappings of inertia and complacency described earlier, the playing field for emerging market companies is surprisingly level. The benefits of a relentless focus on finding new ways to solve practical problems and challenges experienced at the local customer level shows little favoritism to scale or wealth.

PUSH FOR INNOVATION
Are there enduring global truths about the best ways to successfully create growth, profit, and success that cut across borders, regions, cultures and ownership structures? Are well-meaning policy makers and influencers correct if they assert that winning management practices in more mature markets are not effective in driving improved performance in emerging market companies in Asia, either public or private? Quite the opposite is true.

Current management science studies are showing that there are more similarities than differences between industrialized countries and emerging Asian markets with regards to the drivers of increased business performance. Research shows that in newly-reforming Asian countries, as in more industrialized Western markets, higher company performance can be clearly tied to an organization's innovativeness, market orientation, entrepreneurship, and competitiveness. Surprisingly, while frustrating and irritating, there is also evidence that bureaucratic business cultures create little hindrance to increased performance in emerging Asian marketplaces.

The reality facing all global managers is that over time, most companies find themselves effectively offering the same value propositions as all the other players in their marketplace, whereupon the basis of competition becomes an unprofitable race to offer the lowest price. So the lesson for emerging markets is clear: the focus in coaching and leading and assisting companies in reform-oriented Asian economies should be shifted more to the smaller-scale, and deceptively difficult, challenge of winning head-to-head competition for customers through differentiated offerings.

CHANGE THE GAME
Entrenched industrialized players have been most successful in protecting their attractive home market positions from lower-cost emerging market competition by leveraging blockbuster product innovation and controlled access to distribution (presumably achieved through massive economic and intellectual superiority and significant power over relatively weaker retail and wholesale channels). But the landscape has changed dramatically -in the realities of how their own home markets work, and in the size and attractiveness of many emerging markets in their own right.

In most industries, product home runs are increasingly few and far between, retail or wholesale consolidation has dramatically shifted power downstream away from incumbent manufacturers, and differentiation is being dominated by improvements that play more to Asian competitors' nascent strengths - such as strategic supply chain innovation in sourcing, assembly, logistics, and integration. The biggest upside for emerging market countries, such as China and Vietnam, is that they need not assume that low cost manufacturing - through lower relative wage levels - is their only basis of future competition.

Not surprisingly, many Western executive suite walls are papered with meeting notes warning of an emerging truth: the threat to incumbent industrialized players' dominance will be severe if Asian tigers and dragons are successful in redefining the global playing field in their favor.