Big entrepreneurial success stories are becoming more and more common in Latin America. The list of large, efficient international companies has grown, and they have become more relevant to the world economy.
The explanation for their success goes beyond high commodity prices or the growth of the middle class. On one hand we have enormous worldwide liquidity that has lowered interest rates and moved investors’ money into the developing economies, where there is a higher return on capital. There is also growth in local savings in the pension funds, the retreat of multinational firms to the their trenches in their first-world home countries, and the changes in the way goods are made in global manufacturing chains that require decentralized production processes in different parts of the world. In large and small ways, all of this is creating a space for the growth of local companies.
In the last few years a powerful economic and financial tail wind has been generated which facilitates the take-off of companies in the region. All of the companies, the good and the not so good, have felt this positive effect. The same is happening to the region’s countries. Almost all of them grew regardless of their starting point or their policies. To put this in more familiar terms, paraphrasing the old adage, it was the hurricane that enabled even turkeys to fly.
In spite of such favorable conditions, the fastest and most long-lasting growth will surely come from the companies with the best leadership. The proof? The facts. With just two exceptions (chemicals and manufacturing) the difference between companies with the biggest and the smallest operating margins in the 22 sectors included in the Latin 500 of Latin Trade is above 14 percentage points. The average difference is 35 percentage points and in some sectors, such as energy, retail, aluminum and beverages, it’s more than 50 points. That’s a huge difference between the two extremes (See the details at www.latinbusinesschronicle.com). What this means is that the profits of a company don’t depend on the industry but on the leadership each one has for conceiving and executing its strategic decisions. The best companies have operating margins of up to 50 points larger than the worst ones.
Never have there been changes of direction so profound, or results so favorable in this region like those of the last five years. Behind those changes are managers who are ever more audacious but who are increasingly tying their actions to their basic corporate values. The proof? The leadership styles of the CEOs who are winners of the BRAVO 2013 Prizes in Business who are showcased in this edition.
As we have learned in so many ways in Latin America, opportunities are worthless without business leaders who find them and take advantage of them for the good of all. Hence, an extraordinary tool for accelerating economic growth would be to make good corporate leadership a more abundant resource. For now, it’s still refreshing to think that you can be successful in any sector, provided that the leader allows it to happen.
Santiago Gutiérrez,
Executive Editor
sgutierrez@latintrade.com