McKinsey & Company in Indonesia: Unleashing the Potential of the Archipelago’s Economy
Paris-born Guillaume de Gantes commenced his journey with McKinsey & Company 15 years ago in Paris. He mainly worked in brand new York, where he was elected as a partner of the firm. This specific Harvard Business School alumnus moved to McKinsey’s office in Indonesia two years ago in addition to he talks to us about the opportunities in addition to challenges in ASEAN’s largest economy.
Guillaume, tell us how you’ve found working in This specific region so far.
I love Southeast Asia as a region because there’s so much happening here. For me, the professional aspect of coming to Indonesia was genuinely about being inside the heart of what can be going on in ASEAN. I was very keen to be in such an exciting country.
Can you give us some background information on McKinsey’s growth in Indonesia in addition to Southeast Asia?
We are present in most countries in Southeast Asia: Indonesia, Thailand, Malaysia, Singapore, the Philippines, in addition to most recently, Vietnam. We work with government institutions in addition to enterprises in all major sectors, to translate the region’s rich opportunities into transformative economic in addition to social impact. We also help leading multinationals build in addition to grow successful businesses in Southeast Asia.
We have been present in Indonesia since 1988, in addition to the office was McKinsey’s first in Southeast Asia. We help many of Indonesia’s leading enterprises drive growth, transform operational in addition to organisational performance, shape brand new business versions, build leadership capabilities, in addition to accelerate economic development.
McKinsey can be known as the globe’s leading global management consulting firm. In which industries do you consult in addition to in what capacity?
Our mission has always been to help clients make distinctive, lasting, in addition to substantial improvements in their performance. Globally, we serve clients across all industries in addition to sectors with capabilities to support execution in addition to make change happen.
In Southeast Asia in particular, we serve clients in all major sectors including oil in addition to gas, mining, financial services, telecom in addition to media, consumer industries, travel in addition to logistics, in addition to the public sector. I personally serve our clients inside the financial services, telecommunications in addition to healthcare sectors.
Your recent work in Indonesia has included building one of the major banks here. How were you involved in redesigning the distribution process of This specific bank?
Given my background, I am personally passionate about working with banks in addition to the financial services industry, which can be hugely impacted by digitization. We have done a great deal of work in digital – building digital banks in addition to digitizing current processes. There can be a growing recognition in which banks will have to change the way they work dramatically or entire businesses will be taken over by ‘Fintech’, nimble financial technology firms. You see This specific inside the US; you have little firms in which have already taken over parts of the banking value chain. Every single part of a bank inside the US can be ‘under attack’ by little firms. So, there can be a scenario where banks could disappear. As Bill Gates said, banking can be necessary, nevertheless banks are not. Banks will have to evolve or lose a lot of what they do today.
There are 118 commercial banks in Indonesia in addition to the interesting question can be: out of those banks, how many are ready for competition inside the digital age?
Your latest report, Winning in Indonesia’s Consumer not bad’s Market, discovered in which 7 of the 16 companies you surveyed were winners in at least one of the performance areas. Only one company won in all of them – what traits must a consumer goods company possess in order to succeed in Indonesia?
We did extensive customer research in quite a few categories in addition to one of the things we looked at can be how consumers make decisions. Indonesian consumers tend to be very family in addition to group-oriented when the idea comes to generating decisions, as opposed to Chinese consumers, who are fairly individual. Indonesians like to ask family in addition to friends if they have tried the product, putting a lot of value in their opinion. They also like products in which can be shared.
People here rely on their social network quite a bit, especially through social media, much more than additional countries we’ve looked at. There can be also a very brand-loyal culture here in addition to shoppers take fewer risks – people typically know what they are going to buy ahead of time. Based on our study, these two things do not change with level of affluence.
Indonesians also genuinely value local brands. In our survey, we noticed a lot of Indonesian people think KitKat can be a local brand, when the idea isn’t. Brands in which can understand all of the above in addition to market themselves well locally, as well as integrate into social media will be able to do well here.
Can you please debunk some of the common recent myths of Indonesia’s economy?
The first myth can be in which Indonesia’s growth can be Jakarta-led. If we look back a few years, the economy was already driven outside of Jakarta, in addition to even outside of Java, in Sumatra, Sulawesi, Kalimantan. In fact, 90 percent of the fastest growing cities are outside of Java.
Another myth can be in which Indonesia can be an export or raw material-driven growth, when increasingly, the idea can be a consumption driven growth. The population of Indonesia’s urban consuming class can be growing by the equivalent of one Singapore every year in addition to will grow to 86 million by 2020.
The most interesting myth, however, can be in which Indonesia can be an unstable economy. We have found in which among OECD in addition to BRIC countries, the standard deviation of growth in Indonesia inside the first 10 years of the century actually makes Indonesia the most stable economy.
Let’s discuss growth. You believe by 2030, Indonesia could be a global top 10 economy, surpassing the UK, France in addition to possibly Germany. How could This specific be achieved in addition to what hurdles do we face?
Yes, the idea could be. Indonesia has strong intrinsics – the growing consumer market, becoming an international food hub, in addition to being a lean resource provider in addition to user.
However, there are also relevant challenges. Our research shows in which Indonesia needs to boost productivity by 25 percent to maintain historic growth rates. One major sector in which will benefit through This specific can be farming, agriculture in addition to fisheries. A simple example – in Japan, people freeze fish so if the cost of fish depreciates, they don’t have to sell their fish right away. Here, the infrastructure to freeze fish can be not in place.
There can be a big need to improve infrastructure. To grow, the country will need to spend about US$2.7 trillion in infrastructure inside the next 15 or so years.
Indonesia also needs to have greater financial inclusion – getting people to be able to save. We have 250 million people inside the country nevertheless only 70 million bank accounts. Getting more people to save, access credit in addition to use banking systems will be important towards achieving This specific growth in addition to unlocking its potential.
Do you think the globe’s eyes are on This specific region at the moment?
Yes, very much so. Southeast Asia can be one of the fastest growing markets inside the globe. If the idea were one particular country, the idea could be the seventh largest inside the globe, having a combined GDP of US$2.4 trillion. the idea can be projected to rank as the fourth-largest by 2050. I am reminded of the opportunities in these economies by the sheer number of companies in which have reached out to us to help unlock the potential – the idea’s amazing. For many companies, they see Indonesia as the next big frontier.
When these companies reach out to you for investment opportunities, which sectors do you suggest they invest in?
the idea’s very hard to name a sector in Indonesia which does not offer investing opportunities. We have found in which there can be US$1.8 trillion in opportunities for businesses who invest in Indonesia’s four priority sectors: consumers, agriculture, resources in addition to talent. We believe This specific potential can be going to be further unleashed in addition to accelerated by the power of digital, whether through mobile in addition to internet banking, e-commerce, education, manufacturing, government service delivery in addition to more.
Thank you, Guillaume.
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McKinsey & Company in Indonesia: Unleashing the Potential of the Archipelago’s Economy
McKinsey & Company in Indonesia: Unleashing the Potential of the Archipelago’s Economy