By Yang Luo-Branch – Arkansas Association Of Asian Businesses
It is to Arkansas’ pride that six native companies were included in the 2018 U.S. Fortune 500 and two in the 2018 Global 500, with Walmart ranked number one, based on revenue on both lists. As a relatively small state in population, these recognitions truly validate Arkansas’ stand in the competitive global economic arena.
Looking Back or Forward?
Walmart Inc., founded in 1962, and Tyson Foods, established in 1935, are on both of the prestigious U.S. and Global Fortune 500 lists. Their vitality throughout all these decades of ebbs and flows in business is, indeed, admirable. However, in the fast-changing business, technology and political climate, it no longer always holds that past performance will predict future success. While celebrating the sustained success of companies by looking at their current and past performances, it is also worthwhile to take a completely fresh and keen look into the future of companies, big or small.
An inspiration: 2018 Fortune Future 50 List
Fortune recently published yet another global company ranking, the Fortune Future 50, a ranking of 50 public companies with the potential for the fastest and most sustainable growth. Collaborating with Boston Consulting Group, Fortune just published this annual list for the second time, this year starting to adopt a global perspective.
Digest the List
1. Geographic distribution: There are 50 companies on this list, 42 percent of which are headquartered in the United States, 42 percent from China and 16 percent from the rest of the world (see Figure 1).
2. Sectors and industries: The largest sector is technology; 27 of the 50 companies are distributed within the sector, which includes the internet and direct marketing retail, software and services, and hardware manufacturing industries. The second largest sector is industrials, which contains automobile, electronics and machinery manufacturing. The sectors also include health care, food and beverages, financials and so on (see Figure 2). The landscape of the selection is rather wide, incorporating both traditional and newly emerged fields.
3. The tenures of the companies: The average age of the companies on the list is 23 years, spanning from over half a century old to less than 10 years. Although 44 companies were founded after 1990, not all these are technology companies, as one might assume. In fact, the technology companies can be dated back to 1951 (Figure 4).
Digest the Ranking Methodology
Different from Fortune’s other lists, which are backward looking, the Future 50 list is branded as a forward-looking evaluation. This is done by examining 1,100 publicly traded companies worldwide, whose market value is no less than $20 billion or with revenue of $10 billion and above.
The ranking calculation is built upon “two pillars.” Fifty percent of the points are based on a “market view of growth potential,” and the other half of the assessment is based on the company’s “actual capacity to deliver that growth,” in terms of strategy, technology and investments, people and structure. This methodology differentiates itself from Fortune’s other ranking systems, by not limiting the assessments within the financial realm. Therefore, this evaluation system, developed by Fortune and Boston Consulting Group, is considered more sophisticated, with the purpose of looking at a company’s long-term growth moving forward.
The Implications for Arkansas
To adopt a broader view from right where we are
When something significant happens in Arkansas, some may call it a “miracle” and might even be so awed as to say, “Can you believe it happened in Arkansas?” My response is always, “Why not?” Arkansas is just a location on the planet like any other place on Earth. We should always consider ourselves as equally capable as anywhere else, although Arkansas has a unique set of strengths and challenges.
My point is that, although I am not someone who looks to a rank to validate everything, I do believe that looking at a list will help us gain a new perspective. By examining the forward-looking list published by Fortune, it increases my belief that the companies are capable of competing at such a caliber. We have every opportunity to make the list, or at least to learn from it.
It is encouraging to see that recognizing the power of technological transformation can help businesses thrive in the near and long-term future. Older, home-grown companies, like Tyson Foods and Walmart, are rebranding themselves as technology companies. At the same time, young technology companies, from manufacturing, IT, solar, Fintech, and so on, are making their mark by gaining strength quickly. By adopting a broader view, geographically and temporally, we can be better in tune with the global economy’s dynamic moving forward, or even set the dynamic.
To strengthen Arkansas’s ties with the most promising companies
Like the “six-degree of separation” law of human connection, I believe businesses should also have close ties to each other around the globe. There are connections between Arkansas and the companies on the list at a substantial level. For example, Walmart owns a 12.1 percent stake in the Chinese internet and direct marketing retail giant, JD.com, ranked 50th on the Fortune Future 50 list. Additionally, in September 2018, JD.com signed a strategic partnership agreement with Ruyi Technology Group, the largest textile manufacturer in China, which is the same company that announced a $400 million investment and plans to create 800 jobs in Forrest City in May 2017.
Success attracts success. Looking for the significant ties between Arkansas and the big global players helps us appreciate the advantages of strengthening collaborations and increasing the likelihood of becoming a major player. At the relationship-building level, we should celebrate our business partners’ hard-earned recognition at home and overseas.
I hope that all Arkansas businesses are poised as well-rounded global players, equipped with a forward-thinking outlook. To be effectively adapting forward, Arkansas companies and businesses need to become more proactive, open-minded and fearless, and to learn from cases near and far. We must expect the unexpected within ourselves.