Traditional Business Models vs. Organizational Innovation

 

“On Nov. 14, 1889, New York World reporter and Western Pa. native Nellie Bly started a 25,000-mile journey around the world, inspired by the popular Jules Verne book ‘Around the World in Eighty Days’.”

  

The fractional executive model has gained varying levels of establishment and acceptance across different countries and regions. This model, which involves hiring seasoned executives on a part-time or project basis, offers businesses the flexibility to access high-level expertise without the commitment of full-time employment. Here's a look at how this model is being adopted in different parts of the world:

 

North America

In North America, particularly in the United States, the fractional executive model is well-established and continues to grow.

“Currently, 25% of U.S. businesses have adopted fractional hiring, with this figure expected to rise to 35% by 2025.”

Deloitte

The rise of the gig economy and the increasing need for businesses to remain agile and cost-effective have driven the adoption of fractional executives. Many companies, from startups to established SMEs, are embracing this model to fill leadership gaps, manage transitions, and drive growth initiatives without the overhead of full-time executive salaries.

 

Europe

Western Europe: Countries like the UK, Germany, and the Netherlands are seeing a growing acceptance of fractional executives, particularly in the technology, finance, and consulting sectors. The model appeals to businesses looking to navigate complex regulatory environments or enter new markets with minimal risk.

“Around 20% of European businesses have implemented fractional hiring, projected to reach 30% by 2025.”

Eurostat

“The concept of Interim Management began in the Netherlands in the mid-1970s. Dutch companies wanted a model that would enable them to conveniently access specific, senior management talent for pre-determined periods to deliver on key tasks and bring new initiatives to life. The added degree of flexibility and scalability that Interim Management delivered proved to be highly effective and the model then became established in the U.K. and other European countries.”

Vendux

 

Southern Europe: In countries such as Italy and Spain, the adoption of fractional executives is slower. Traditional business cultures that value long-term employment relationships and full-time commitments are more prevalent, but the model is gaining traction, especially in industries facing digital transformation challenges.

 

Eastern Europe: Adoption is in its nascent stages but is growing as startups and SMEs seek cost-effective ways to access high-level expertise. The trend is particularly noticeable in tech hubs like Poland and Estonia.

 

Africa

In Africa, the fractional executive model is emerging as a promising solution for the continent's burgeoning startup ecosystem, especially in countries like South Africa or Kenia. The ability to access seasoned executives on a part-time basis is particularly appealing to African entrepreneurs who may not have the resources to hire full-time C-suite leaders. This model allows startups to benefit from high-level expertise while managing costs effectively. The concept is gaining recognition as a potential game-changer for African businesses looking to scale and compete globally.

“The concept holds significant potential, yet its adoption remains gradual. This trend is gaining traction particularly among small and medium-sized enterprises (SMEs), business-to-business enterprises (B2B enterprises), and tech firms. There’s significant demand not only for Chief Technology Officers (CTOs) and Chief Financial Officers (CFOs) but across various executive positions. We’ve definitely seen the most interest coming from Kenya, which is no surprise considering their strong tech hub, particularly Nairobi. Cape Town follows closely. In Egypt, we’ve had some placements in the health tech space, specifically e-health. Nigeria’s interest has been more sporadic, with pockets of demand in mobility and micro-financing.”

Angel Jones, CEO of HomecomingEX

 

Middle East

In the UAE and Saudi Arabia, the model is gaining attention, particularly in sectors like technology, finance, and consulting, where companies are looking for ways to bring in specialized skills without the long-term commitment of a full-time hire. However, traditional business practices and the emphasis on full-time, permanent roles can hinder adoption.

 

Asia-Pacific

The adoption of fractional executives in the Asia-Pacific region varies significantly by country. In markets like Australia, New Zealand, and Singapore, the model is gaining acceptance as businesses seek to leverage global talent pools and adapt to fast-changing market conditions. However, in other parts of the region, the concept is still relatively new and may face cultural and organizational challenges as companies traditionally favor full-time, long-term employment relationships.

“The supply of Fractional Leaders in the New Zealand talent pool alone has grown exponentially in the past 12 months - from 44 listed on LinkedIn in August 2023 to over 200 in February of 2024. And by all indications, these numbers will continue to rise, considering 70% of employees last year reported burnout in their current work structure, and businesses continue to face low productivity in the post-COVID era, driving many leaders out of many companies and into positions where they can work on their own terms. Despite these economic woes, as a nation we rank in the top 20% worldwide for innovation by economy, and we Kiwis have an unshakable sense of ingenuity that always leaves a door open for giving new things a go.”

Michelle Albon, Co-Founder of The Fractional Directory

 

Latin America

In Latin America, the fractional executive model is slowly gaining ground, particularly in countries with vibrant startup communities such as Brazil, Argentina, and Mexico. The need for cost-effective leadership solutions in a region characterized by economic volatility and diverse business environments makes the fractional model an attractive option. However, widespread adoption may be hindered by cultural preferences for traditional employment structures and the varying levels of economic development across the region.

“We’re generally less accustomed to this hiring model, and most of the sales calls revolve around why this model would make sense. In 2-3 years, we’ll see a further inclusion of the fractional executive role as we’re currently seeing in the US.”

Pedro Marin, Co-Founder of Landa Club

 

 

The adoption of the fractional executive model varies widely across different regions, influenced by cultural, economic, and business environment factors. While North America and parts of Western Europe are leading the way, other regions are gradually recognizing the model's value, especially in industries undergoing rapid change or facing significant challenges. As globalization and digital transformation continue, the demand for flexible executive talent is likely to grow, leading to broader adoption of the fractional executive model worldwide.

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