Sunday, January 25, 2004
*
G is for:
Globalisation
Globalisation is an idea with enormous appeal for ambitious executives. No longer will they be limited to the domestic market – they now have the opportunity to take over the world.
A few companies have succeeded in making this work. [1]
But for most managers, globalisation is simply an opportunity to repeat tried and tested mistakes on a grander scale, and to demonstrate incompetence in a whole new theatre of operations.
The simple-minded manager who thinks that creating a global brand requires nothing more than throwing money at consultants to produce a new, internationally acceptable name has entirely missed the point. [2]
While the French may agonise over Hollywood and America’s cultural imperialism, national differences continue to outweigh the similarities.
The Coca-Cola Company’s wily marketing executives have understood what so many others have not. While Coke is indeed omnipresent, the recipe varies subtly from country to country to take account of local taste preferences.
The gradual – and overdue – recognition of the partial nature of globalisation has led many companies to retreat from their earlier strategies.
Local country managers, who had seen their freedom as colonial governors reined in, are once again enjoying increased discretion to develop local policies to suit local conditions.
As this process continues, the same tensions that prompted earlier moves towards increased centralisation will re-emerge, with growing conflict driven by both business and personal considerations.
For the country manager with a reasonable degree of self-belief, greater freedom to respond to local challenges must bring greater success, accompanied by a welcome elevation in status. For the head office manager, the reverse is true. The country manager’s flexibility to undermine your unified strategy, and to take credit for successful market penetration, is something to be resisted at all costs.
This destructive tension [3] is not the only problem faced by global operations.
Costs are higher, communications are strained, and complexity is increased. Wherever there’s a local competitor with similar resources, a focused operation and real local knowledge, the odds must be against you.
The best strategy – staying with the domestic market you know best – is rarely an option. Even suggesting this approach is seen as revealing a parochial and defeatist attitude.
The obvious alternative is to hand over as much control as possible to local managers, giving them the scope to create an operation free from inappropriate global considerations. But the implication that locals may be able to function more effectively without your input is hard to stomach.
Companies which follow this strategy do so only reluctantly and indirectly. Central management never completely cedes control, but instead attempts to create a structure where local managers’ success is seen as the result of head office’s delegatory prowess. [4]
The truly centralised global operation can only succeed in two circumstances:
1. Where customers are global or, for whatever reason, demand a global supplier. Customers that run centralised global operations themselves love to work with global suppliers. Global sourcing supports their own efforts to standardise, outweighing, as they see it, all the cost and quality drawbacks.
2. Where your brand is heavily image-dependent, and international (or American) values are part of what you are selling. Products with little intrinsic or tangible value are particularly suited to this. And as Western consumers’ demands rarely have much to do with any real need, that leaves plenty of scope.
It’s nice work if you can get it, and relatively low risk. As a strategy, it does rely on customers remaining essentially somewhat stupid. But as many of the world’s most successful companies can attest, this has yet to become a problem.
[1] In many developing countries, Coke is the most recognised word in the English language, football enthusiasts are as likely to support Manchester United as any domestic team, and upwardly mobile citizens look forward to the day when they can eat their first Big Mac. This is progress.
[2] While a name is not sufficient, it may be necessary. The English are unlikely ever to take to the French snack brand ‘Plops’, even with the opportunity to wash these tasty morsels down with a glass of ‘Pschitt’ lemonade.
[3] Constructive tension is rarely seen outside the textbooks. It demands leaders able to see through the posturing and manoeuvring of their subordinates, and impose corporate values. The best most chief executives can hope for is to recognise and correct destructive behaviour on a case-by-case basis.
[4] Typically, this follows a period of weak performance under central control. This allows head office to create undemanding budgets – excused by the need to develop or grow the operation – and then take credit for the outperformance which follows as the amount of central interference is lessened.
G is for:
Globalisation
Globalisation is an idea with enormous appeal for ambitious executives. No longer will they be limited to the domestic market – they now have the opportunity to take over the world.
A few companies have succeeded in making this work. [1]
But for most managers, globalisation is simply an opportunity to repeat tried and tested mistakes on a grander scale, and to demonstrate incompetence in a whole new theatre of operations.
The simple-minded manager who thinks that creating a global brand requires nothing more than throwing money at consultants to produce a new, internationally acceptable name has entirely missed the point. [2]
While the French may agonise over Hollywood and America’s cultural imperialism, national differences continue to outweigh the similarities.
The Coca-Cola Company’s wily marketing executives have understood what so many others have not. While Coke is indeed omnipresent, the recipe varies subtly from country to country to take account of local taste preferences.
The gradual – and overdue – recognition of the partial nature of globalisation has led many companies to retreat from their earlier strategies.
Local country managers, who had seen their freedom as colonial governors reined in, are once again enjoying increased discretion to develop local policies to suit local conditions.
As this process continues, the same tensions that prompted earlier moves towards increased centralisation will re-emerge, with growing conflict driven by both business and personal considerations.
For the country manager with a reasonable degree of self-belief, greater freedom to respond to local challenges must bring greater success, accompanied by a welcome elevation in status. For the head office manager, the reverse is true. The country manager’s flexibility to undermine your unified strategy, and to take credit for successful market penetration, is something to be resisted at all costs.
This destructive tension [3] is not the only problem faced by global operations.
Costs are higher, communications are strained, and complexity is increased. Wherever there’s a local competitor with similar resources, a focused operation and real local knowledge, the odds must be against you.
The best strategy – staying with the domestic market you know best – is rarely an option. Even suggesting this approach is seen as revealing a parochial and defeatist attitude.
The obvious alternative is to hand over as much control as possible to local managers, giving them the scope to create an operation free from inappropriate global considerations. But the implication that locals may be able to function more effectively without your input is hard to stomach.
Companies which follow this strategy do so only reluctantly and indirectly. Central management never completely cedes control, but instead attempts to create a structure where local managers’ success is seen as the result of head office’s delegatory prowess. [4]
The truly centralised global operation can only succeed in two circumstances:
1. Where customers are global or, for whatever reason, demand a global supplier. Customers that run centralised global operations themselves love to work with global suppliers. Global sourcing supports their own efforts to standardise, outweighing, as they see it, all the cost and quality drawbacks.
2. Where your brand is heavily image-dependent, and international (or American) values are part of what you are selling. Products with little intrinsic or tangible value are particularly suited to this. And as Western consumers’ demands rarely have much to do with any real need, that leaves plenty of scope.
It’s nice work if you can get it, and relatively low risk. As a strategy, it does rely on customers remaining essentially somewhat stupid. But as many of the world’s most successful companies can attest, this has yet to become a problem.
[1] In many developing countries, Coke is the most recognised word in the English language, football enthusiasts are as likely to support Manchester United as any domestic team, and upwardly mobile citizens look forward to the day when they can eat their first Big Mac. This is progress.
[2] While a name is not sufficient, it may be necessary. The English are unlikely ever to take to the French snack brand ‘Plops’, even with the opportunity to wash these tasty morsels down with a glass of ‘Pschitt’ lemonade.
[3] Constructive tension is rarely seen outside the textbooks. It demands leaders able to see through the posturing and manoeuvring of their subordinates, and impose corporate values. The best most chief executives can hope for is to recognise and correct destructive behaviour on a case-by-case basis.
[4] Typically, this follows a period of weak performance under central control. This allows head office to create undemanding budgets – excused by the need to develop or grow the operation – and then take credit for the outperformance which follows as the amount of central interference is lessened.
Friday, January 02, 2004
*
G is for:
Geography
As any airline executive can tell you, the best way to do business is through face-to-face meetings – if necessary, flying to meet your counterpart. [1]
But ask any telecoms or technology provider and you will be told that geography no longer matters. It seems you can communicate just as effectively using the telephone, the Internet or video-conferencing (depending on which particular technology your adviser’s company happens to sell).
The fact that these selfsame companies choose to cluster together in capital cities and industry hotspots like Silicon Valley should in no way be seen to disprove their case.
Yet the airlines are winning the argument, even if their financial statements don’t always suggest it.
Geography still matters, and physical meetings are still the preferred way of doing business, for all but a few technophiles and misanthropes.
If anything, current trends seem set to support the continued concentration of population into the cities.
Today’s international executive is bold enough to relocate abroad, but only if he can rely on moving to a foreign city which is essentially indistinguishable from the surroundings he is used to.
There is an important lesson in this for the manager looking for international experience and hoping to combine it with improved quality of life.
You can’t.
Move away from the recognised list of key locations, in any direction, and you will find yourself in the slow lane.
No matter how grand your job title, or how often you visit head office to fight your corner, you will find it difficult to recover. Quality of life and business success are incompatible – and nobody takes a tanned Englishman seriously.
[1] To make sure you are on top form for the meeting, you will, of course, need to travel business (or preferably first) class. You’re worth it.
G is for:
Geography
As any airline executive can tell you, the best way to do business is through face-to-face meetings – if necessary, flying to meet your counterpart. [1]
But ask any telecoms or technology provider and you will be told that geography no longer matters. It seems you can communicate just as effectively using the telephone, the Internet or video-conferencing (depending on which particular technology your adviser’s company happens to sell).
The fact that these selfsame companies choose to cluster together in capital cities and industry hotspots like Silicon Valley should in no way be seen to disprove their case.
Yet the airlines are winning the argument, even if their financial statements don’t always suggest it.
Geography still matters, and physical meetings are still the preferred way of doing business, for all but a few technophiles and misanthropes.
If anything, current trends seem set to support the continued concentration of population into the cities.
Today’s international executive is bold enough to relocate abroad, but only if he can rely on moving to a foreign city which is essentially indistinguishable from the surroundings he is used to.
There is an important lesson in this for the manager looking for international experience and hoping to combine it with improved quality of life.
You can’t.
Move away from the recognised list of key locations, in any direction, and you will find yourself in the slow lane.
No matter how grand your job title, or how often you visit head office to fight your corner, you will find it difficult to recover. Quality of life and business success are incompatible – and nobody takes a tanned Englishman seriously.
[1] To make sure you are on top form for the meeting, you will, of course, need to travel business (or preferably first) class. You’re worth it.
