edited by Paul Kirkbride and Karen Ward, John Wiley and Sons Ltd. (in association with Ashridge) 2001.
A copy of this book can be ordered online via the Ashridge e-bookshop.
This second volume of the series consists of essays written by 10 experts, working for or with Ashridge on a wide range of issues concerned with globalisation as a major factor in the internal activities of many companies today.
(Summarised by Edgar Wille in February 2004)
(We always say that there is no substitute for reading the book to gain the full benefit. Also the authors of the book are not to be held responsible for any errors, misunderstandings or inaccuracies of the summariser. It is of the nature of the task that a summary can never fully represent the full richness of the authors' offerings.)
Following on from the companion volume Globalisation: the external pressures, this book critically examines the globalisation phenomenon from an internal organisational perspective. It aims to explore whether there is any substance behind the much hyped 'global company'.
This first chapter looks at global organisations in practice, identifying the key characteristics of a global organisation and providing a framework for assessing the extent to which an organisation is moving towards, or has become, truly global.
Do global organisations exist anywhere other than in the PR machines of multinational companies (MNCs)? As early as 1994, four 'fault lines' were identified by O'Hara-Devereaux and Johansen, as driving organisations inexorably towards a global reality. They were:
These fault lines have since become wider and have been speeded up by the rapid development of the Internet. How have organisations responded to them?
Faced with the changing demands of consumers and the pressure to deliver cost effective, high quality products and services to multiple markets, one response has been to buy global scope through mergers and acquisitions, because organic growth was not going to be sufficient. These alliances are justified by talk of extended customer bases across the world and economies of scale, that reduce costs and risks and give access to the talent best able to develop innovative products and services.
However, our authors assert that behind the media and PR hype the practice of many companies is very different. Joining together two enterprises with different structures, processes and mindsets is a complex challenge and bigger may not be better. Moreover while they are trying to make these partnerships work, they may take their eye off the external marketplace, where avowedly local and regional companies can slip in and steal market opportunities.
Illustrations are given, such as the Daimler Benz merger, which has disappointed shareholders. With Japanese companies involved as well, they have not been able to develop a cohesive culture. Integrating global alliances, such as the airline linkage 'One World', have found it difficult to create a common customer experience - a seamless service for globetrotters. Even global brands turn out often to have many local and regional variations.
The question is asked 'how global is global?' Can the word be used of companies who confine themselves to the Triad of N. America, Europe and Japan with developed parts of Asia, while neglecting the rest of the world? Evidence grows that the future for many industries lies in China, India and Brazil. The spotlight is currently on China, but many companies are frightened of getting their fingers burnt. China has a legal system that fails to support contracts; market data is difficult to obtain; the infrastructure is poor and transportation inadequate; local relationships dominate distribution channels.
It appears that the burgeoning middle classes longing for Western global brands and luxury goods is an exaggerated picture. In emerging markets all the global players are concentrated in small high value niche segments. Local competitors dominate the big potential markets. In fact, the arrival of foreign firms stirs the local ones into action, as when the arrival of McDonalds stirred a Philippine company to develop value menus more suited to local tastes. There are also the first signs of some of these companies, eg from India, moving into reverse direction trade. Tetley's, the inventor of tea bags, have been taken over by the Tata Group of India. It is seen as a first step to India's involvement in globalisation.
The next question addressed is whether there is such a thing as a global mindset - a filter through which to look at the world, involving sensitivity to cultural diversity which few managers have as yet attained. Countries of origin exercise a long lasting influence on the management of companies who may be working across borders, while remaining very British (GlaxoSmith Kline), Swedish (IKEA) or German (VW), long after being involved in wider trade. A global mindset demands a deep self awareness, open to curiosity and recognising myriad alternatives. The development requires sustained effort and is helped when people from other cultures are appointed to boards, as has happened in Unilever where an Indian has been appointed.
Then, another aspect which works against the full development of globalisation is managerial burnout, where the strains and stresses of a life of working long hours, being always on the move, with many hours in planes, eventually take their toll and managers often want to get back to a more reasonable family life and the enjoyment of leisure. It is detrimental to the firm as well, as one quote suggests: "Unfortunately our divisional vice president was too busy travelling to have much impact on our performance". Senior managers should not regard this burnout as a sign that the individual is not up to the job, but should encourage innovative ways of doing business, such as using the Internet and video conferencing, instead of clocking up air miles.
A truly global organisation will be one where learning takes place and is transferred to all parts of the company. Best solutions are shared, though adapted to situations. The 'not invented here' mentality has to go. Personal networks should be encouraged across borders, with the help of the Internet.
There are a number of problems to be met when trying to reduce the gap between the intent of 'espoused strategy' and strategy in action. You have to overcome short term pressures from shareholders against long term investing for future prosperity, with initial cost during the inevitable slow build up. Again a venture goes wrong and the need to avoid a particular area or category of investment become a kind of company superstition. Getting the right people in the right place when you need them is a vital challenge together with training potential talent for when it will be needed. So, too, the changing roles of managers to less of a daily 'hands on' approach, in favour of an ambassadorial role, concerned with relationships, can feel like a loss of status and power.
A model of organisation is offered, modifying the McKinsey 7S model. Its components are global strategy, global organisation, global processes, global culture, global learning, and global leadership. All have to be clear, future oriented, aligned to both global and local requirements, communicated and owned throughout the organisation, open to feedback and change. Learning was not specified in the McKinsey model, but is crucial so that intellectual capital accrued in various experiences can be reinvested elsewhere as appropriate. (Appendices provide diagnostics to enable managers to assess progress towards globalisation.)
A series of key principles for designing an organisation on a global basis are offered:
Philip Sadler, a former principal and chief executive of Ashridge is quoted for his 6C model of designing organisations, developed as a general model, but here particularly applied to the globalisation issue. His 6 Cs are:
A number of designs are offered to illustrate alignment to strategic intent, global integration, methods of delivering economies of scale, cost efficiencies and other replicable standards - all irrespective of location. These are matters of principle, not of laying down the law in specific situations. If the wheel will work then don't reinvent it. In other words, keep in mind the need for local responsiveness. But there are ways of doing things that are largely universal.
Cross boundary learning is a key issue which is mentioned throughout the book. Dispersed control plus hubs, where learning can be brokered, encourages the diffusion of learning, if the principle of a company as a place where learning is fundamental is accepted and understood.
The inevitability of tensions and what to do about them is addressed. One aspect of the solution is not to fill the posts with 'yes men' or people who have only known one track of business life.
Customer facing organisations and designing flexibility into the organisation go without saying. The transition from a domestic to a global organisation is tracked as one company did, using the HR function to lead it through project teams.
Closing advice includes "Organisation design is a strategic choice. There is no such thing as a perfect structure. You need to explore the alternatives and assess which design best fits your business."
The chapter begins with a story of cross cultural misunderstanding, where a manager took a poorly performing manager to one side to counsel him privately. This happened twice with no improvement. A local (Asian) deputy took the matter over. She rejected the method of trying quietly to help him or make him feel guilty as a basis for improvement. She publicly criticised him and shamed him into action. This was locally appropriate, but foreign to the Western manager.
The authors address the issue of what culture is. "At its most abstract it refers to human ability to use complex linguistic and non linguistic symbols to transmit shared traditions and patterns of social interaction through time and space." There are simpler models, such as 'the way we do things here', which are not so comprehensive. To some extent, 'I know it when I see it' might be appropriate, as when the authors cite the way in which certain American questionnaires to measure values were used in another culture and fell flat.
A section on ten dimensions of cultural difference draws on the work of Gert Hofstede, in conjunction with the work of Fons Trompenaars, Nancy Adler and others. The ten dimensions follow:
This cultural diversity is a fact of life in global organisations. It can have a positive side in increased creativity, better decision making, more productive team work, better communication and improved marketing responsiveness. This is true if there is the will to harness the diversity. These benefits tend to emerge in the long term. In the short term there may be mistrust, poor team work, group fragmentation, miscommunication, difficulty in securing agreement.
Case studies are given of the impact of some of these features, not only between East and West, but also between German and US personnel involved in common activities.
It is not to be assumed that the homogeneous nature of globalisation will cause these differences to disappear. There is, particularly in the East, a resistance to the West's cultural hegemony and a desire to promote distinctive Asian ways. It is important that all global managers work in the light of awareness of the differences, utilising them where they can and accepting them, for the present, where they cannot.
That change is ever present and ever faster is generally accepted in management literature. What global organisations can do to change on a global scale as distinct from locally is discussed. A simple model of - Why change? What change? How change? - is used. It sounds simple enough but actually it is quite profound.
Change is seen under four headings:
Change can take place along two principal paths, incremental change, and transformation. Hamel, Pascale and Peters urge us along the path of transformation, even revolution. Paul believes that the evidence to support their perspective is patchy and few followers of drastic transformation are able to make the changes stick with any degree of permanence. Being driven by a clear, consistent business recipe seems to work in favour of companies who follow it. There is a high death rate among mature companies who seek to revolutionise.
There is a useful treatment of what counts as a core organisational change. It would apply if there was radical change in an organisation’s:
Illustrations are given of where such radical change was applied only in one part of the whole corporation, rather than disturbing the mature. In global business the cultural factors discussed in the previous chapter have to be considered. They could complicate an attempt at global change seriously. Specific examples are given of where trying to apply particular changes in all cultures within a global organisation did not work.
Hewlett Packard had difficulty in transferring their 'HP Way' to their Hong Kong subsidiary. Similarly there is good reason from examples to doubt whether total quality management and re-engineering transport easily from the West to most Eastern cultures, for reasons which link with the Hofstede and Trompenaars analysis of cultures (see chapter 3). Trying to impose low power distance in countries where this is high, or individualistic approaches where collectivism prevails, will not work. This means some modification to the hype about radical transformation which is popular in some circles. It needs great discrimination in global situations. The philosophy of total change is very much an Anglo-Saxon one and this needs to be remembered.
Change in the West tends to be linear, progressive, destination oriented and is based on the creation of disequilibrium to reach later equilibrium. It is managed by people outside the system being changed, and it doesn’t flow naturally from the life of the organisation.
In Eastern cultures, change is cyclical, processual, journey oriented, based on the maintenance or restoration of harmony and equilibrium, followed by people who are in the system being changed, and flowing naturally from the mores of the organisation.
The author concludes that culture places severe limits on the extent to which global organisations can manage change in a uniform way throughout the world. Change methods are not universally transferable. He believes that, faced with a need for change, global organisations would be well advised to choose incremental processes and avoid radical transformations. This would improve the chance of a better overall success rate with organisational change.
This is a reflective chapter written from the heart by someone whose background is truly multicultural. Of Indian and Venezeulan parentage, educated in USA and Britain, she has lived in five countries.
She speaks with practical examples from her own life of the way in which fear of failure can inhibit learning, especially when some crossing of cultural divides has to take place. Withdrawal from the situation can sometimes seem an easier option.
Organisations have to create a context in which apparent failure is not a disgrace, but part of the learning process, where mistakes are valued.
Samreen poses the dilemmas which organisations face in relation to learning. On the one hand, they want to support their staff in learning what is necessary to meet corporate objectives, in a way which covers the needs of their specific current contributions and prepares them for future wider contributions. On the other hand, real learning can take place only if the individual owns the learning and chooses the scope and pace of learning in harmony with their own personality. Their own identity, personal ambitions, creativity and passion for learning, guide their approach and will tend to have priority over tailoring it to the corporate needs, unless the company can harmonise these apparently contrasting needs.
Organisational learning is the ultimate objective of individual learning. It is the sum of the individual learning, applied to corporate needs, but is greater than the sum. It involves the interaction between the individual spheres of learning and between the learners themselves; learning to learn itself is a considerable investment in the future of the individual and that of the company. In a global organisation it is vital that learning takes account of diversity and the ability to function in diverse conditions that are initially unfamiliar. How can corporate management guide this process without reducing the personal sense of ownership and initiative?
Whether the objectives of an organisation are seen as adding to the wealth of shareholders or meeting customer or society’s needs, there has to be some focus in learning; it has to contribute to the organisation’s purposes. The enterprise cannot afford to support learning which is a waste of time and which fritters away company resources on irrelevancies. Thogh the question also arises as to what is an irrelevancy.
How do employees learn flexibility, to be agile and innovative, to develop the ability to reframe their thinking around constant and unexpected change across national and cultural boundaries? There is need for a good deal of freedom to ensure this kind of learning and therefore great skill is needed in guiding it for the common good of the enterprise. There has to be a half way house between focusing directly on the bottom line and investing in the future by the more indirect way of growing people.
People must learn what they want to learn and must want to learn what will serve the organisation well. The organisation will have rich learning resources and wisdom, accumulated from its experience, yet that past experience is to be viewed in the light of new experiences, particular prominent in global business.
The soft skills are as significant as the hard. Creativity, emotion and intuition are as vital as theoretical and analytic skills. Recruitment must take into account the individual’s attitude to learning, their commitment to the company’s’ success, their clear desire to contribute to it and their willingness to share tacit knowledge and help it to be made explicit. Much of the learning is through the job itself, by doing, but this needs to be consciously sought, as well as subconsciously happening. The corporation must understand this and facilitate the process. This must include a climate which enables people to say "I don’t understand", to confess ignorance without shame.
The corporation can introduce specific techniques to help the individual to learn in tandem with the organisation. Mentoring aims at overall growth, yet focusing on real work situations. It gives permission freely to admit areas of weakness; it aims at helping the individual to grow in awareness of their learning styles and needs. Coaching is similar but focuses more on the individual learning to solve their own problems in practical and operational areas.
Action learning is also recommended, where groups of managers, comrades in adversity, learn from each other as they share their defeats and victories. The layout of offices is discussed, with open plan and hot desk approaches being seen as conducive to learning exchange, so long as there is opportunity to go somewhere quiet for more personal reflective learning.
These principles apply to global learning, but with greater complexity and the need to leap over the barriers of distance and culture to undertake a journey toward becoming a rich and powerful global learning community.
This chapter follows on appropriately from the previous one. It adds modern technology to the more conceptual processes previously discussed. Whoever is reading this summary at this moment is participating in the use of modern technology for the purpose of widening their learning horizons.
In the Ashridge Virtual Learning Resource Centre (VLRC), used by 90 companies, which means several thousand people, you are able to learn, in digested form, much about the whole range of management thinking through summaries, reviews and learning guides; there is also access to current information about organisational and industry activity and trends, including knowledge of competitors, information extracted from professional journals, research summaries and software guides.
You choose what you wish to follow up in greater detail, and, in terms of the previous chapter, you are the owner of your own learning. Your company has paid for access and you are able to control the rate and scope of your learning.
The components of an e-learning environment are set out in this chapter, ranging from planned distance or distributed learning to just in time learning. You can dip in as required. The use of computer and multimedia training and of the web is discussed. The use of e-technology in knowledge management is also highlighted; it is particularly useful for connecting people, expertise and vital information and making the transition from tacit to explicit knowledge.
There are also more collective uses of the technology to engage in discussion on 'chat rooms' and virtual classrooms, with access to experts and even real live situations.
E-learning involves a completely new way of thinking about some aspects of learning and has a number of practical advantages, connected with time and money, updating of knowledge and above all global reach. There is also the opportunity to go back over key learning points.
Of course there is still a place for face to face learning; momentum is created by people working together at one place to discover what they need to know or to apply what they do know. But some matters such as transfer of statistical and other facts, finance training, text book type knowledge transfer, some aspects of foreign language learning skills, readily lend themselves to e-learning. Management theory diagrams and useful frameworks are well adapted to presentation on screen. And some classroom courses now require the use of these as preparation for attendance. Thus the either/or syndrome is avoided and different techniques offer synergy in learning.
The point is well made that the technology should enable and enhance, not dictate the learning experience. This perception contributes to the solving of the problem of personal ownership of learning, yet serving company needs, as discussed in the previous chapter. A culture change is involved in getting people to see the advantages of e-learning; it should include ensuring that people have time for learning. The use of the facilities have to be marketed inside an organisation to ensure that they are used to the full.
A checklist is given by which to assess providers of e-learning. Content is obviously at the top of the list. Brand can inspire confidence. Are there regular updates? Are there trial use periods? What are the pricing arrangements? Do they conform to industry standards? Who are the current customers? Is there technical support? Do they cater for different learning styles? Can your organisation receive feedback on the extent of use? Does the material match the policy on corporate competences?
The rise of the corporate university in some organisations is also greatly abetted by the use of e-technology in ways that are discussed.
Examples are given of ways in which organisations are increasingly using e-learning. It has to be taken seriously as part of the learning strategy of a company, especially in global situations where the ability to span the world is so important.
The leading globalisation experts seem generally agreed that "effective, efficient international teams are central to future global competitiveness:" They are said to be "the engines that pull companies forward to success or failure in the global marketplace". Yet, says Karen Ward, "many companies are failing to capitalise on the promise of higher performance offered by effective teams. Too few global organisations actively manage the creation and maintenance of teams". Teams are often seen in isolation from the wider organisation. Teams are microcosms of the wider organisation and as such must reflect all aspects of the whole.
Team purposes need to be aligned with the corporate strategy, the processes across the world and the various cultures. Leadership needs to take into account cultural diversity, which means a different approach to leadership from that which prevails for the whole company. Also means need to be developed for learning and sharing of learning. Given all the factors of culture, time and distance, global teams are inevitably complex in a way that local teams are not.
The preconditions for effective complex teams are:
There will be a greater chance of success if the team as a whole has:
Six further factors also have a strong impact:
Details of a suggested team life cycle are then offered:
Phase one: start up - know your sponsors, task and team
Phase two: First meetings - start slowly to end fast; agree the ground rules:
Phase three: work through strategic moments:
Phase four: Completing the task, review and share the learning:
Operating a team in a global economy is a complex challenge and none of the steps suggested can be short cut if success is to be achieved.
What makes for successful global managers cannot be adequately explained by lists of behavioural competences.
Based on his research, Stefan Wills puts forward a model of three interlocking parts of the core competences of any successful international manager:
Cognitive complexity means the degree to which an individual is capable of complex thinking. He must be able both to differentiate and integrate. He must be able to find patterns in what previously appeared unrelated matters. He must have:
Emotional energy breaks down as follows:
Psychological maturity refers specifically to an international manager’s values and beliefs; a unifying value system that helps them to formulate the themes that ultimately make their lives meaningful. Three specific core values appear to be significant:
The author also simplifies the three categories as the head, heart and soul. He believes that for too long within the world of leadership development, the things to do with the 'head' have been over-emphasised. So called scientific models have stressed the objective - rational approach.
International leaders need to be encouraged to be emotionally creative by observing carefully the emotional reactions of others; listening carefully to the words which accompany the emotions, and observing the bodily reactions to emotion, their own and that of others.
It is refreshing to see Stefan ending his chapter by reference to spirituality or soul, the higher order values and overall purpose in life. Happiness is seen as a spiritual quality. Just ask two of his questions in the context of global leadership. Do happier people perform better at work? Do unhappy people make worse leaders?
Stefan also joins the select band of people who dare to use the word 'love' in a management context, quoting Rodney Ferris defining love:
"A feeling of caring or deep respect for yourself and others, of valuing and believing in yourself and others, and of helping to achieve the best of which everyone is capable. It means finding a sense of purpose, fulfillment and fun in your work and helping others to find these qualities in their work as well. Without these feelings, leaders fundamentally are taking advantage of their constituents."
The last two pages of the chapter speak of the factors which create love in life - partner and family, friends and confidants, from whom we learn reciprocity. Work of course ties us to the human community. "When you love what you are doing, you never have to go to work again." Work becomes aligned with our life purpose, vision and values, and ultimately a major part of why we exist.
"Balancing someone to love, something to do and something to hope for, is one of the greatest challenges that many international leaders face". Playtime is needed and laughter is a medicine. It was said "You grow up the day you have a real good laugh at yourself." There is a sense of peace and being at ease with yourself in these last pages. Perhaps these words - love, happiness, fun, joy - encapsulate an area for future attention in the search for effective global leaders. Gorky is quoted "When work is pleasure, life is a joy. When work is duty, life is slavery."
This chapter starts by directing our attention to the great civilisations of the past, as complex organisations of great power and complexity. For example the Roman, the Aztec, the Chinese empires. They were all global as far as they could reach. The rulers of those empires influenced the lives of huge numbers of people and they did it using approaches that are still valid today.
Presumably the authors don’t include 'christians to the lions' or burning down the Headquarters. No doubt they have in mind, in this example, the Pax Romana, which brought a form of stable government, with an amazing transportation system, to a vast and previously disorderly territory. These empires faced vast multicultural problems leading to management and leadership control issues. There is a book waiting to be written, perhaps entitled Learn about Globalisation from Augustus Caesar. He, like all these emperors of centuries ago, like modern leaders of global organisations, must have prized three areas of clarity, to which we are introduced:
There is, however, nowadays, for the modern global enterprise, a clarity issue, namely LACK of clarity. Information, communication and transport technologies have enormously increased the number of choices facing executives and managers. Sourcing of materials can come from any part of the globe; people can be hired from anywhere, decisions can be made any where and communicated to anywhere. Whereas once there were clearly located Head Offices and Regional Offices, "you can now be anywhere to do anything and do it any time."
This vast range of opportunities confuses by its very range and counters clarity with ambiguity and uncertainty. Ambiguity is what exists out there; uncertainty is what you face as you try to make sense of the ambiguity. At general manager level there are three tasks: to be strategic and decide future direction; to delegate effectively because you cannot do it all; and to handle ambiguity and uncertainty. The last is a headache because there are multiple potentially right answers, and just because something works today does not mean it will work tomorrow.
If you sit at the top of an organisation you are sitting at the top of a powerful ambiguity pump. And that is the context of your role. Beneath you the very complexity of the organisation tacks in various directions and you have to try to make sense of it all. You have to thrive on it, not avoid it, run away from it or pretend it’s not there. It can be turned to advantage if you can learn to make the most of what other organisations shrink from.
The authors’ research has identified eight specific behaviours that contribute directly in helping leaders operate effectively when faced by high levels of ambiguity and consequent feelings of uncertainty. These 'enablers' are:
The main contribution of this chapter is to suggest an approach to facing ambiguity and making uncertainty bearable. "This ability to define uncertainty and (even) make it attractive and inhabitable for their organisations is perhaps the most important clarity of all."
The joint author gathers together the threads by means of a case study. The details of the case I shall not summarise; a case study is all or nothing. But I will pull out the principles of global leadership which Paul draws from it.
The Italian tyre and cable company Pirelli employs about 40,000 people, operates in some 30 countries and has a marketing network which covers most of the countries in the world. In 1999, the firm launched a worldwide leadership initiative entitled Effective Leadership: A Path for Development and Improvement.
Environmental pressures created the need for the programme. Car companies were demanding reduced prices to cope with their own cost cutting needs. It was therefore necessary to take every possible step to meet the threats, using the newest technology and, where necessary, having to extend their offering beyond merely wheels and tyres on the tyre side of the business. High levels of automation have been achieved in the production processes. Now it was necessary to match this with an upgrading of leadership to the highest levels.
This would mean the shaking of traditional approaches which had served well in the past and following the path of transformation, which required new styles of leadership worldwide. This initiative was no mere isolated training event, but would go to the heart of leadership everywhere. There had to be a move from the transactional style of leadership, appropriate to stable times, to a transformational one, to cope with rapid change and external turbulence. It required the provision of a compelling vision and gaining the commitment of all staff, through personal identification and involvement.
The 'Full Range Leadership' model lay at the base of the programme. This identifies all the leadership styles and explores the appropriate conditions for their exercise, so that any changes would take place upon a broad base of understanding. The means of implementing the development programme is another story, but to have the styles summarised makes a fitting end to this book (and indeed to this summary). The styles are presented under three headings; non leadership, transactional and transformational, followed in each case by key indicators.
(This sounds like a caricature, but it happens)
(This style is cognitive, stimulating others to think through issues and thus to develop their own abilities).
As intellectual stimulation, but with greater ability to inspire followers to unexpected heights of performance.
(Charismatic, high on morality, trust, integrity, honesty and purpose).
The programme has given Pirelli a common language with which to understand their actions as leaders and followers and to be able to discuss problems against that positive background. It is sufficiently open that where it appears to have difficulty in being transported across cultures, there is room for flexibility, but the spirit of the indicators remains. If it is implemented in the spirit of the best indicators, and not as an imposition from Italy, there is scope for a considerable amount of progress.