The Death of the Global Manager — HBS Working Knowledge

The Death of the Global Manager — HBS Working Knowledge

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http://hbswk.hbs.edu/cgi-bin/print/6761.html

The Death of the Global Manager Published: August 8, 2011 Author: Julia Hanna

When Transnational Management was first published in 1992, the world was a different place. "The global economy was radically restructuring in the wake of an era of accelerating globalization in the 1980s," says Harvard Business School professor emeritus Christopher A. Bartlett, who coauthored the textbook and its updates with the late Sumantra Ghoshal (HBS DBA '86) and Paul W. Beamish of the University of Western Ontario. "The Japanese juggernaut had just come driving through the United States, challenging the international strategy of so many companies." Nearly 20 years later and in its sixth edition, Bartlett's case-filled textbook (which he describes as a "continuing passion") offers the opportunity to reexamine the ever-changing nature of multinational corporations (MNCs) and cross-border management while confirming and further exploring some basic challenges that have, more or less, remained the same. "There are three core strategies that any MNC has to pursue to build layers of competitive advantage," Bartlett says. "The first is to use worldwide operations to build global scale efficiency. If you're Ford or Toyota, for example, you have to compete in the world market to capture the minimum efficient scale." The second requirement, often in conflict with the first, is a sensitivity and responsiveness to national differences. "It's a closeness to the market that enables you to adapt and modify, not just produce one single, standardized product. The simplest example might be the need for a right-hand drive Toyota Corolla in the UK," Bartlett says. The third imperative is to leverage the world for information, knowledge, and expertise. "The latest consumer trend or technological development may be emerging in Germany or Japan, not your home market," Bartlett says. "Having eyes and ears around the world is critical, as is having the response capabilities to tap into the best and brightest, wherever they may be. Companies can no longer assume that all the smart people in the world are born within a 20-mile radius of their headquarters." This last factor—of being able to develop and diffuse innovation rapidly around the world—has emerged to become much more important as companies constantly renew their product line or service business, Bartlett says. "That's a big change that's taken place."

The world's communication pipeline Another seismic shift is the broader context in which companies now operate, forgotten all too easily in today's hyper-connected world. "Back in 1992, the Internet was a very narrowly used technology," Bartlett says. "It is now the communication pipeline of the world." 2/6/2012 11:04 PM


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The organizational capability of a company to rapidly develop and diffuse innovation is incredibly important but difficult to cultivate, he continues. "Back when the book was first published, it required a huge amount of travel, with communications mailed and faxed around the world. Things are obviously different now, with the Internet, satellite phone connections, and video conference calls on Skype." Those communications channels are of critical importance, Bartlett adds, when it comes to resolving the inherent tensions between headquarters—where the focus might be on standardizing products to drive down cost—and subsidiaries lobbying to adapt products to meet the specific needs of a local market.

Making the global manager What are the requisite characteristics of a "global manager," if there is such a thing anymore? "Today, I would argue that you don't put that qualifying adjective in front of manager—we all simply operate in a global environment," Bartlett says. "It used to be that you would make a career choice to be in the 'international division.' " And in the 1960s and '70s, a foreign assignment could be far from a promotion: "It was sometimes the failed domestic managers who were sent abroad." In today's world, however, a shortage of human capital, not financial capital, is the bigger constraint. "Companies look for bright, capable managers all over the world; there's much more fluidity across the organization in that sense." (A case in point is Carlos Ghosn, a Brazilian-Lebanese who serves as chairman and CEO of the Japanese and French automakers Nissan and Renault.) Managers operating in a global environment obviously need a broad perspective and the ability to relate to other people and cultures in an open, engaged way. Beyond that, Bartlett points to the need for the mental flexibility that enables a manager to negotiate, adapt, and modify the layers of competitive advantage and various strategic imperatives that are part of any multinational company. "We talk about building a matrix into the organization's structure that enables people to be responsible for the global product line, the geographic area, the functional expertise of R&D or marketing," says Bartlett. "That's still necessary, but much more important is to build a matrix in the manager's mind so that he or she sees the world in terms of the tensions, conflicts, and trade-offs that are part of operating in today's world."

Envisioning the future Bartlett describes Transnational Management as being in a constant state of evolution. The most recently added chapter, "The Future of the Transnational," includes a case study on the pharmaceutical company Genzyme and its efforts to establish Humanitarian Assistance for Neglected Diseases (HAND), a corporate social responsibility program focused on treatments for diseases that typically affect too small a population to warrant the attention of drug development companies. "As the organizational model of the transnational has evolved, it's become a critical player in the development of the global political and social economy," Bartlett says. "With that enormous power comes an increased responsibility; this most recent chapter highlights the role that the transnational company has in bringing about change to the world."

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As the Genzyme case shows, that responsibility is accompanied by considerable complexities and trade-offs. The company's initial focus on developing a treatment for Gaucher disease extends to malaria, TB, and Chagas disease, with various global partnerships and constituencies cropping up along the way. The crux of the case becomes apparent soon enough: Can Genzyme's HAND program manage all of these initiatives successfully without stretching itself too thin? Given its priorities, what should its partnering strategy look like? "This is really the next frontier for the transnational company," Bartlett says. "How does it move beyond its role as an economic entity and recognize itself as a key player in the sociopolitical environment in which it has responsibility as well as power?" Given the scope and influence of today's global corporations, the answer to that question promises to shape the world as we know it for years to come.

About the author Julia Hanna is associate editor of the HBS Alumni Bulletin.

Reader Comments: 1. I appreciate Professor Barlett's point about the need for most managers to develop a global lens. What was missing from this article for me was the importance of cross-cultural sensitivities in developing human capital, along with the product. From my global leadership development consulting experiences, few companies actually look at global talent development in terms of succession planning. The temptation to save money on salaries and other benefits still tend to be so great, that global movement is very limited. The result is that the quality of the relationships and development opportunities suffer. Carlos Ghosn is the exception, not the rule. Joe Steele Consultant Steele Consulting 2. For the firts time, somebody says openly what we all knew for at least 10 years. The Global manager is dead--multicultural, multilingual and multilevel management is the new world, and that is what we need. The question is, is the world ready for that reality? Many business schools is LA are teaching the same tricks of the old days. Change comes slow or at least is what they think, not this days.!! Than you for the eye opener, maybe they will believe now. Saludos. Juan Aguirre Chair for Entrepreneurship Universidad Latina Costa Rica 3. Chris Bartlett's contributions have molded the way we all think about globalisation. So I am looking forward to the next edition. I agree that all managers are now global managers, but I think there grades of globalisation because there are more than three dimensions that these managers need to wrestle with. My own list has nine. I agree with Bartlett's first two - economies of scale and local market requirements. I then break down his third - leverage the world for information, knowledge, and expertise - into four: sourcing talent, 2/6/2012 11:04 PM


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utilizing scarce expertise, learning from leading environments, leveraging peripheral innovation. Beyond these six, there are four more: brand offer consistency, local government/community positioning, low cost locations, and legal protection from peripheral problems. All 10 dimensions have consequences for how you organize and manage. For example, some companies have locally autonomous subsidiaries not just to help tailor products to local market tastes, but because local laws require local investors or because a local positioning helps government/community relations or because a separate subsidiary provides some protection against liability if things go wrong. This makes the "matrix in the mind" ten rather than three dimensional. Hence, global managers capable of retaining a balance across this many dimensions are still rare. Anonymous 4. I was a great admirer of the original book and thought its ideas leading edge. I am sure that some of the principles are still critical but I worry that the world has moved on and the commitment to innovation in products and services has been increasingly subsumed under short-term financial goals. One could certainly make this case about big pharma, for example. Management, as Gary Davies of Northwestern argues, is increasingly controlled by the (in my opinion) unreasonable and unsustainable demands of financial markets and the short-term traders who drive them who gave us those fancy new toxic credit derivative products that led to the financial crisis! I wonder what Chris would have to say about this, and particularly about transnational management in banking. I am not convinced that many top managers believe that the next frontier is to become a key player in the the sociopolitical environment, except to the extent that this serv es their economic ends. Nor do business schools help much as they emphasize the economic at the expense of the social - as the financial crisis demonstrates (look at the role of top MBAs in this) and as Rakesh Khurana of Harvard explains so eloquently in his recent book on business schools. I wish I could agree with Chris's conclusion but the evidence for it is somewhat underwhelming. As Joe Steele says in his post, exceptions are a bad basis for claiming rules! Ken Starkey Professor of Management and Organisational Learning Nottingham University Business School, UK 5. First, thanks to Professor Barlett. I would like to add that the shortage of qualified global managers can be resolved through developing a long term human resources strategy within the organization to build its local managers with global vision & experiences. This strategy has to be in line with the organization's globalization strategy. Thanks to all . Omar Bayahya Group Admin. Manager Dabbagh Group Holding 6. One of the reasons that organizations trying to be global fail is because of limited focus on understanding cross cultural behaviours. Example; Walmart trying to establish in Germany failed by establishing "American way" of doing business and Daimlerchrysler merger and demerger happened due to "German way" emphasizes the need to encourage cross cultural sensitivity for building human capital.

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Shailendra Ravi Senior Director EMC 7. I agree we all do operate in a global environment, but for me local managers, are not global managers. I guess it's really a matter of orgaizational structure. I believe their must be a Global Manager, ultimately responsible for the local managers at remote locations accross the globe. The local manager's focus, his/her operation in country, full stop. The "global" interaction, or interconnectability, is decided in how those remote locations (countries), perform within regions (continents), and what global effect that has on performance by the Global Manager. Every manager trying to be "global" can result in managers serving their own agendas, in contradiction to the agenda of the company. We have all heard the phrase "going native"? The Global Manager cracks the whip that prevents this from happening, good organizations are compartmentalized. Global decisions for an organization should only be made at it's top level, and the company's level and frequency of interaction controlled by that very same Global Manager. Dr. S A Visotsky Chairman & CEO Vitech Group LLC 8. The efficiencies of the global companies are not anywhere optimal or really admirable yet. The managers continue to impose and propagate own cultures in their operating areas instead of looking for setting up operations in the local tradition. A food-chain company from US tends to sell burgers in India, while a very large consumer group is there for the local delicacies. Cultural education and training is still bound at the local levels. Better-working formats from elsewhere are being imitated at another place ( best practice learning). At a consumer level global business still targets those few who can be called trans-culture people S.Sistla Chief Automation Tata Steel 9. We all operate in an Global Environment, but reading about moon or watching moon and mars does not make a person a universe expert. We have to well understand that there is a difference between Information and Expertise. One can be well informed about many issues, but expertise is something which comes by functionally executing the job over a large span of time and knowing the smallest detail of it. Hence Globally Informed Manager is different from Global Manager. It is only that the flow of information has become faster then the yesteryears. The quantum of information is also much detailed for an easy analysis. But when it comes to Managing Globally, there are extreme challenges, where the manager gets to know, only when he first starts handling the business in that particular country. The first taste of human Bias, racism, values, religious beliefs, social systems , deep rooted corruption, obstructive bureaucracy , corrupt judiciary , corrupt tax regimes, political influence, mafia, terror, hatred for west and so on and so forth. And usually it is in these very conditions, one has to then bring semblance of order and returns for the shareholders.

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Being Globally informed is not the same as Being a Global Manager. The Global Manager is still a very relevant person. Managing in India and China is not the same as Managing in Thailand and Indonesia. Managing in Europe is not the same as Managing in Asia. There are vast horizontal and vertical differences and only a Global Manager who has fought his way through the systems and delivered knows the intricacies of the Job. Atul Guglani Director Mantex Technologies 10. I agree with Author's Point of view. The culture of the MNC is also an important factor to be successful as a global manager. Not just putting the (domestic - HQ area) core culture into the other global sites, rather merge with the best of each culture from all sites and make it evolve organically. The 20 mile radius comment is true and it is changing, people with different geographical area are holding equal post. Classic example of Mukesh Ambani (Indian business man) being the first non american to be board of director for Bank of america. But is that peculating at all level of the organization is a key too. Ram K Finance MNC 11. As I speak with more and more managers who work in multicultural environments beyond their own geographical space, cultural intelligence seems to be one of the most critical requirements for success. The manner in which the individual applies cultural experiences and modifies behaviour in the group contributes to leadership effectiveness. Shoma Mukherji Ph.D. scholar Management Development Institute 12. The recent GFC and the continuing economic instability has forced a rethinking of the concept of globalisation from the model of 'one size fits all', 'free markets with no regulation' to one where markets are semi global with partial integration, governments are more involved and borders become more important. Regionalisation has become the new business philosophy, with more understanding and acceptance of local markets, local diversity and local ways of working - what Pankaj Ghemawat describes as 'World 3.0'. I think therefore that this current environment requires more Global Managers to be developed, especially those who can 'bridge' the divide between global and local. Tom Verghese Director Cultural Synergies 13. We should not confuse Global for International- many, if not all companies are International, but really very few are truly global. What is Global? It isn't just having autonomous subsidiaries in every country, but having global processes, systems and information held globally once that gets deployed locally (with some unique flavours maybe). There are very few truly global managers who have the skills to pull this off - if you have one nurture her/him as they are extremely marketable. Anonymous 14. Very interesting and convincing interview. One thing, Carlos Ghosn isn't only "Brazilian-Lebanese" 2/6/2012 11:04 PM


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His mother was French and he graduated from the Ecole Polytechnique, which surely made him an insider in the French system (and he was appointed CEO of Nissan after his French employer, Renault, bought a controlling stake in the business). He's surely "globalized" but his CV is very similar to that of many members of the old French elite. Robert Dujarric Director, ICAS Temple University Japan 15. Corporate Governance we know is already on the 3rd storey, that is, not just CG, not GOOD CG, but now BETTER CG, as described tentatively by AG Monks & Nell Minnow (Economist, Oct. 2010). CG is culturally sensitive, yes, and the 21st century manager is one who can access post-modernist skills easily. The bare intellect is not just enough, according to one of the parameters espoused by Stephen R Covey, he is one who makes use of even a bank of emotional capital, etc. These are all the factors that create the ever increasing variables that seem to make the profile of today's global manager almost unassailable. Gbenga Ogunsakin columnist, Nigeria TTHE NATION NEWSPAPER 16. The comments reflect in our modest opinion the lack of multiculturality and multiliingualism that is so common these days. Globality and internationality are not the same but they go hand in hand. The problems are not for those that are outside earning the "bread" , the problems related to the newcomers, those that need to be taught, that we live in a global world Just a reminder this exercise would not have been possible without "the global village" of facebook, twitter, google, yahoo, etc. I recently visited Honduras and you begin to see celulars all over and companies nobody ever heard of interested as China, so they said is "becoming to expensive" Honduras is not the same today as it was 5 years ago and nobody seem to understand that among those newcomers or the old timers. We are global amigos, with local indenpendent subsidiaries, or global compnaies with global processes.What is coming is a global village. What China does affects Costa Rica, the US problems are my problemsThe global wars of the future will be more terrifying because they will be economic wars, please we need multicultural, mutilingual and multimanegement managers and we are not educating them. Education in business needs to be look at, The question of How relevant we are for the world market business needs we need to face,today. Prof please excuse the second comment, but I could not help it. Saludos. Juan Aguirre Chair for Entrepreneurship Universidad Latina Costa Rica

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17. We can't define a global manager the way we did so two decades back. Today there are many managers who work in international situations and move globally as a part of their assignments. However, in my view, by just working in another country(ies) one doesn't become a true global manager. One needs to fully attune to the culture of the place of work and appreciate it in order to be a global person. Many seem to be working just to complete their tenures and then rush back. They have a mind set which makes them see only the darker(accrding to them) side of the others. Such people cannot develop as global managers. Let's understand the psyche of others and imbibe whatever their positives are. Kapil Kumar Sopory Company Secretary SMEC(India) Private Limited 18. Probably in a few years from now the term Universal Manager would gain currency over even the present Global Manager. Unless one has a universal attitude of assimilating what is best in every culture, geography, people and make it work locally by studious application, one cannot be successful in driving change and achieving success. In my own experience of working with MNCs I have been a witness to the unwanted knee-jerk reactions of some of the best MNC managers who at the first sign of difficulty pack their tent and make their way out without even giving a fair chance to their own ground work and the local environment to succeed! Knowledge and deep pockets of a MNC alone cannot buy success for a global manager - Honest involvement and genuine interest in promoting the business locally in tandem with natives and preparing them to take over at the appropriate time are some of the basic ingredients of a successful global or rather - allow me to say so- the Universal Manager. And in those scheme of things culture should never be a barrier but should become an intelligent strength. (Comments mentioned herein above are personal. Not attributable to the organization to which the author belongs.) Santhanam Krishnan Saraswat Bank Copyright © 2012 President and Fellows of Harvard College

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The Death of the Global Manager — HBS Working Knowledge

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