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THE NEXT GENERATION OF LEADERS
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EXPLORING THE GLOBAL FRONTIER
Over the past few years, globalization has moved from the periphery to center stage. Once the specialized responsibility of a few managers, it is now a core concern of nearly every senior executive. As international business consultants and professors, it used to be that we worked with a small and specialized group of managers within a company who had responsibility for international operations. Now prefixes such as Worldwide and Global are being added to standard titles such as Product Manager, Vice President of Marketing, Director of Quality, and so on. For many executives, it is not just the titles that are unfamiliar:
Iāve got competitors now coming out of Peru, Hungry, and Taiwan that I didnāt even know existed two years ago. They have cost structures that I have no idea how to compete against.
Iām responsible for a worldwide product launch that requires me to bring people together who lie far outside my direct lines of authority. In some cases, Iām not even sure where the help I need is in the organization.
Iāve been given a mandate to lower our costs by 20 percent and to scour the earth for the highest quality, lowest cost components for our products. The world is a pretty big place when youāve been using local suppliers for the last 25 years.
Iām in charge of a task force that has people on it from France, Germany, Italy, Canada, the United States, and Mexico. Even though we all speak English, itās clear to me that we do not speak the same language.
Sometimes I think Iām going nuts. How do you listen to āthe voice of the customerā when they speak a hundred different languages and donāt all want the same thing?
The company wants a worldwide standard of ethical conduct, but Iām losing business in some countries because itās against company policy to pay for things such as a golf game when we take out government officials.
It used to be that foreign exchange was something that the finance folks worried about. Thanks to the Asian debt crisis, now I have to worry about it. Should I keep our prices in Asia the same to protect our profit margins and risk our market share dropping like a rock, or should I lower our prices to maintain share and take a hit in profits?
Sometimes I feel almost overwhelmed. Iāve got seven major competitors from five different countries; 42 tier one suppliers representing 25 different currencies; governments ranging from dictatorships to open democracies; local customers in every major region of the world that want my services tailored to their needs; global customers that want my services standardized and delivered to all of their worldwide operations. Iāve never dealt with anything like this before and neither has anyone else in the company. No SOPs [Standard Operating Procedures] exist for the challenges we face today.
I just returned from my first trip to China. It was a joint venture negotiation. People have asked me, āWell how did it go?ā I have to say Iām not sure. I couldnāt get a direct answer or commitment from them. I sensed that something was going on in the background with their team but I have no idea what it was.
As these quotes demonstrate, many managers today have to navigate with no mapped out answers. While the media make international business seem glamorous, for managers who need new skills both to survive in their current positions and to prepare for promotion opportunities, globalization feels more like a giant wave about to crash down on top of them. Consider the problems of a new factory in Vietnam that plays a significant role in a major manufacturing firmās global strategy. The firm needs a low-cost manufacturing base from which it can ship products throughout the Asian region in order to compete with its major Japanese competitor which is about to begin delivering product manufactured in its new factory in Indonesia. Since most of the Japanese competitorās raw materials are sourced in Indonesia, the recent and dramatic depreciation of the Indonesian rupiah actually gives the Japanese an even greater cost advantage.
We just opened up operations in Vietnamāa joint venture with the government. Guess what I found when I went to inspect our new greenfield factory site: a green field all rightāof rice, flooded with water. We have no usable road out there, no electricity, no sewer, no city water. Iām supposed to be turning out product six months from now. Iāll be lucky if I can figure out how to get the field drained and construction started six months from now.
This manager is sailing in uncharted waters. For example, how does he get a sewer line extended out to the factory site? Contact the local sewer department? There is no sewer department. Build a separate septic tank and leachfield system for the factory? The problem here is that there are no specific regulations or specifications to comply with and no formal procedures to follow for getting such a plan for a self-contained sewer system approved. And while the manager struggles for a solution, his company can not afford to let its main global competitor gain a significant advantage in Asiaāa major regional battleground.
Figure 1.1 Quantity of Global Leaders
Managers who are not trained to deal with international government relations, cultural issues, and global market uncertainty will not produce the results expected by the home office and will not achieve their own desired level of personal success.
In our consulting practice, we hear these frustrations often. This book is designed to give individuals the framework and the tools necessary to succeed in the new global business environment.
The Lack of Global Leaders
Globalization creates new opportunities that require new capabilities. However, these capabilities are not acquired overnight. Consequently, in nearly every firm, the demand for global leaders far outstrips the supply. For example, in a survey of Fortune 500 firms that we completed in 1997, 85 percent of firms do not feel they have an adequate number of global leaders (see Figure 1.1).
Figure 1.2 Quanlity of Global Leaders
Furthermore, as Figure 1.2 illustrates, these executives believe that even among those identified as global leaders the average skill level was not sufficient.
Surprised by these results, we conducted in-depth interviews in order to learn more about this leadership shortage and about the leadership competencies needed to manage successfully in the New World. Our research led us to two main conclusions:
1. The supply of global leaders is short because global leaders canāt be developed overnight and because they havenāt been developed in the past.
2. The demand for global leaders is high because of the pace and nature of globalization.
Letās first look briefly at the supply problem. As you progress through this book, you will see that the capabilities required to be a successful leader are not acquired overnight. No one can come along, sprinkle global leader dust over you and magically bestow these capabilities. Unfortunately, few corporations have sought to provide their employees with the experiences and training needed to develop global leadership capabilities. During the past 50 years, many firms have been able to focus on their domestic market and still grow and succeed. As a consequence, most managers developed into provincial rather than global leaders. For example, in the past Japanese managers dealt primarily with other Japanese managers. As a consequence, they developed provincial Japanese mental maps of leadership to help them captain their businesses. The same was true for U.S., French, German, Italian, British, and other managers.
While supply of global leaders is essentially flat, demand is growing almost exponentially. Many people say that the world is getting smaller. However, it is actually getting larger. For example, in how many countries did your firm operate twenty years ago? Ten years ago? Five years ago? How many countries does it operate in today? And five years from now? Clearly most firms are operating in more places today than ever before. For most executives the world they have to think about and understand is getting larger. Countries that didnāt even show up on anyoneās radar screen ten years ago present major market opportunities today. As a consequence, more global leaders are needed now and in the future because globalization means greater revenues, lower costs, and even corporate survival. Demand is also rising because there is no way to plot a reliable, lasting map of global business. The terrain is constantly changing. Consequently, it is not possible to simply develop a few global leaders and then have the masses follow the trails these leaders blaze.
Sailing in Uncharted Global Waters
Today you have the unprecedented opportunity and challenge of leading organizations into the new, unmapped frontiers of the global marketplace. In that sense, global leadership has many parallels with global exploration of 500 years ago. In fact, one manager, working in China, said that he felt like Magellan sailing the uncharted Pacific Ocean.
As perspective, in the early sixteenth century, Ferdinand Magellan, a Portuguese sea captain, commanded the ship that was the first to sail around the world. His commission was to capture the spice trade for Spain. These excerpts from the shipās log convey the enormity of the challenge:
The captain general Fernandez Magellan had resolved on undertaking a long voyage over the ocean, ā¦ a course as yet unexplored by any navigator.ā¦ On Monday morning the 10th August 1519 foresail was set.ā¦ On Wednesday 28th November, we ā¦ entered the ocean to which we afterwards gave the denomination of Pacific and in which we sailed the space of three months and 20 days, without tasting any fresh provisions. The biscuit we were eating no longer deserved the name of bread; it was nothing but dust and worms, which had consumed the substance. The water we were obliged to drink was equally putrid and offensive.ā¦ In the course of these three months and 20 days in the Ocean denominated by the Pacific ā¦ we saw no fish but sharks and if God had not granted us a fortunate voyage, we should all have perished of hunger in so vast a sea.ā¦ We reckoned to have sailed upwards of 14,600 leagues, having circumnavigated the globe from east to west. I do not think that any one for the future will venture on a similar voyage.ā¦ On 8th September 1522, I presented to His Sacred Majesty Don Carlos neither gold nor silver ā¦ but a book written with my own hand, in which by day and day, I had set down every event on our voyage.
āShipās log August 1519 to September 1522 as kept by Antonio Pigafetta during Ferdinand Magellanās voyage around the world.
Imagine what it must have been like for explorers such as Magellan as they scanned the horizon of the great Pacific Ocean for days on endāno reliable charts, the stars of an unfamiliar hemisphere often blocked from view by clouds, waves crashing over the shipās bow, wind howling threats of potential destruction, a crew losing confidence with each passing day of nothing but sea and sky, ravenous sharks ready to devour unfortunate seamates who slipped from the deck.
Now fast forward to the present. These descriptions may have a familiar ring. The global business opportunities today are vast, both for you personally and for your company. There are new markets to be developed, new territories to be explored. But just as the Pacific Ocean was for Magellan, our global marketplace is a shark-infested sea of danger. It is filled with brutal storms of competition, endless seas of change, confusing market channels, undiscovered frontiers of technology, and unseen threats. Like Magellan, the global manager of today must display unwavering leadership in the face of all these challenges.
While there are important similarities between then and now, there is one great differenceāa difference that to you as a leader makes all the difference. In the Old World, once the seas and islands were accurately charted, once the rivers, valleys and mountains were properly mapped, the coordinates didnāt change. The static nature of geographical landmarks allowed pioneers, and later settlers, to follow the maps of early explorers and move into the new territories. The first inquisitive footprints of the early explorers became well-beaten paths. Lands that were once hazardous and strange became safe and familiar.
Todayās global business world is in a constant state of flux: markets, suppliers, competitors, technology, and customers constantly shift, which means that as quickly as the territory is mapped, it changes. As soon as the ink is dry, itās useless. The result? The New World of global business requires that all leaders be explorers!
The Tsunami of Globalization
Increasingly, you do not have to seek out global business opportunitiesāthey are coming to you. In fact, whether we like it or not, the tsunami of globalization is inescapable. Tsunamis are fascinating phenomenon. These enormous waves are caused by volcanic eruptions or earthquakes far below the surface of the ocean. In deep waters of 20,000 feet or more, they appear at the surface merely as one- to two-foot swells, but they travel at over 600 miles per hour. They r...
