UK: Managing Revolution - Creating a cyberspace platform.

UK: Managing Revolution - Creating a cyberspace platform. - Managing Revolution - Creating a cyberspace platform - Companies need fully linked world networks, global people who share responsibility, and a system of communication that engenders collaborat

by ROBERT HELLER.
Last Updated: 31 Aug 2010

Managing Revolution - Creating a cyberspace platform - Companies need fully linked world networks, global people who share responsibility, and a system of communication that engenders collaboration.

Open a site on the world wide web and automatically your business is international. Make your products and services available to this worldwide audience and - hey presto! - you're global.

The web site may be all the company has: viz Amazon.com, the bookseller. These asset-poor upstarts intensify the pressure on the wealthy old order. The multinationals have reached a Rubicon. On one bank sits a habit-ridden corpocracy with affiliates abroad - on the other a truly global organisation which knows no frontiers.

In crossing that river, British companies are relatively conspicuous, if you believe the 1999 report The Competitiveness of Global Firms (FT Management). Nine of 'the best' globalists are incorporated in the UK and they include some eyebrow-raisers: Bass, GEC, 3i, Reckitt & Colman. The latter's strategy has just come apart at the seams: that's true of several 'competitiveness' stars, including EDS and one-time cynosure Hewlett-Packard.

HP is now bifurcating in a belated effort to exploit cyberspace. Its trauma shows how violently the internet has changed the global game.

Curiously, the report's key measure, overall market effectiveness capability (OMEC), does not specify information and communications technology among a dozen 'global dashboard' dials, ranging from 'mission and vision' to 'planning and intelligence'. Nor do any of the dashboard dials, other than 'international', distinguish global from local firms. In the age of the internet, that distinction is dying. True globalism makes similar brands available in similar ways worldwide, managed by an organisation that sees no difference between home and away fixtures. On that definition Amazon.com 'out-globals' the OMEC champion, Unilever.

A lmost every business must be touched, and many damaged, by the rise of 'infomediaries', database sites which act as exchanges for purchases ranging from flat-rolled steel to bull's semen. Because they offer total information and complete price comparison, these sites are ballooning: $43 billion of sales last year are expected to reach $1,400 billion by 2003. You either join the infomediaries or cede them your profits.

Established corporations had best get their global retaliation in fast. First they need to get fully wired. The whole organisation, and everybody within it, must be linked by networks that make maximum information universally available in real time.

The network cannot become globally effective without revolutionary changes in the way the organisation is managed. If people have access to information, they will expect to use it. Since information is power, senior managers have tended to cling to the stuff. But if information is also the prime competitive tool, the clutch is self-defeating. Intranets and extranets cannot thrive on secrecy. They defeat it.

The second need for a global company is global people. They do not abound. In Breaking through Culture Shock (Nicholas Brealey, £18), Elisabeth Marx, an executive head-hunter, calls this shock an occupational hazard in 'global business ... some executives clearly thrive on this challenge ... others feel disoriented and anxious and do not perform well'. The failure rate for US managers is estimated at a huge 25% to 40%.

Problems of personal adjustment have always bedevilled international companies. But more than adjustment is required for true globalism. You need to create a genuine global community in which recruitment, appointment, promotion and transfer are conducted without reference to nationality. The remoteness of this ideal is evident merely from contemplating the union of Mercedes-Benz and Chrysler. The cultural norms of American and German business are as different as Wagner and Elvis Presley.

Enter the third need: an information and communication system that, like the web, is shared around the world and creates wholly new norms. The truly global system doesn't just inform and communicate: it engenders collaborative action. The Holy Grail is to have a common platform for management.

That cannot be provided by a structure founded on national head offices staffed by omnipotent chief executives and their cohorts. The essence of true globalism is the dissipation of central power and its replacement by dispersed, shared responsibility. The multinationals are having real trouble groping towards this formula. One answer (viz, Hewlett-Packard) is to contract, to spin off businesses, or sell them (viz, Unilever). Another response, diametrically opposed, and recently publicly eschewed by Unilever, is to swell via the ever bigger merger.

Merger in itself does nothing to improve, and may retard overall marketing effectiveness capability. Both demerging and merging put off the evil day of adopting radical change - not in the structure, but in the management. The evil day is really far from evil. But it demands changing behaviour, abandoning 'the way things are done round here' for new ways of doing things - round the world.

Robert Heller was the founding editor of Management Today.

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