Businesses are steadily becoming more global. As a result, it's more important than ever for business leaders to have a genuinely international outlook. This can only truly be gained by living and working abroad.
The challenges are enormous. Capital moves freely across national and continental boundaries and, increasingly, so do goods and services. Supply-chains lengthen as businesses chase global economies of scale. New technologies reduce communication and transport costs and we face competition from all parts of the world.
The stock markets have played an important role too. Investors have pressured companies to 'focus', by which they mean: 'Concentrate on building strong positions in a few sectors - or just one - rather than lots of weak positions in lots of sectors'. Investors prefer to diversify for themselves rather than let management diversify for them. Leaders must concentrate on making a single business successful rather than hedging their bets across several businesses. In response, more and more businesses are going global.
This means that business leaders have to understand the issues, risks and opportunities their organisations face in diverse countries across the globe. They need to adapt to leading their local management teams from a distance, allowing them enough autonomy and authority to respond to local needs without losing sight of the disciplines that make the business greater than the sum of its parts. There are no simple solutions: different companies have different ways of adapting to local styles and conditions - as I've experienced. GE imposes its own strong culture across all parts of its business, while Unilever puts the emphasis on adapting to local conditions. These solutions reflect the different sectors of each firm: technology is universal, while consumer tastes are not.
Leaders of global businesses need to be sensitive to new sources of reputational risk. Cor- porate behaviour is a hot topic, and customer awareness of business problems can spread rapidly from one country to another, fuelled by 24-hour news, e-mail and blogs. It's hard for a firm to combat stakeholder journalism without seeming uncaring and thoughtless. Businesses have been under pressure over trans-national issues as diverse as sweatshop labour, food miles and the source of the timber in garden furniture.
All this puts a premium on understanding how local leaders, opinion-formers and consumers behave and think. John Mole's book Mind Your Manners (Nicholas Brealey, 2003) offers an excellent illustration of how business cultures differ. He differentiates between 'Individual' and 'Group' leadership styles, and the organisation of businesses along 'Organic' or 'Systematic' lines. Thus, Greek business leaders operate in a group style in organic organisations, while Americans respond to individual leaders and organise systematically. The Latin countries cluster on one side of the map and the Anglo-Saxons at the other; the Belgians, Irish and French find themselves somewhere in the middle. It's an analysis that I've found useful.
Books take you only so far, however. The way to appreciate these differences properly is to live and work abroad, for at least a year and preferably three. I would encourage every aspiring leader to seek experience in the US, continental Europe and Asia Pacific, each of which offers something different. Living in the US is a fabulous way to tap into the latest business inno- vations, ideas and trends. Europe remains the UK's largest trading partner and is arguably furthest ahead on the 'green' agenda, while Asia Pacific represents a huge source of growth and typically takes more time for the average Westerner to understand.
Mastering these differences takes patience and empathy - skills that are valuable for leaders in any context. The Chartered Management Institute's recent Leading with Political Awareness report found higher levels of political skill among managers who'd lived abroad, including interpersonal skills, abilities to 'read' people and situations, and strategic skills. Their foreign experience helped them perform better at home.
I have followed the international path myself, living in both the US and continental Europe. I took my MBA at Insead in France, and the experience of mixing with students from more than 40 countries has helped me ever since. Living in America also taught me valuable lessons. To take an example from my last position at John Menzies: when trying to retain a piece of aviation service business in the US, we found we could not close the deal, despite offering better service than the competition at a good price. I realised we needed to couch our pitch in terms Americans like to hear - generally more aggressive and up-front than Europeans like. Only then did we win the customer over and secure the deal.
Living abroad makes you more sensitive to the existence of differences across national boundaries, as well as giving you an appreciation of specific differences in the country you live in. A leader with international experience is much better equipped to handle today's faster, more complex and more global world.
CV - Patrick Macdonald recently stepped down as chief executive of John Menzies, a quoted £1.5bn logistics company with operations in 24 countries. He has lived and worked in the UK, US, Germany and France with Unilever, Boston Consulting Group and General Electric. He is a Chartered Engineer and holds an MBA from Insead.