UK: SURVIVAL OF THE GLOBALLY ADAPTED. - Managers can operate globally if their company's structure allows them to.

by Robert Heller.
Last Updated: 31 Aug 2010

Managers can operate globally if their company's structure allows them to.

Not a day passes without bearing witness to the growing force of global business. Whether it is the BBC linking with Pearson to assault the global media market, or Ford Motor reorganising its entire corporate structure on worldwide lines, or Heineken calling on subsidiaries around Europe to counter a beer strike in Holland, or the Swiss-Swedish ABB buying up two dozen factories in Eastern Europe - the evidence is unmistakeable. The borders between businesses are coming down.

What about the borders between people? Global management assumes the existence of global managers, borderless executives whose domicile is as irrelevant to them as to their employers. And they do exist. The most conspicuous example must be Eckhard Pfeiffer, who masterminded the astonishing resurgence and surge of Compaq from its Houston HQ, but goes home to Munich when he can. His ambitions, too, are pitched in global terms: to overtake IBM in world market share in 1996 (a once-tough target now in clear sight).

Join a senior group in a Swiss drug company, and you'll find several European nationalities and an American listening to an Israeli pharmacologist. Visit a European car company, and young American managers will be working side-by-side with Britons and Germans. In the new globalism of the car industry, Detroit has surrendered the lead in smaller cars to the Europeans, for the simple reason that they understand the market better.

Several years ago, the Taurus cars that dramatically revived Ford's US fortunes were adapted from European mid-range models. Now worldwide small car sales, led from Europe, will fit into a total global organisation of five 'programme centres', each staffed with managers and engineers from around the world.

This parallels the evolution of the multi-disciplinary, multi-functional teams which have become mandatory in modern product development. That has worked smoothly, which is no surprise: the old system of 'hand-offs' between functions and departments as projects moved consecutively between stages might have been designed to produce delay and disagreement. Concurrent team working is plainly superior. The new cross-border approach is equally superior to the old matrix system - in theory.

The matrix subjects managers to triple control. They are responsible to the national bosses in the country where they work: to the supranational heads of their business function: to the leaders, also supranational, of their product group. The progenitors of the matrix were trying to square the circle: to combine independence with dependence without reducing effectiveness. Instead, they produced a recipe for confusion, overlap and turf wars.

At IBM, once the acclaimed maestro of matrix management, the current answer is to create 14 marketing groups organised by industry customers - banking, retailing, and so on - right across the world. According to Business Week, this follows a study of ABB, whose boss, Percy Barnevik, is the best-known practising guru of globalism. But the presidents of ABB's 1,300 profit centres still have two bosses: the head of the national company which houses them, plus one of 50 heads of business groups, who in turn report to an eight-man executive committee.

That sounds as cumbersome as any matrix, and its validity must remain unproven unless or until ABB starts making more than minuscule profits. But within the system Barnevik's group heads, for example, will 'co-ordinate globally, overseeing factories in far-flung locations, allocating export markets, realising economies of scale, and ensuring that quality and performance meet global standards'. As these heroes rest on the seventh day (if they can), at least they can reflect on truly global weeks.

They and others who are on similar missions in different companies are not the familiar style of expatriate manager investigated by Malcolm Brown elsewhere in this issue (see p48, The fading charms of foreign fields). The traditional expat is the lineal descendant of the men who ruled India, sent out from the home country to govern some distant territory. The former multinational overlords likewise despatched people for spells in 'affiliates' - the euphemism for underling subsidiaries.

Globalism changes all that. If there is no home country as such, who is an expat, or an underling, and who isn't? The new global managers will follow the task, and that will determine their authority and their location. What will determine their success? Computer networks are indispensable foundations for firms which want to operate across borders: that currently obstructs Ford's ambitions - its American and European systems are incompatible. But compatibility is also impossible between Detroit managers who believe that America knows best and Europeans or Asians who may actually know better.

The odds are, however, that the sheer pressure of competition for global markets will overcome the national, human barriers. The pressure isn't confined to or coming from mighty multinationals alone. Last year The McKinsey Quarterly reported on a new breed of smaller Australian company that is 'born global', using the fax rather than the network as founder managements 'cherry-pick the best business and customers' anywhere in the world. I've found similar firms in New Zealand and the Philippines - and Britain.

In small, medium and large companies alike, that's how markets are evolving, and managers are bound to evolve with them. The necessity is to ensure that the established organisations, in which most managers still operate, get out of the way. That means abandoning the matrix and its enshrined centralising forces in order to develop genuine global dynamism. That's a far harder task than developing individual managers who can think and operate across frontiers. That's inevitable. The new generation of management has also been born global.

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