A Google search under the key word globalization yields more than 1.6 million hitsample proof that both interest and definitions abound. What does it really mean to be a global business? What is the best management infrastructure for this business? How then do you successfully lead and manage in a global business environment?
For the more than two decades that I've spent growing and managing global teams, I've learned through trial and error that successful global organizations begin with the recognition that a global strategy really is only a collection of local strategies built around a common core (Chart 1).
Chart 1. The Spectrum of Organizational Approaches to Globalization
Businesses are far more global today than they have ever been, especially as we examine the shift in general to Asia and, in particular, to China and India. From an outsourcing perspective, China has become a manufacturer to the world, and India is considered the software designer for the world.
We also are experiencing the phenomenon of an exploding customer base counted in billions. In India, for example, an estimated three million new cell phone subscribers are added every month, and this is expected to continue for the next 10 years.
It becomes very apparent then that understanding these dynamics, quickly relating to them, and practically managing a global business are not tasks you can conduct remotely out of Silicon Valley or any other single location on the planet. Clearly, a business now must be interconnected in ways that didn't matter as much beforecollecting detailed information about the customer base, then digesting and articulating this data, and finally providing services and products that meet the needs of the local environment.
For example, when service providers in the United States or Europe plan their investments, they count on an average rate per user (ARPU) of $50 per month to assess their ROI. However, when the same ROI assessment is made in emerging markets, a $5 ARPU is assumed.
Global companies then ask, "How do I make money? Do I have the right technologies and infrastructure?" This shift in mindset translates into the development of a business model and sound implementation of this model. As managers, we want to know what this transformation will look like from an organizational perspective. What is the optimum leadership and management infrastructure?
For businesses to truly succeed in this dynamic global environment, they must follow an all-important maxim, which I strongly reiterate here: Make your management structure global but operate and execute in a local format. What do I mean by this? As we examine some important aspects of a global management infrastructure, I'd like to share with you my guiding principles.
Most businesses today want their manufacturing centers in Asia because there is a large installed base, an already well-developed supply chain, a critical mass of potential customers, and ready access to a deep pool of talent at a lower cost. If your intention is to have a manufacturing base in Asia, then the person who leads this organization must be hired and based in Asia. This allows the manager to build his or her own future rather than fight against a physical relocation and mindset transition to Asia.
IP creation, which provides a company with a competitive advantage, is not easily transferable. In highly sophisticated areas of technology, it takes a minimum of three to five years to start a core in any location that would allow you to build expertise and know-how.
In my experience, the home base, where IP is created, should house a minimum 25% of a company's entire R&D team. When it comes to maintenance and sustainability, I believe that 75% of this team could be transferred closer to the manufacturing base with direct access to customers.
At a minimum, a comprehensive three-year program should be put in place to effectively complete this knowledge transfer. Most importantly, the head of this global R&D organization should be a very versatile and flexible person to manage this worldwide organization, stay in touch with customers, create products in a lab, present effective solutions, and refine them based on direct input.
The lines between inbound/outbound marketing and traditional sales organizations are blurring. The field organization must be located as close as possible to the purchasing decision makers and end users.
In many cases, decisions are made in the Western hemisphere, but implementation and support are done from other regions. Linking these organizations with global reach and local touch has to be embedded into an organization's DNA. All supporting functions have to deal with this fluid and seamless organization. Marketing communications, for example, cannot follow the traditional model of corporate diktat and regional execution.
Let's move on now to the very real challenges of overcoming issues like multiple time zones, cultural barriers, and style issues. My theory is that you cannot allow any of these issues to become an obstacle. Instead, use them to your advantage.
Employees need to feel independent and understand what defines success. Business teams must be aligned around customer requirements. As a manager, you have to make it clear who has accountability, ownership, and final responsibility for implementation and execution. Specific methods of measuring performance and providing feedback in a structured and uniform fashion are imperative.
Status updates pose very real challenges for global teams. Effective use of various communications methods can be of tremendous help. Successful use of time and communications has a lot to do with rigor and how well you enforce the system you set up.
Staff meetings, for example, can be used for strategic decision making, strategy refinement, and course correction. Monthly reviews should cover planning, execution, and validation. Checks on orders, shipment, and forecasts must be carried out on a weekly basis.
Judicious use of e-mail over voice mail can help overcome language and time barriers. Meetings should be held at times when it is most convenient for the majority of the staff.
I am a strong believer in the philosophy of shadow of a leader. Practice what you preach. If you hold yourself accountable, then you can hold others accountable.
For example, I worked in Europe for many years. Europeans hated voice mail because it was an Americanized way of communicating. When I sent an e-mail, I generally received a response the same day. When I returned to the United States, I responded immediately whenever I received an e-mail.
It took three months for people to change their behavior when interacting with me. I did not have to write a new policy on e-mail responsiveness. I just responded to every e-mail the same day or the next day. Others started following the same trend. When you repeatedly demonstrate meaningful, positive behavior, people are motivated to follow.
When in an Asian environment, try to understand subtle nuances and find ways in which to engage your team. In Japan, everything you say must be in your presentation slides.
Follow a standard format for establishing fiscal strategic plans including key objectives such as orders, growth, and strategic objectives. Help your team channel their thoughts, identify the three or four strategies that will enable them to meet objectives, and explain how they will be measured and what will be accomplished every month. Maintain a consistent communications methodology across regions. This helps to create a sense of community and an environment that really is open.
Empowerment doesn't work unless the framework is clear and your teams know what they are supposed to be doing. Clarify the level of authority of each individual.
The leadership structure of today is not necessarily what you may need in the future. If you do not have the necessary talent and leadership in the local base, envision the dream team that you need and create it.
Imagine what your organization is supposed to look like and shift the balance according to your business. If 60% of your customers are in Asia, your organization needs to reflect this reality. You then need to reverse-engineer to where you want to get to in the near future. In my experience, I have used the following methods to build the global organization I eventually needed for success:
Dig into your current organization at regional levels. Identify the individuals who have the talent and the drive and make sure they can be coached and mentored. Determine if you can place them in positions where they can grow. These individuals must be able to work across cultures and geographic regions.
Find people in the organization who are flexible to move to different geographies, who can learn by becoming truly local and leave an impression behind. Their job is to replace themselves. However, you also need to provide a vision of what these individuals will be doing at the end of their overseas assignments.
Use expatriates in a nontraditional manner. I am a strong believer in rotational assignments. Place your best and brightest people in the local environment for a year or more and provide them with on-the-job training.
For example, a European manager could move to Singapore and may eventually decide to become a Singaporean employee. You can retain the same European salary level, and everyone wins because the manager is challenged to have a broader, bigger impact.
Set performance benchmarks and mechanisms in place to both motivate and evaluate people. Provide feedback. Then identify the star performers that you don't want to lose under any circumstances and make them part of your dream team. Spend 70% of your time with A-ranked performers, 30% with your B performers, and systematically weed out nonperformers.
Motivate your international team by inviting them to participate in the decision-making process. Some people are naturally driven. Give them opportunities to learn and grow. Others want to be in the spotlight.
At the end of the day, everyone works to earn a living. Why do we stay in one place? For most people, it is because they see a future that lines up with their hopes and dreams. Clearly, a manager plays a very critical role in articulating an employee's career path with the company. When employees do not have that clarity in mind, they will leave.
In summary, managing an international team requires these three key elements:
No plan is ever perfect. Learn by executingwith speed. And ultimately, succeed by being flexible enough to recognize missteps and adjust your course along the way.
About the Author
Amir Aghdaei, who began his career at IBM, is senior vice president of field operations and marketing at Credence Systems. Before joining the company in 2007, Mr. Aghdaei was a long-term Agilent Technologies and Hewlett-Packard employee who held senior management positions at both companies including worldwide eBusiness manager and vice president and general manager of the Measurement Systems Division Electronics Group. He holds an M.B.A. from the University of Delaware, an M.S. in applied mathematics and computer science from Georgia State University, and a B.S. in industrial engineering from the Science and Technology University of Iran. Credence Systems, 408-635-4509, e-mail: firstname.lastname@example.org