In 2011, as IBM was planning to commemorate its 100th anniversary, it struck me that therewere dramatic parallels between the company’s transformation over 10 decades and the wayin which the global economy had been transformed over the same period. Both had benefitedfrom an expansion of economic growth, and an increase in living standards, that was withoutprecedent in human history. This progress had been greatly enabled by the integration ofglobal society, and through the power and prevalence of information technology.
Today, global economic integration presents enormous opportunity for the future ofbusiness and society. For business, buying and selling goods and services in a global marketcan lead to cost savings and increased revenue, but also the ability to draw on the talents andinsights of a global workforce. Society can also benefit in a myriad of ways, from individualsrealizing higher living standards to governments realizing new avenues for cooperation. Andwhile many point to the risks of integration, the more pressing and more pragmaticquestions are the following: How do we deal with the future? Do we embrace it? Or do we clingto the past?
These questions are particularly important for companies in the United States and throughoutthe world. They face new challenges as they navigate what is the first truly global era inhuman history – an era in which the volume and speed of information, people, products,services and ideas being circulated around the world is greater than ever before. wher qualityservices will be delivered via cloud-like platforms and consistency of shareholder returns will bemandatory. This new era calls for new business models, new corporate structures, newinvestor engagement and new thinking.
Fundamental to the global era, and uniquely suited to benefit from it, is what I call the globallyintegrated enterprise (GIE), which refers to companies that are truly global (as opposed to“multinational”) in their management and their operations. In this model, work is organized infundamentally different ways. It calls for different skills and behaviors, more collaboration andtransparency, more disciplined financial management, greater focus on a multiplicity ofcultural differences, and less hierarchy.
As an example, decisions about wher to locate operations are based on how to maximizevalue for customers, employees, and business partners. Instead of taking people to wher thework is, you take work to wher the people are. Thus, rather than maintaining separate supplychains in different markets, there is one supply chain, and it’s global — not just for products,but also services, capital, ideas, and intellectual property.
Similarly, human capital is thought of not in terms of countries and regions and business units,but rather how to manage and deploy it as one global asset. While CEO, I saw that IBM’s IBM-0.02% future was going to be focused on innovation, which meant that rather than beingcapital-intensive, we were going to be human capital-intensive – delivering software andservices. So it was even more important than in the past that we hired and retained the bestpeople. But unlike earlier eras, it didn’t really matter wher these people were or wher theycame from – we simply wanted them to excel in their work at IBM and we wanted to do whatwe could to help them excel.
In connection with our global workforce, we recognized the need to create a common culturethat would ensure consistent values throughout the company, regardless of wher ouremployees were working (that’s the “integrated” part of GIE). To that end, we conducted acompany-wide survey – what we called a “ValuesJam” – that gave anyone working for IBM theopportunity to weigh in on what the company should stand for and how our employees shouldoperate. That exercise culminated with an updated set of values that became the connectivetissue for IBMers throughout the world.
For a company to become a GIE, its leaders must embrace a particular frame of mind – onethat I worked to imbue in my colleagues while I was CEO of IBM. This frame of mind is focusedon how to operate seamlessly as a single organic entity – by integrating internal operationshorizontally and globally, collaborating with external partners, and operating at the bestlocation in the world, to maximize value creation from a global point of view.
IBM is far from the only company that has adopted key GIE principles and practices. A numberof companies, operating across a diverse set of countries and industries, have implementedmeasures that resemble those we adopted at IBM. They include CemexCX -0.16% of Mexico, aleading producer of cement and other building materials; Bharti Airtel of India, one of theworld’s most dynamic cellular telephone providers; and Geely of China, which is making majorinroads in the global car industry thanks to innovative products and management. Themeasures they’ve implemented are a byproduct of their own experiences, which led them toreach the same conclusions we did at IBM: that companies need to be global in order to staycompetitive, but need to do so in ways that keep them close to their customers while alsoemphasizing values and principles that foster agility, innovation, and productivity.
The GIE, and the new global era for business, are at the center of my current work. My book,Re-Think: A Path to the Future, was published earlier this year. These areas represent thefoundation of work being undertaken by the Center for Global Enterprise (CGE), which is aresearch organization I launched last year. Its work is being devoted to explaining the age inwhich we are living, while also documenting how a new management science is emerging, howleaders can apply it, and how all stakeholders should strive to maximize its benefits. (www.chinainout.com)
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