Once, only great corporations were multinational. Now companies become great and global simultaneously. Even start-ups have rapidly achieved world-wide penetration of hugely promising markets. The role models date back a long time. For instance, Compaq Computer recognised from its start in 1983 that personal computing was an international, not a domestic industry. Compaq's rise was sensational, from a world record first year of $111 million to $2 billion in five years: but in the age of the Internet even that pace seems strictly routine.
The clusters of American super-stars revolve around start-ups like Netscape, whose inspired breakthrough with browsers set the Internet booming: or Cisco, which grew from 200 people in 1989 to 11,000 in 1998 on the back of its Internet routers. The markets such companies created were automatically global, because cyberspace knows no boundaries. Companies large and small, moreover, have equal access to the new, revolutionary global networks and telecoms products. So smallness is no liability. Rather, size may be a serious disadvantage.
The new channels of communication and commerce bypass the established, terrestrial networks. Huge volumes of traffic move through these familiar networks, and vast revenues are generated. But the revolutionary newcomer has no need of the old means of distribution, nor of the massive overheads which accompany them. Nor does it need the fixed assets - regional and national HQs, warehouses and distribution networks - that multinationals acquired as they crossed frontiers and tapped new geographical markets.
Most multinationals were (and are) nothing more than great national companies with overseas subsidiaries. But the revolution in communications technology has turned the truly global company from grand idea to attainable reality. The global means, including the World Wide Web, Intranets and Extranets, have received a crescendo of publicity. It is not misleading. These wonders make possible mighty and necessary improvements to the way in which companies are managed .
Globalism intensifies problems of complexity and spans of control. You can see the new dimension at Stuttgart, where Daimler-Benz in 1998 began creating a new global company after buying Chrysler. The 'war room' (according to the Wall Street Journal) 'hums with state-of-the-art communications technology'. The sharp end of this technology includes six banked computer screens, a big-screen TV that converts into a giant terminal, video-conference kit, and clocks showing the time in Detroit, New York, Johannesburg, Tokyo, Bangkok and Sydney.
A few doors away is the 'integration room' that enables managers in Stuttgart to work in concert with their Chrysler colleagues in Auburn Hills, Michigan. Writing on a giant whiteboard is translated onto a screen in the US. There a companion integration room handles the American end. Frequent teleconferencing is accompanied by heavy input of data to the combined 'infobase'. Using Lotus Notes, both sides keep track of no less than 989 priority integration projects - monitored by traffic lights: 'Green means everything's on schedule. Yellow signifies hangups. Red screams trouble'.
This abolition of geography by telecoms is proceeding so rapidly that most businesses have yet to begin catching up. One entrepreneur, however, got lucky. He had expanded all over the globe, selling in 75 countries and opening subsidiaries in a third of them. He was about to establish a regional office to coordinate the furthest flung satellites, in Asia Pacific, when he made a sudden, marvellous discovery: teleconferencing.
Plans for a regional HQ were promptly scrapped, saving much money, killing the imminent extra layer of potential bureaucracy, and maintaining his personal contact with the managers running the Asian companies. The teleconferences work fine, and his organisation has stayed flat and fast. Since delayering and speed of reaction are two of the prime virtues in today's management, other companies must surely reach the same conclusion: manage with the full, flexible aid of information technology, not along tramlines laid down by organisation charts.
The impact of communications on management is nothing new. Peter Drucker has celebrated the remarkable effectiveness of the men who ruled India. Because messages took so long to reach distant officials, and the replies so long to come back, their superiors had to agree objectives and action plans at the start. Perforce, they let their subordinates get on with the job and judged them by success against plan. That elegant simplicity vanished in the era of worldwide telephony and jet travel: superiors and bureaucrats could interfere to their hearts' content - and the discontent of everybody else.
THE INDIAN PRINCIPLE
Just as electronic shopping turns the wheel back to pre-war home delivery, so electronic management is returning in part to the Indian principle. The boss, like our entrepreneur, delegates full responsibility to people who have contracted to perform agreed tasks. But modern bosses, like him, have an advantage. While they can directly contact managers at will, they don't have to. Thanks again to IT, they can check on performance day-to-day (hour-to-hour, if they're wholly neurotic) without bothering anybody with questions. The answers are instantly available via the system.
In theory, senior management's ability to 'dig down' the database to check on sales in Droitwich, Osaka and Cape Town, or to verify profit margins in Bangkok, Wichita and Lima, makes possible more Draconian control than the most dedicated bureaucrats ever envisaged. But long ago the telephone was expected to have the same effect, reducing middle managers to mere tools of the top. Instead, as Shoshana Zuboff has pointed out, the phone liberated subordinates. At a safe distance, they were readier to answer back, argue, put their own points of view.
You need to generate a similar effect from modern systems in order to optimise use of the managers in place. Simply adding more managers is no answer to the challenges facing the executive armies which are already fighting the global wars. Exploiting the opportunities of global markets, all the way from sourcing R&D to improving the response to customer enquiries and complaints, places great demands on managers whose thinking has previously been conditioned by domestic markets.
This is still the case with most British companies. Their managers speak of 'Europe' as if it were another, foreign part of the globe, and not their new domestic market, to which Britain 'belongs' as much as Germany and France. Americans, too, are far more insular than the stupendous spread of their global businesses suggests. But the enormous improvements in communications technology are increasing familiarity with overseas markets and making the difficult tasks far easier.
Take the quest for customer focus, a stretching enough target even within domestic markets, sought like the Holy Grail, and with as scant success. The task of overjoying customers spread around Europe, let alone the globe, is trickier still. How do you achieve the same excellent perceived service in Hanover and Hounslow? How do you obtain instantaneous, meaningful feedback from customers in Rio and Ontario? How do you ensure vital simultaneous availability of a new product in 44 different markets?
This is no theoretical matter. As the life-cycle of personal computers has shortened dramatically, to a mere six months in many cases, the requirement for rapid global distribution has intensified. This new imperative gives the manufacturer no more than a couple of weeks to get products into the world markets in suitable quantity. What's true of PCs today is applying to more and more industries. Gone are the days when major overseas markets could be told to wait. Gone are the days, too, when head offices could design products without attention to overseas affiliates, which had a zero chance of influencing what they had to sell.
Companies can now gather vastly more and more precise customer information from around the world, and far more quickly. Yet researchers for the IT Management Programme were astonished to find major firms absurdly lacking in this respect, even in their local markets. They could analyse sales and financial performance by market and product readily enough, but couldn't repeat the exercise by customer. Some 'do not know how many customers they have, let alone calculate the value of individual customers.'
Global managers gather and communicate this information in order to separate the sheep from the goats, the profitable customers and markets (to be loved and cherished and made more profitable still) from the unprofitable. The latter can be dropped, or (preferably) made profitable, very possibly by use of IT-based techniques for cutting the world-wide cost of sales and service. An obvious instance is the use of one-site global call centres (which can be combined with faxes and e-mails on a single Website for integrated handling of complaints and queries).
SEGMENTED OPPORTUNITIES
There are also invaluable techniques (again, mostly IT-based) for identifying and serving segmented markets. If managements aren't using these methods, unrepeatable opportunities are being lost. Tiny segments are now large enough to feed global businesses. One Huddersfield company, Camborne Fabrics, sells only fabrics for office furniture, but world-wide. Its systems allowed Camborne to boast a 97% level of next-day delivery to any market: it responded by investing in still better systems to exploit the profit potential of satisfying the under-served 3%.
How you use such systems is decisive in the world-wide wars. This is, however, a time of painful transition. Generally, data is now garnered and communicated faster, more accurately and in more convenient form - yet information overload and control failures abound. Electronic meetings have burgeoned rapidly, too. But none of this has lessened the insatiable pressures for face-to-face, round-the-world contact. Similarly, few innovations have caught on so rapidly as fax, mobile phones, e-mail and the Web - but without easing those same pressures.
The technology has enlarged companies' ability to reach their managers on the run, in hotel rooms, airports, and their homes, on trains and on holiday. The result? One survey found that half the questioned managers couldn't escape from their work even when vacationing, even when sick. The fax and the mobile phone have made interruptions easier: the portable computer, with its links (now enhanced by the Web and Intranets) to corporate data and colleagues, has made the office global as well as the business.
Tomorrow's global managers will spend even less time in their offices, and even more living out of briefcases which contain the means of communication - with the laptop revolution now enhanced by the Internet. The age of PDAs (personal digital assistants) has dawned too. To all intents and purposes, 21st century executives will be in constant touch with their work. They are at personal risk from the increases in stress that are being reported as managers find it harder, even impossible, to 'get away from it all'. With distance management, there's no 'away.'
The pressures are not inevitable. The time-saving, speed-enhancing life-style for which hard-pressed global executives yearn is within reach. The wondrous technology isn't really to blame for excessive workloads. If IT is used more effectively, the quality of managerial life improves in practice as well as in theory. The key is familiar to experts in boosting productivity through information systems, factory automation or any other application of state-of-the-art technology.
Before buying any costly hardware or software, the truly expert expert studies the processes and applies something which isn't state-of-the-art at all: common sense. By eliminating whole processes and process stages; streamlining flows; relating means to redefined ends, and so on, huge improvements are won intellectually before a single technological penny is invested. The transition to truly global management rests on improving the processes by which the parts form a world-wide whole.
This is not just a matter of taking out intermediary regional managements. The existence of the latter may often be unjustified. But companies have to avoid the down-sizing trap. Taking out whole layers of management, or the many managers who only act as relays in the processes, will save payroll costs. But if processes are unchanged, the remaining managers will slump under a heavier workload. The whole global system will begin to malfunction and lose its capacity to grow profits.
THE CONSULTANT MANAGER
Building the business and its management round its properly identified customers, wherever they are in the world, is entirely feasible. That only happens where the new electronic powers of gathering information, communicating, organising and meeting have been directed to proper ends. There is no point in going global only to find that unexpected costs of serving customers in far-flung and unfamiliar markets devour any prospect of profits for years to come.
The new management processes, employing the new tools for managing at a distance, strengthen the trend for managers to become more and more like consultants. The latter have long been successfully peripatetic, depending on IT to keep in touch with their offices and files. Now corporate managers work increasingly outside the conventional structure of offices and departments - often operating in multi-disciplinary, cross-functional teams whose location round the globe is determined by their purposes.
These global changes are so far-reaching in their potential that even far-sighted thinkers, let alone practical managers, have yet to come to full terms with their times. Even the distinguished contributors to a collection of essays entitled Rethinking the Future, assembled by Rowan Gibson, barely mention the telecoms revolution, managing at a distance, or the Internet itself. That's not surprising, in view of one passage from contributor Warren Bennis:
'I have a board in my leadership institute, made up of very terrific leaders, and they all have e-mail. But when I asked how many of them use it, only half of the hands went up, and some of those went up rather lamely. Rather haltingly.'
Yet what's so new? Managers like Microsoft's Bill Gates have been using e-mail as a distance management tool for years. Long ago I came across an electronics entrepreneur whose highly successful business interests were in England: he ran them electronically from the Caribbean. Years before the first web site appeared in 1993, Francis Kinsman wrote that 'many managers in the next century will be faced with the facts of ferociously competitive international telecommuting.' So they will, once their companies get round (as they must) to grabbing their new global and technological opportunities.
When they do, ferocity will probably be less evident than liberation. Much managerial frustration stems from inability to contact the right person at the right time, or to get the right information in the right place, or to be certain that the right actions are being taken with the right results. Today, managers can achieve over earth's greatest distances what, in the past, they couldn't achieve under their own noses.
read all 70 gurus with one feed read all Read all media
