The globalization of a company might seem like a straightforward exercise when the grand, over-arching ideas are scribbled out on flip charts and flashed up on PowerPoint presentations at corporate headquarters. But that’s deceptive. In practice, it’s never as simple as it sounds.
Recently a finance manager new to a company told me about a painful meeting he had with his CEO after six months in the job. In spite of the good work he and his team were doing, the CEO told him if he didn’t travel more often to some of the key countries where the company operated, he would no longer be effective in his job and would lose credibility.
To the manager, this sounded like an ultimatum, and he was determined to respond. Together, we figured out that this was one of the many challenges of globalization — that is, adapting to and working within different corporate cultures around the world.
What managers often fail to realize is that globalization is a two-way street.
In a paper released in January this year, Jim O’Neill, head of global economic research at Goldman Sachs, explains that “globalization requires not only incorporating local best practices, but also taking local best practices back to home countries and continuously adapting them to current conditions.”
As the past two decades have shown, he adds, “employing a cookie-cutter prescription to global processes yields little success.”
But as O’Neill notes, the adaptation process should be mutual That became clear to me during the four years I spent as CFO of BIC.
For example, at one of the annual meetings I set up for about 100 key financial staff from throughout the company, I decided to tap into their knowledge and asked them how they would grow the business. The ideas varied considerably, but the most interesting ones were from people who already knew BIC’s procedures, had followed their logic to develop realistic ways to increase revenue incrementally.
More importantly, none of the ideas would have surfaced if we had not breathed the same air and broken bread together.
In the instance of the finance manager, the company where he worked had grown into a loose federation of entrepreneurial “fiefdoms” in a number of countries. On a basic level, it seemed as if all the local entrepreneurs had to worry about was delivering the dividend to head office twice a year.
But the gradual globalization of the business required more co-ordination over time between the country managers and head office to get new products and services out into the market as cost-effectively and efficiently as possible.
The rules of the game changed when the CEO decided to be more hands-on with the country managers, and identified several members of his top corporate team who demonstrated an ability to embrace and inculcate new business ideas.
The problem, however, was that in spite of the push towards globalization, the company’s veteran employees had never been asked to share systems and best practices, and indeed had little incentive to co-operate. So the finance manager realized that he no choice but to get on a plane and meet his country managers. He knew he was going to have to try to win them over personally, one manager at a time.
In his travels, the finance manager encountered a range of attitudes to change. At one end of the spectrum were visionary executives who knew what the CEO wanted to accomplish and what they needed to do that. They quickly embraced new ideas, transmitting them to all corners of their business functions.
At the other end were backward-looking offices. They had a strong sense of history, and preferred to rely on tried-and-trusted procedures. Consequently, they had less ability than their visionary peers to integrate new business practices or to grow market share.
The finance manager’s challenge was to determine where each of the country managers fitted along that spectrum.
Once that was done, he had it made. Within a few months he was able to report back to his CEO with a detailed briefing on the willingness of the business to adapt and respond to new ideas. By getting on a plane to visit each of his key managers, he learned how to tailor his own management style which not only gave his credibility with the CEO a boost, but also helped the company succeed globally.
Blythe McGarvie, until recently CFO of BIC, the French consumer products company, is president of Leadership for International Finance and Enterprises.