Going Global

Building stronger capabilities

Roughly 75 percent of the Fortune 1000 have significant operations outside of the United States. Consumer, automotive and tech companies lead the way with the utility and financial sectors having a lower international profile. Going global provides access to a larger market for products and services, of course. Global operations also help companies hedge against local downturns or regulatory shifts and provide access to talent, knowledge and resources that might otherwise be difficult to acquire. There are risks as well, and we have seen these play out in the takeover of operations by foreign governments, ethical violations associated with local business practices, and wildly fluctuating currency values. Nevertheless, it’s clear that the trend is toward more global expansion. As recently as the 1970s, the percentage of firms operating overseas was closer to 25%. The boom has been fueled by continued market development, the internet and associated technologies easing global coordination, and trade agreements.

This overall trend masks differences in the experiences of individual companies, some of whom have broad and deep global connections and others who are still just beginning to dabble. While a number of companies who have been global for quite a while have extensive expatriate programs and substantial global diversity from the top of the organization to several levels down across their locations, for most this is not yet the case. Few of our American companies have done what some European and Asian companies have done to establish multiple global headquarters (Royal Dutch Shell, Unilever, Standard Chartered Bank, Sony). In fact, the majority of leadership teams in U.S. companies doing business globally remain almost exclusively American. This is changing but still requires greater attention. The benefits of being global versus simply doing business globally will become more evident as Silicon Valley-like innovation ecosystems and technology centers continue to grow, like those in Tel Aviv and Cambridge. The question is, what should businesses be doing to seize global opportunities rather than fall hopelessly behind?

In 1987, I was a visiting professor at INSEAD in Fontainebleau, France. At the time, there was a lot being written in the American press about globalization. I was excited to discover what the situation looked like from the other side of the pond. It wasn’t until I taught my first class that I understood what was taking place in the world at large. I had students from 34 countries in my classroom but not a single American. How were Americans supposed to learn to “go global” if they weren’t leaving home? At the same time, I was encouraged to teach cases from the Harvard Business Press, since that was what the students from all over the world wanted to learn. I had many international students in my stateside classrooms at both the undergraduate and graduate level. It simply hadn’t occurred to me that the flow was only in one direction.

More recently, I was invited to address students at a university in China during a business trip. There I met students who hadn’t (yet) taken the opportunity to study in the U.S. They listened attentively and asked good questions, soaking up as much of my perspective as they could. It again dawned on me (I’m slow) that in all my years of teaching, I had never arranged to have a professor from a Chinese university address one of my classes. Yet, the U.S. has no more important competitor-collaborator on the world stage than China. It is critical that businesspeople here understand how the Chinese think and operate, either to meet them head on or work with them to create new joint opportunities. Our MBA, MA, and MS programs in business-related subjects are mostly silent on globalization challenges, preferring to concentrate on Google or Apple rather than Haier or Ant Financial. Our students do meet Chinese students who are studying here, and that’s a good thing; hopefully, some of those ties will last. Still, if you contrast the experience being had by the Chinese student with that of the American student who is either living at home or has moved to a new city in the U.S. to study, the two challenges couldn’t be more different. Adults learn by tackling challenges that require new sensemaking. Whether they succeed or fail, learning still takes place but if the challenges are never taken up, they remain undeveloped. Who is it that is learning today?

Universities should do more to educate our students in business in global matters. Still, knowing very well how universities operate, I wouldn’t expect things to change anytime soon. In recent years, MBA enrollment has softened, making it even less likely that universities will experiment with bold new ideas. If I was a business leader, I’d be asking myself what to do about growing my company’s global savvy rather than expecting the answer to be provided by students hired from leading MBA programs.

Here are some steps to consider.

1. Begin with specific goals for the global diversification of talent in mind and a plan to achieve them. If you have this already, that’s a terrific start; my guess is that it doesn’t exist.

2. Fill one or more seats on your board with someone from outside the country and assign a board committee the responsibility for monitoring your progress against your global diversification plan. This will help overcome the inertia that is often present as we continue to promote those we know and work in ways that are comfortable rather than stretching our wings.

3. As you have openings, hire strategically to fill key positions with people who understand globalization because they have lived and worked globally.

4. Once a critical mass of strategic hires has been made, bring these leaders together to help the company formulate new business strategies based on taking advantage of global business opportunities. Then align investments, joint ventures and acquisitions with this strategy.

5. After the strategies are initiated, either rebalance the leadership team with more diversified global talent or create a parallel global business advisory group to work with leaders in continuing to expand the organization’s footprint and capabilities.

6. Consider structural changes such as opening multiple headquarters and process upgrades to support systems such as leadership development, career planning and talent acquisition to enable more meaningful exposure to global business.

Becoming global is a process that can take years, even though the world around us is changing much more rapidly than that. It might be good to get going.