andEs Corner: when will corporations understand globalisation

Will multinational corporations understand globalisation or will they cease to exist.

This is a major challenge that I see coming.

So, why do I think they don’t understand globalisation? Because they have been mislead for years. But first of all a tiny bit of sidetracking…

I believe that this global meltdown had two major causes:

1. the set of well known reasons: subprime mortgage / credit fiascos etc. etc.

2. the real economy not really being real or stable on its own anymore

Point 1 has been discussed enough already so here I will start to discuss one aspect of point 2 (I think other topics will come in future blogs): globalisation where multinationals have been advised incorrectly for years about what this means.

From what I can see the only people in a corporation thinking about globalisation effects are the money men, CFO/CMO/… who look to either:

  1. save money (cheaper employees – or at least cheaper hourly rate)

  2. make more money (bigger markets)

But I think also the tech leaders CTO/CIO/… should be looking at one other aspect of globalisation if they want to make their projects more successful – and this is how does it effect decisions regarding where to locate employees or expertise.

At the moment I see multinationals making location based decisions on at the most two criteria:

1. hourly rate of employees between locations

2. geographical distance with relation to a customer or other team.

Infact, often companies also neglect item two. But there is a third factor which seems to have been completely neglected (or I have yet to see it be officially stated ANYWHERE): that of national trait.

I think it there are some well known national traits like English people drink beer quickly, Germans eat lots of sausage and the French can’t go to bed without a red wine. But there are other common traits too. And ones much more interesting for multinationals.

I am not an anthropologist so I cannot provide you here with a definitive list of where to do what jobs but to provide a couple of examples of what I mean, based purely on my experiences (DISCLAIMER: and again not applying to everyone I have met!!); for example Germans are excellent testers. Possibly the best in the world. They take pride in finding a fault and getting to the bottom of it. It is the Deutsche Grundlichkeit that takes full effect here. The people I worked with in Canada were the best designers I have ever worked with. I guess this must be related to all of the long winters stuck in doors with nothing else to contemplate apart from their belly buttons (actually I think it’s mostly to do with the freedom & lack of fear which are both essential for creativity). Indonesians seem to be some of the most persistent people I have met and also hardest to demotivate; nothing seems to phase them – despite the chaos that seems to reign there which makes them excellent at integrating systems where interfaces are not well defined; Going with the flow is an Indonesian trait (if you listen carefully there is a flow and they seem adept at jumping into it.). This could be related to the TERRIBLE traffic there.

Of course a national trait does not apply to every single person in that country BUT it does apply to the majority. And for the long term success of a company it is certainly a more valuable criteria too use when setting up a location strategy than hourly rate which varies greatly over time (exchange rates, wage rises, …) and ultimately says nothing. (IF you are going to measure purely on a cost basis then hourly rate is not sufficient. Total cost of product needs to be considered. This is a more long term average cost with factors such as quality, travel, employee fluctuation, training etc. all factored in.)

So, why have corporations been so blind to this? Well, this goes back to other reasons related to business practise in the old world:

1. they are thinking again in financial quarters; focused on giving quick dividends. Not considering long term goals and strategies. And they rarely stay in the their jobs long enough to get past thinking beyond hourly rate.

2. they have lost any understanding of actually how they do business and what makes REAL sense – choosing rather to listen to what market analysts tell them or their share price value.

3. it is much easier to make a decision based on one simple number than a whole list of factors – i.e. out of pure laziness.

4. because everyone else is doing it. The sheep mentality. There seems to be such a common understanding that it makes sense to consider only hourly rate that the old saying “you never got fired for buying IBM” could almost be replaced with “you never got fired for moving a project to India/China/Vietnam/Atlantis” (assuming dolphins will be the ultimate cheap labour once labour prices have normalised).

So if you are a CEO running a global company it would be a sin not to make use of the global pool of traits at your disposal. Start working. Start thinking. It is YOUR DECISION. And hire an anthropologist.

So what do you think? Am I totally wrong? Do you have other traits you can think of? What traits fit to the english? 😉

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One thought on “andEs Corner: when will corporations understand globalisation

  1. I agree 100%. Have almost the same experience. Would like to have time to discuss some of your thoughts.
    One interesting thing: Most of this problems are already analyzed in a book which was written around 150 years ago. And some of the “Big Bosses” (today called CEO or something like that) learned there lesson 100 years ago. Like Ford (Cars don’t by cars) or Werner von Siemens who invented the “Betriebsrente”. But this BWL-Students are not able to think that far. They really don’t think more far then one quarter. Or as we say in germany: “Not more far then I can throw a washing machine.”
    But there are also good examples of leading a company. But these are not CEO’s or CTO’s. These are company owners.
    Ok, I could write almost another blog entry instead of a comment (may be I should do?) but its middle of the night in Jakarta. I have to go to sleep.

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