In the first of seven critical considerations, remember to embrace globalization to help your organization to succeed.
In the course of my career consulting companies on services globalization, I’ve found seven important common practices present among companies that successfully globalize their services and absent among companies that have failed to globalize. In this and my next six columns, I’ll introduce those seven practices—what I call the “Seven Secrets of Successful Globalizers.”
The first of these secrets is Embrace Globalization. For client organizations, embracing globalization means seeing the unique advantages of operating in different parts of the world and looking beyond cost savings to find growth and quality improvement opportunities.
Companies that have embraced globalization—including leaders such as GE, Citicorp, Texas Instruments, and Proctor & Gamble—have found large pools of productive labor in offshore destinations. But they have found something more as well: top engineering talent, attention to detail and quality, sophisticated mid-level and senior-level management, and even a level of brand identity and loyalty that rivals that of in-house employees.
As former GE CEO Jack Welch said, “Globalization has changed us [GE] into a company that searches the world, not just to sell or to source, but to find intellectual capital—the world’s best talents and greatest ideas.”
Indeed, GE is a good example of a company that has successfully embraced globalization. Responding in part to potential clients that had expressed interest in streamlining their global operations, GE commercialized Gecis in late 2004 and recently rebranded it Genpact. It offers technology-enabled business processes with more than 19,000 professionals in the U.S., Mexico, Hungary, Romania, China, and India.
When GE saw an opportunity to expand its global services operations, it pounced on that chance, even though that meant divesting a majority stake (GE retained a 40-percent stake in the company). It’s that type of enduring flexibility and ability to forget all of yesterday’s rules to take advantage of today’s opportunities that continues to mark GE as a leading embracer of globalization.
The basic model for embracing globalization has four components:
- Embrace globalization across the business;
- Ask why your processes cannot be performed elsewhere;
- Mandate the globalization of those processes that can be performed elsewhere; and
- Keep an eye on the future.
The first component of the model speaks to the idea that globalization of services should not necessarily be relegated to back-office processes or information technology. Every business function should be on the table for globalization until it’s taken off because it can be performed most efficiently in-house.
That leads to the second component of the model: asking why each process cannot be done elsewhere. Bill Gates has said that “If we are not realistic about what we’re good at, then there is a chance of going backwards in the face of further competition.” In asking why each process cannot be done elsewhere, a business must be realistic about those processes that are a) really core processes and b) performed most efficiently in-house. There’s no room for egos in this process: To survive, a business must strip itself down to only true, core processes.
That stripping down is part of the model’s third component: mandating the globalization of those processes that can be done elsewhere. Within a company, globalization will be resisted by some. Successful globalizers neither back down from that resistance nor tolerate it. Effective change management that secures top-level commitment and buy-in and addresses points of resistance is a critical part of a successful globalization initiative.
The final component of embracing globalization is keeping an eye toward the future. Companies must be constantly vigilant and always prepared to scrap the old way of doing business to take advantage of a new opportunity. It used to be that to engage in this sort of flexibility made companies leaders. Today, it is a business imperative. As Thomas Friedman wrote in “The World is Flat”, “If you want to grow and flourish in a flat world, you better learn how to change and align yourself with it.”
The concept of embracing globalization as an important part of a successful globalization strategy may seem like a no-brainer, but many companies have tried to globalize half-heartedly without fully embracing globalization, and many have failed.
Stay tuned for my next column, in which I’ll discuss the second secret of successful globalizers: welcoming globalization as a transformation lever.