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source: WilsonSelectPlus Developing leaders for the global
frontier.
Author: Gregersen, Hal B.; Morrison,
Allen J. Black, J. Stewart. Source: Imagine the experiences
of explorers such as Magellan or Cook as they scanned the horizon of the
great Pacific Ocean for days; they had no reliable charts, an unfamiliar
hemisphere of stars, shark-infested waters, a crew losing confidence with
each passing day, storm clouds gathering in the distance, waves crashing over
the ship's bow, and wind howling. In many ways, the new business world is
just as dangerous, filled with brutal storms of competitors, endless seas of
change, seemingly strange cultures, confusing marketing channels, and unknown
frontiers of technology. The great difference,
however, is that only a few great and courageous explorers were needed in the
days of Magellan. Once the seas and their islands were charted, the
coordinates didn't change. In contrast, the islands, mountains, rivers, and
valleys of today's global business world are not static; they change.
Markets, suppliers, competitors, technology, and customers are constantly
shifting. Consequently, global business now requires all leaders to be
explorers, guided by only the faintest glimmer of unfamiliar stars and
excited by the opportunity and uncertainty of untapped markets. At current growth rates,
trade between nations will exceed total commerce within nations by 2015.(FN1)
In industries such as semiconductors, automobiles, commercial aircraft,
telecommunications, computers, and consumer electronics, it is impossible to
survive and not scan the world for competitors, customers, human resources,
suppliers, and technology. These forces of change
help explain why leadership models of the past will not work in a global
future. Provincial Japanese models of leadership have worked in Japan because
Japanese leaders largely interacted with other Japanese. The same has been
true for American, German, or French leadership models. In the future, a new
breed of leader will be needed. Recently, Jack Welch, CEO of General
Electric, commented:. "The Jack Welch of
the future cannot be like me. I spent my entire career in the United States.
The next head of General Electric will be somebody who spent time in Bombay,
in Hong Kong, in Buenos Aires. We have to send our best and brightest
overseas and make sure they have the training that will allow them to be the
global leaders who will make GE flourish in the future."(FN2). Most companies lack an
adequate number of globally competent executives. Based on the results of a
three-year study, we found that almost all companies claim that they need
more global leaders, and most want future global leaders of higher caliber
and quality (see the sidebar for details on the study). Of the U.S. Fortune 500
firms we surveyed, 85 percent do not think they have an adequate number of
global leaders (see Figure 1); 67 percent of the firms think that their
existing leaders need additional skills and knowledge before they meet or
exceed needed capabilities. Jack Riechert, recently retired CEO of Brunswick
Corporation, reflects the sentiments of many senior executives we
interviewed: "Financial resources are not the problem. We have the
money, products, and position to be a dominant global player. What we lack
are the human resources. We just don't have enough people with the needed
global leadership capabilities.". Another aspect of our
survey is the high rating of global leadership compared to other factors in a
company's global business success (see Table 1). CHARACTERISTICS OF GLOBAL
LEADERSAs multinational firms compete in the unpredictable business frontier,
they must confront two persistent, perplexing questions:. 1. What are the
characteristics of leaders who can guide organizations that span diverse
countries, cultures, and customers? 2. How can companies
effectively develop these leaders? Our research revealed
that every global leader needs a set of context-specific abilities and must
have a core of certain characteristics. Roughly one-third of global business
leaders' success depends on the knowledge and skills for specific contexts.
For example, corporate cultures, industry dynamics, and "country of
origin" management practices can permeate a company's worldwide
operations and require unique knowledge and skills for successful leadership.
About two-thirds of the characteristics apply generically to leaders,
regardless of their managerial position, corporate culture, industry norms,
or country-of-origin management practices. These general global leadership
characteristics include exhibiting character, embracing duality, and
demonstrating savvy. Most important, the leaders in our study saw
inquisitiveness as the force underlying these characteristics. UNBRIDLED
INQUISITIVENESSWhile all leaders have substantial intelligence, all are not
necessarily inquisitive. Constantly crossing cultural, language, political,
social, and economic borders makes global business complex and uncertain. As
a consequence, constant learning is required for success. Global business is
physically taxing on managers. Travel, jet lag, and working in different
languages and across different cultures can be tiring. For unsuccessful
leaders, these aspects are just too overwhelming. Successful leaders are
invigorated by the differences around them. They are driven by a sense of
adventure and a desire to see and experience new things. When studying individuals
on international assignments, researchers have found this same characteristic
to be important in cross-cultural adjustment and job performance.(FN3) They
have called it adventuresomeness, curiosity, or open-mindedness. While
international assignment responsibilities are not the same as global
leadership, it does seem that whether a manager is crossing one country
border or many, inquisitiveness is key to success (see the sidebar on Mikell
Rigg McGuire). Global leaders stated
repeatedly that inquisitiveness is the fuel for increasing their global
savvy, enhancing their ability to understand people and maintain integrity,
and augmenting their capacity for dealing with uncertainty and managing
tensions. Inquisitiveness enables global leaders to not only develop the
characteristics of character, duality, and savvy, but also build a complex
understanding of how all three work together. PERSONAL CHARACTERFrom
our interviews, we determined that personal character involves two
components: emotionally connecting with people from various backgrounds and
exhibiting uncompromising integrity. Emotional Connection. A
genuine emotional connection with people throughout the company's worldwide
operations is a function of a three-step process: (1) a sincere interest in
and concern for others, (2) an effort to really listen to people, and (3) an
understanding of different viewpoints. Leaders in the survey pointed out that
understanding different viewpoints is not the same as embracing them but does
lead to respecting them.(FN4) This process is particularly challenging when
cultural and language differences confound communication. Ample opportunity
exists for misunderstanding and taking and giving offense. Without the
ability to connect with individuals, cultural diversity becomes a huge
obstacle to effective leadership. In the literature on
expatriates, we have found similar concepts. For example, willingness to
communicate with host country nationals has been found to facilitate the
cross-cultural adjustment of expatriates.(FN5) Ethnocentricity and
sociability also relate to making connections across cultures and have been
discussed extensively in the literature.(FN6). Fundamentally, emotional
connection is important because it leads to goodwill. In turn, employees give
leaders the benefit of the doubt on difficult matters, put forth their best
efforts, and make sacrifices. In global organizations with webs of
interrelated units that must cooperate and coordinate to meet customer needs,
goodwill -- rather than clear lines of command and control -- is what leaders
need to achieve global initiatives (see the sidebar on Jon Huntsman). Integrity. Executives
described integrity in terms of ethical behavior and loyalty to the company's
agreed-on values and strategy. Both personal and company standards are
substantially more prone to compromise overseas.(FN7) When far removed from
corporate oversight, managers are often tempted to change themselves and
their organizations to appeal to local values and demands. Yet despite the
opportunities for short-term advantage, the global leaders we studied were
most effective when they consistently maintained the highest ethical
standards in personal and company matters. Successful global leaders
indicated that integrity significantly increased the overall levels of trust
throughout the organization. They pointed out that when crossing cultural,
national, functional, and business unit lines, trust is an essential,
irreplaceable ingredient for effective execution. They were quick to add that
quite often the difference between winners and losers in global competition
is great execution, not great strategy, and added that for great execution,
you need employees' trust and commitment. They felt that their high
level of inquisitiveness actually facilitated their ability to maintain
ethical integrity. All acknowledged that definitions of allowable ethical
behavior varied from country to country. However, their inquisitiveness led
them to probe below the surface, deep into people's ethical values. For
example, one manager made the following observation: "It's true that practices
differ from one country to another. 'Gifts might be more or less accepted
from one country to another. However, around the world, employees and
customers alike trust managers who conduct business above board and on the
basis of business merit" (see the sidebar on Lane Cook). DUALITYGlobal leaders
embrace duality by managing uncertainty, essentially knowing when to act and
when to gather more information, and balancing tensions, understanding what
needs to change and what needs to stay the same from country to country and
region to region. Capacity for Managing
Uncertainty. At the heart of any multinational, uncertainty reigns supreme,
and successful leaders have a capacity for managing in changing conditions.
In the global business arena, they confront a dearth of quality data and a
staggering number of questions; for example: What is a country's real market
potential? Is this country a good platform for global operations? How secure
is the local currency? How long will it take to train local managers? While
purely domestic executives face some of these same questions, the degree of
uncertainty that global managers face is exponentially higher. The recent
Asian financial and currency crisis underscores this point. Once again in the
literature on expatriates, we find an interesting parallel in terms of this
characteristic for managing uncertainty. Researchers discuss the
characteristic less in terms of management and more in terms of tolerance. In
fact, most studies referred to tolerance for ambiguity. Research on
expatriates has found that crossing from one's home culture into a foreign
one creates significant uncertainty and that those who have a reasonably high
tolerance for ambiguity tend to cope and adjust better.(FN8). In the global arena where
uncertainty can come from not just one country but a dozen or more at a time,
many managers may be tempted to do more research, which they believe will
reduce the risk of poor decisions.(FN9) Yet, in many parts of the world and
for many products, collecting accurate data sometimes takes so long that the
data are useless by the time they are available. Furthermore, in today's
hypercompetitive business environment, waiting for clarity works only if
everyone else also waits. While global leaders allow time for research, they
do not allow the search for clarity to jeopardize first-mover advantages.
They quickly separate the "figure from background" and do not wait
for the entire picture to come into focus before moving ahead. They know that
speed and a capacity for uncertainty are tightly intertwined (see the sidebar
on Gary Griffiths). Unique Ability to Balance
Tensions. In addition to uncertainty, managers must balance various tensions
as they confront the pressures for both global integration and local responsiveness.
Successful leaders indicated that it is generally a mistake to either
globalize or localize all activities.(FN10) Rather, some activities like
R&D may be most appropriately carried out worldwide, while other
activities such as advertising and promotion may be best carried out locally
or regionally. These leaders stressed that the perspective should not be one
of just tolerating tensions but of embracing their inherent duality. A global
executive with an engineering background commented:. "If you design a
bridge to be completely rigid, it will collapse. If you let it swing freely,
no one will be able to use it. Oscillation within a range is good and
necessary for the bridge to function. The same is true for global
organizations and leaders. That is why effective global leaders embrace
duality and tensions.". These tensions include
product standardization versus local adaptation, headquarters' management
style versus the subsidiary's approach, corporate labor relations policies
versus host country norms, and global brand image versus local consumer
preferences. Embracing duality requires leaders to view tensions as necessary
and good (see the sidebar on Stephen Burke). SAVVYBecause
globalization increases both the opportunities for business and the
challenges in getting things done, leaders need to be more savvy, much like a
high-hurdle runner needs the ability to jump higher than a low-hurdle runner.
In our research, we found two dimensions: business savvy and organizational
savvy. Business Savvy. Global
business savvy enables managers to recognize worldwide market opportunities.
They either locate new markets for the company's goods and services or gain
more efficient access to the company's existing markets. To recognize new
market opportunities, to arbitrage opportunities involving cost and quality
differences across company affiliates, and to maximize efficiencies by
reducing redundancies, global leaders must understand competitive
conditions.(FN11) Leaders know the sources and location of comparative
advantage, country-specific conditions, countries' political and financial
stability, and so on. They also understand international disciplines such as
finance, accounting, marketing, operations, human resource management, and
strategy. They comprehend issues that domestic-oriented leaders just don't
have to face -- such as how real movements in exchange rates can create
opportunities to (1) lower prices and increase market share while keeping
profit margins stable, or (2) keep prices and market share constant and reap
additional profits (see the sidebar on Steve Holliday).(FN12). Organizational Savvy.
Global leaders have intimate knowledge of their firms' capabilities and their
ability to mobilize resources to capture market opportunities. They know the
strengths and weaknesses of the organization, are familiar with the company's
subsidiaries and competitive positions, and know key overseas managers.(FN13)
Due to changes in cultures, languages, government regulations, increased
physical distances, and shifting time zones, as well as unclear lines of
authority, the depth and breadth of organizational savvy required to execute
effectively is far greater for global leaders (see the sidebar on Ta-Tung
Wang). DEVELOPING GLOBAL
LEADERSOrganizations seeking to globalize need look no further than their own
leaders to determine if their efforts will succeed or fail. Does the
organization have enough global leaders? If not, it must ask if its leaders
are born or made. Based on our interviews, the consensus was that global
leaders are born and then made. ASSESSING TALENTGlobal
leaders, like great musicians or athletes, need superior talent, abundant
opportunity, and excellent education and training to succeed. Not everyone
has the ability to become one, so companies should not give opportunity and
education to just anyone. Companies need to assess whether they are hiring
enough young managers with the required baseline level of leadership talent
to ensure that, even with normal turnover, they will have future global
leaders. Colgate-Palmolive, a
company with decades of international business experience, often hires
entry-level marketing candidates who have already demonstrated such
characteristics and capabilities. It intentionally hires newly minted
undergraduates or MBAs who have lived or worked abroad, speak more than one
language, or can demonstrate their preexisting aptitude for global business.
Still, even individuals with potential need outstanding developmental
opportunities. In our research, firms with comprehensive development systems
performed better financially than firms without such systems. However, most
firms do not have comprehensive systems for developing global leaders (see
Figure 2). THE DEVELOPMENT
PROCESSHow are global leaders made? The basic mental process for development
is to understand the whole world, not just one country. For most of us, that
requires both some rearranging and stretching of our mind-sets. However, it
usually takes a pretty hard blow to the head and some real tugging before we
rearrange and stretch our minds enough to encompass the whole earth.(FN14)
Direct confrontations with new terrain can create a sharp contrast between
what we know and what lies before us. We might consider the
example of one American's seemingly simple trip to a traditional Japanese
restaurant. As this very tall businessman walked in, he hit his head on the
wooden beam over the entry with such force that it shook and rattled the
doors and windows and caused the other patrons to fear an impending
earthquake. The American did the same thing the very next day. Finally, on
his third trip to the restaurant, he remembered to duck when entering. Most of us are like this
person. It takes getting hit in the head -- hard and probably more than once
-- before we are ready to change our mind-sets. And we need to expand our
minds to recognize global opportunities and to marshal worldwide
organizational resources. We need to emotionally connect with people who are
different from ourselves and engender their good will. We need to understand
people of different ethics and demonstrate integrity in a way that inspires
trust. We need to embrace the constant dualities and tensions of global and
local business demands. One reason that inquisitiveness differentiates
between successful global leaders and those who struggle with worldwide
responsibilities is that it ignites and fuels the motivation to go through
this mind-altering process. STRATEGIES FOR DEVELOPING
GLOBAL LEADERSIn our research across Europe, North America, and Asia, we
found four strategies that, when properly used, are effective at developing
global leaders: travel, teams, training, and transfers. TRAVELForeign travel, the
first strategy, must put potential global leaders in the middle of the
country, its culture, economy, political system, market, and so on,
uninsulated by the common corporate cocoon of a western luxury hotel, car and
driver, dutiful staffers, and choreographed itinerary. When Procter & Gamble
CEO John Pepper travels, he visits several families' homes in each country to
see firsthand how they use products, before he goes to his hotel or office.
His approach helped him see that the French prefer front-load washers and
would not easily change to top-load washers. This, in turn, helped Pepper
better manage the introduction of a new cold-water detergent brand globally
and, at the same time, find a way to meet the local need for distributing the
detergent evently throughout the clothes in front-load washers. This led to
the invention of an innovative plastic ball into which a customer pours the
detergent; it evenly distributes the detergent through little holes. The successful global
leaders in our survey consistently described two ways to enhance the developmental
potential of international travel: First, take detours. Often the greatest
contrasts and opportunities for stretching and rearranging minds are found
off the beaten path. Second, get wet. Dive into the shops, markets, schools,
homes, and so forth to find out what local life is really like. TEAMSThe second strategy
is to establish teams in which individuals with diverse backgrounds and
perspectives work together closely.(FN15) Contrasting views and values can
force members to think globally. Managed well, a culturally diverse team can
also produce better business decisions. Recently, Black &
Decker implemented a 360 degree performance appraisal and feedback system,
using a team from the United States and several Asian countries, including
Singapore and Malaysia. Tracy Billbrough, president of Black & Decker
Eastern Hemisphere, felt that the global team experience helped him better
understand how to connect emotionally with people from different cultural
backgrounds and appreciate why those connections aided in successful
implementation. Multicultural teams can
be quite problematic, however, if not managed well. To help make teams more
effective in developing global leaders:. * People should become
team members before becoming team leaders. * In general, people
should be members or leaders of single-function, multicultural teams before
becoming members or leaders of multiple-function, multicultural teams. * Companies should give
team members adequate training in topics such as cross-cultural communication,
conflict resolution, and multicultural team dynamics. TRAININGThe third
strategy, training, can supply all the contrast and confrontation of teams
with a structured learning environment. For example, Sunkyong, one of the
five largest industrial organizations in Korea, has a global leader program
that involves both classroom and action learning projects for participants
from the company's worldwide businesses. One project examined liquid natural
gas opportunities in China. Its outcome helped Sunkyong avoid some costly
mistakes; the training program teams discovered partners who were much more
capable and competent than those the Chinese government had been promoting.
Y.C. Kim, director of human resources, felt that exposure to various people through
the company-provided training program enhanced his organizational savvy, and
he met people who could help him in the future. To enhance global
leadership development, effective training programs should have these
characteristics:. * Participants should
come from the company's worldwide operations. * Programs should include
topics on international strategy and vision, worldwide organizational
structure and design, change management, cross-cultural communication,
international business ethics, multicultural team leadership, new market
entry, dynamics of developing countries and markets, and managing in
uncertainty. * To ensure that the
training encourages people to rearrange and stretch their minds, programs
should include action learning components such as a field-based business
project. TRANSFERSThe fourth, most
powerful strategy is to provide overseas assignments.(FN16) We asked leaders:
"What has been the most powerful experience in your life for developing
global leadership capabilities?" Eighty percent identified living and
working in a foreign country as the single most influential experience in
their lives. Given the respondents' diverse nationalities, functional
experiences, company affiliations, and so on, this finding is significant.
More than any of the other three strategies, working in a foreign locale
every day makes it possible to have mind-altering, head-cracking experiences.
Not everyone is open to
the potential of an international assignment. People usually have one of four
basic responses:. Broken heads. People with
no global leadership potential have such thick heads they do not even realize
when they have hit them and hence learn nothing from the assignment. Bruised heads. Those with
little potential realize that they have hit their heads, but they go back to
being just as they were before the mishap and learn almost nothing. Bright heads. People with
a moderate amount of potential learn to duck after they first hit their
heads; that is, they learn country-specific lessons. Brilliant heads. When
unexpectedly hit in the head, people with significant talent do not ignore
it, do not try to simply reconstruct their original mind-sets, and do not
create unique mental maps for each new situation and country. Instead, they
continually monitor little bumps and major cracks and then update contingent,
general mental maps that transcend country boundaries. For example, NORTEL
(Northern Telecom) maximizes the learning impact of international transfers
by carefully managing each phase. NORTEL establishes candidate pools for
international assignments, encourages informed self-selection, provides
predeparture training, establishes support mechanisms, plans for
repatriation, debriefs employees and families on return, and uses
repatriates' international skills and knowledge throughout the organization.
NORTEL's strategic and systematic approach to international transfers
produces increased market reach, quick innovation transfers, sound strategic
alliances, and better global leaders. How can firms enhance the
power and effectiveness of international assignments? Select the person
carefully. Begin by thinking about how the person and the company will use
the international experience in the future. Consider the person's
family. Ensure that family members are well suited for the assignment. Their
difficulties could cause the global leader to lose the development potential
of the assignment. Provide training.
Training helps people adjust quickly, be resilient, and better capture the
potential of an assignment. Facilitate repatriation.
Companies need to retain people to leverage their international development.
Unfortunately, approximately 25 percent of U.S. expatriates who successfully
complete an international assignment leave their company within a year.
Companies such as Monsanto, however, employ certain strategies to retain and
better utilize potential global leaders after international assignments: They
provide a sponsor to help with placement and reentry and plan for
repatriation three to six months in advance. They help employees locate a
suitable position before their return. They allow some "down time"
for employees to put things in place at home. They provide repatriation
training and facilitate the family's readjustment. They provide the
opportunity to use international experience and allow for reasonable autonomy
in the first job following repatriation. CONCLUSIONLike explorers
of old, today's global leaders face uncharted seas. While the characteristics
these leaders must possess could clearly benefit domestic leaders, the
difference is that global leaders cannot succeed without them. Our research
suggests that most companies clearly lack the quantity or quality of global
leaders they need -- today or in the future. In the near term, this may
create a valuable "free agent market" for those with proven
capabilities until more leaders can be developed. Added material. Hal B. Gregersen is an
associate professor of international strategy and leadership, Marriott School
of Management, Brigham Young University. Allen J. Morrison is an associate
professor of multinational marketing at the Richard Ivey School of Business,
University of Western Ontario. J. Stewart Black is managing director and principal,
Center for Global Assignments, and visiting professor, University of
California, Irvine. This research was funded
in part by the David M. Kennedy Center for International Studies and the
Center for International Business Education and Research at Brigham Young
University. The authors' book, Global Explorers: The Next Generation of
Leaders, will be published by Routledge in March 1999. Table 1 Importance of
Global Leadership Compared to Other Needs(FN*). (TABLE)Dimension Average
RatingCompetent Global Leaders 6.1Adequate Financial Resources 5.9Improved
International Communication Technology 5.1Higher Quality Local National
Workforce 5.0Greater Political Stability in Developing Countries 4.7Greater
National Government Support of Trade 4.5Lower Tariff/Trade Restrictions in
Other Countries 4.4. 1 = Not at all important;
7 = Extremely important. FOOTNOTE* Based on survey
of U.S. Fortune 500 firms in 1997. Figure 1 Quantity and
Quality of Global Leaders How many global leaders do firms have? How capable
are global leaders? Figure 2 Systems for
Developing Global Leaders. FOOTNOTES1. R. Daft,
Management (New York: Dryden, 1997). 2. J. Welch, speech at
General Electric, Spring 1997. 3. For a complete review
of characteristics related to international assignment success, see:. J.S. Black, H.B.
Gregersen, M.E. Mendenhall, and L. Stroh, Globalizing People through
International Assignments (Reading, Massachusetts, Addison-Wesley, 1998);
and. J.S. Black and H.B.
Gregersen, So You're Going Overseas: A Handbook for Personal and Professional
Success (San Diego, California: Global Business Publishers, 1998). 4. For a discussion of
the relationship between global effectiveness and understanding culture,
see:. S. Weiss,
"Negotiating with 'Romans --Part 1," Sloan Management Review,
volume 35, Winter 1994, pp. 51-61; and. L. Hoecklin, Managing
Cultural Differences: Strategies for Competitive Advantage (Workingham,
England: The Economist Intelligence Unit and Addison-Wesley, 1995). 5. For the first major
review of this concept, see:. M.E. Mendenhall and G.
Oddou, "The Dimensions of Expatriate Acculturation: A Review,"
Academy of Management Review, volume 10, number 1, 1985, pp. 39-47. 6. For example, see:. J.S. Black,
"Personal Dimensions and Work Role Transitions: A Study of Japanese
Expatriate Managers in America," Management International Review, volume
30, number 2, 1990, pp. 119-134. 7. M. Nyaw and I. Ng,
"A Comparative Analysis of Ethical Beliefs: A Four Country Study,"
Journal of Business Ethics, volume 13, number 7, 1994, pp. 543-555; and. M. Philips,
"Bribery," Ethics, July 1984, pp. 621-636. 8. For a review, see:. Black et al. (1998),
chapter three. 9. The trade-offs between
gathering too much data and too little are discussed in:. G. Stalk, "Time --
The Next Source of Competitive Advantage," Harvard Business Review,
volume 66, July-August 1988, pp. 41-51. 10. For an academic
perspective, see:. A. Morrison and K. Roth,
"A Taxonomy of Business-Level Strategies in Global Industries,"
Strategic Management Journal, volume 13, number 6, 1992, pp. 399-417;. M. Porter, "Changing
Patterns of International Competition," California Management Review,
volume 28, Winter 1986, pp. 9-40; and. S. Ghoshal, "Global
Strategy: An Organizing Framework," Strategic Management Journal, volume
8, number 6, 1987, pp. 425-440. 11. For a more complete
discussion of arbitrage advantages that come through globalization, see:. G. Ragazzi,
"Theories of the Determinants of Direct Foreign Investment," IMF
Staff Papers, July 1973, pp. 471-498. For a discussion of the
advantages of global integration, see:. C.K. Prahalad and Y. Doz,
The Multinational Mission (New York: Free Press, 1987). 12. For a discussion of
the impact of exchange rates on global competition, see:. R. Aliber, "The MNE
in a Multiple-Currency World," in J. Dunning, ed., The Multinational
Enterprise (London: Allen & Unwin, 1971); and. D. Lessard,
"Transfer Prices, Taxes, and Financial Markets: Implications of
International Financial Transfers within the Multinational Corporation,"
D. Lessard, ed., International Financial Management: Theory and Application,
second edition (New York: Wiley, 1985). 13. H. Crookell and A.
Morrison, "Subsidiary Strategy in a Free Trade Environment,"
Business Quarterly, volume 55, Autumn 1990, pp. 33-39; and. K. Roth and A. Morrison,
"Implementing Global Strategy: Global Subsidiary Mandates," Journal
of International Business Studies, volume 23, number 4, 1992, pp. 715-735. 14. For an excellent
discussion of the challenges of learning in a global context, see:. D. Leonard-Barton,
Wellsprings of Knowledge: Building and Sustaining the Sources of Innovation
(Boston: Harvard Business School Press, 1995); and. Y. Doz, K. Asakawa, J.
Santos, and P. Williamson, "The Metanational Corporation" (Banff,
Canada: Academy of International Business Annual Meeting, paper, 26-29
September 1997). 15. R. Belbin, Management
Teams: Why They Succeed or Fail (London: Heinemann, 1991);. P. Evans, E. Lank, and A.
Farquar, "Managing Human Resources in the International Firm: Lessons
from Practice," in P. Evans, Y. Doz, and A. Laurent, eds., Human
Resource Management in International Firms: Change, Globalization, Innovation
(London: Macmillan, 1989). 16. Black et al. (1992);.
"The Fast Track
Leads Overseas," Business Week, 1 November 1993, pp. 64-68; and. L. loannou,
"Cultivating the New Expatriate Executive," International Business,
July 1994, pp. 40-50. DESCRIPTION OF RESEARCHWe
conducted our research from 1994 through 1997 in two separate efforts:. First, we interviewed 130
executives in fifty firms across Europe (fifteen firms), North America
(twenty-five firms), and Asia (ten firms). Of these interviews, ninety were
with senior executives. We asked the executives to identify someone in their
company who is "an exemplar of future global leadership -- whom senior
management saw as clearly being given global leadership responsibilities and
who would serve as a role model of global leadership to others in the
future." We conducted interviews with forty such leaders. In all 130
interviews, we asked two questions: (1) What are the key characteristics of
effective global leaders? (2) What are the key means of developing these
characteristics? Second, we sent a survey to human resource managers
responsible for executive development in U.S. Fortune 500 firms in 1997. We
received usable surveys from 108 firms. The survey asked about (1) the
importance of global leadership compared to other resources (e.g.,
financial), (2) the quantity and quality of their global leaders, (3) the
importance of global leadership characteristics (identified in the interviews
described above), and (4) their current and future development efforts. INQUISITIVENESS: MIKELL
RIGG MCGUIREIn one of the fastest growing divisions of Franklin-Covey (the
result of a merger of Franklin Quest and the Covey Leadership Center), Mikell
Rigg McGuire, age thirty-five, vice president of international, deals with
operations in more than sixty countries. Although she is constantly traveling
with her team, rather than being stressed by the travel, she invigorated.
Before going overseas, McGuire watches international news networks and reads
international magazines; she collects books and articles on the specific
place she is to visit. She talks to friends who might know people in the
country and calls them up to ask if they can help her understand the country.
They might send her a book on art, for example, which "reflects what is
important to them about the country," she commented. She continues to
learn as she travels to "get that feel for the place.". On a recent assignment,
her team committed to spending at least one evening out on each leg of the
trip to explore the culture. They wanted to "take in a piece or flavor
of that country to experience it." Sometimes they stayed in traditional
local hotels, instead of generic American ones. McGuire's approach to
building inquisitiveness into Franklin-Covey rests on this assumption:. "It is pretty tough
to create open-mindedness. It almost starts from infancy and increases from
all your experiences. Instead, I prefer building a team of people who show a
nugget of inquisitiveness and open-mindedness. Then, you mentor them. It is
an ongoing process to build these capabilities, not something that happens
overnight.". CONNECTION: JON HUNTSMAN,
JR.Jon Huntsman, Jr., thirty-nine, is vice chairman of Huntsman Corporation,
a firm started by his father in 1970. Huntsman is the largest privately held
chemical manufacturing company in the United States, with annual worldwide
sales approaching $6 billion and 7,000 employees in twenty-one countries. Despite huge
responsibilities, Huntsman works hard to stay connected to his employees. In
his interview, he pointed out that his company was built on acquistions that
resulted from the failures of such giants as Shell, Texaco, Monsanto, Eastman
Chemical, and Hoechst Celanese. According to Huntsman, these failures
occurred in part because their leaders failed to connect with employees and
inspire commitment. To stay connected to employees, Huntsman and a team of
senior executives visit each of the company's facilities every December and
meet every employee in its plants worldwide. Huntsman commented:. "In December, we are
gone every single day before Christmas. We visit every Huntsman factory,
every facility around the world. We shake everyone's hand. We talk to every
spouse and child and learn about what they are doing. Where are you going to
school? What do you like doing? Is your family happy? What can we do for you?
We also give them each a holiday gift. Maybe it's a television, or a stereo,
or a cruise. We want them to know how much we appreciate them. We want to
make our employees feel they are the most important people in the universe.
We honestly believe this. "Making these visits
is never easy. We are gone the entire month. But I love the visits. We all
derive incredible energy from them. We love the people.". Huntsman's ability to
connect emotionally with employees stems from his sincere interest in them.
His curiosity about their culture and their personal circumstances allows him
to truly understand their capabilities, motivation, and values. This
connection brings huge rewards to the company and creates goodwill where
insights and ideas percolate up from the factory floor. He remarked:. "Making these visits
lets us connect with our people personally. We believe that the best ideas
come from the factory floor. When people have met me, shaken my hand, and
talked to me, they feel they know me. I challenge them by saying, 'Here is my
number. If you have a good idea, a way to work more efficiently, call me. And
they do!". INTEGRITY: LANE COOKIn
1994, DSL, a $200 million California-based international shipping company,
hired Lane Cook to work in its new Mexico City office. DSL has facilities
throughout the United States as well as Hong Kong, Taiwan, Korea, China, and
Singapore. It focuses on consolidated shipments for the retail industry and
considers major retailers like Wal-Mart, Sears, Target, and J.C. Penney its
main customers. DSL de Mexico had been
through tough times, including the dramatic devaluation of the peso against
the U.S. dollar and the loss of a major U.S. customer that decided to build
its own distribution and warehouse facility in Mexico, only 1.5 miles from
DSL's building. With so much unused capacity and costs already cut to the
bone, Cook was under enormous pressure to raise revenues. He believed that
the key to growth was developing local business. In 1996, Cook had nearly
completed negotiations on an agreement with a mediumsized, Mexico City-based
general merchandise retailer, SuperMart (a disguised name). SuperMart was to
take possession of the goods in Asia and contract with DSL to ship them to
Mexico via the United States. Normally, DSL would have selected the
transportation company to bring the freight from the U.S. border to Mexico
City, but, in this case, the negotiator for SuperMart, Jose Hernandez (a
disguised name) would sign the agreement only if he could select the Mexican
transportation company. According to Cook:. "I thought this was
a little peculiar. I was even more concerned when I later heard a rumor that
Hernandez had a bank account here in Mexico City as well as a bank account in
Laredo, Texas, and that the trucking company he selected had promised to make
a payment to his U.S. bank account whenever a shipment was made. The Laredo
bank would then wire the money to Hernandez's Mexico City account. "I had a choice. On
the one hand, I could just ignore the rumors and sign the deal. We needed the
business, but if the rumors were true, we weren't paying these kickbacks. Or
I could investigate and ask Hernandez about the whole thing. "As I checked into
it, it seemed okay, but I approached Hernandez anyway. When I did, he denied
the rumor categorically. Yes, he had a bank account in Laredo, but so did
many wealthier Mexicans who worried about the stability of the peso. Quite
frankly, I think he was a little offended that I raised the issue, but we
were able to work it out.". Cook was guided in his
decision making by his commitment to three principles: first, that he was
morally obligated to ensure that customers were not being cheated; second,
that he not engage in any activities that reflected negatively on his company,
either in Mexico or elsewhere; and third, that his peers and superiors would
approve his actions. DSL de Mexico is now highly favored by sophisticated
local and international retailers wanting a shipper that provides
high-quality, ethical service worldwide. MANAGING UNCERTAINTY:
GARY GRIFFITHSMarriott Corporation assigned Gary Griffiths to the position of
director of finance when it opened its first hotel in Poland--the Warsaw
Marriott. From the outset, Griffiths faced an endless stream of significant challenges
everyday. One was setting up a bank account in Poland. After calling the
local bank that planned to open a branch in the hotel complex, Griffith
discussed the account with the bank's vice president, who answered, "I
understand what you need, but we do not have room in our system for your
accounts until we open our new branch in six months. I'm sorry, but we can't
help you." Then the bank vice president continued, "I can't open a
business account for your company, but let me open a personal account for
you." Griffiths called the treasurer of Marriott in the United States to
announce that he was ready for the first transfer of cash to the hotel,
$200,000. The treasurer answered, "Terrific! Give me the name on the
account." Griffiths hesitantly responded, "Gary Griffiths."
There was a long pause on the other end of the line. The funds were ultimately
transferred to Griffiths' personal bank account, but they were declared
"missing" in the bank's system for fifty-six days, and the Warsaw
Marriott still had no operating cash. Griffiths drove to Austria and picked
up U.S. $25,000 cash at the Vienna Marriott and brought it back to Poland.
Reentering Poland alone with the money, Griffiths was extremely nervous,
because he had to declare to a border guard with a machine gun that he was
transporting $25,000, more than fifty years of wages for the guard. Griffiths
made it through safely, returned to the hotel, and deposited the money,
directly into his personal account. After living through this
and other experiences filled with endless uncertainty, Griffiths concluded:. "Things are not the
same when you get out there in the world. You have to be willing to
understand new environments and figure out how to deal with them. You have to
learn to improvise. You must be ready to change how you do business. You must
relish the uncertainty of it all.". BALANCING TENSIONS:
STEPHEN BURKEStephen Burke, age thirty-nine, was president of broadcasting
for ABC, part of Disney's recent ABC/Capital Cities acquisition. In 1992,
Michael Eisner, CEO of the Walt Disney Company, asked Burke to take the
position of vice president in charge of park operations and marketing at
EuroDisneyland. EuroDisneyland, a (quasi)
joint venture between Disney and the French government, opened in April 1992
amid a storm of bad publicity. From the beginning, the project was beset with
problems:. * Attendance was off 10
percent from projections. * Per-person spending in
the park was less than half that in Japan. * Hotel occupancy rates
were 37 percent versus 92 percent in Disney's U.S. properties. * Labor costs were
significantly higher than those in the United States because of the inability
to dramatically increase and decrease staff during peak and off seasons. * Negative publicity and
headlines abounded, like "Disney Is Cultural Chernobyl.". * Protests from French
farmers continued because of the French government's appropriation of farm
land for the Disney theme park. * Some workers resisted
the Disney management style and dress code. * Construction cost
overruns were nearly $2 billion. * Operating losses were
approaching $1 billion. Burke and the local
management team faced the task of devising and implementing strategic changes
that would ensure growth and financial health. The first significant change
was renaming the park. "Euro" seemed more like a chemical mix of
unnatural ingredients than a place. Yet the name "Disneyland" was
magical. Burke remarked: "With Disneyland, you get a magical place, and
everybody loves Paris. By including 'Paris in the name, the French would be
more receptive. Also, by definition, we can tie the park to the city in our
marketing and advertising campaigns.". After changing the park's
name to Disneyland Paris, Burke continued to struggle with a central challenge:
How to make the park profitable and strike a balance between Disney tradition
and local culture? In the end, to retain the Disney image, Burke:. * Improved hiring to
focus on outgoing, friendly Disney cast members. * Increased training to
emphasize and teach friendly service and cleanliness. * Introduced seasonal
pricing for entry to the park. * Used traditional Disney
characters throughout the park. To adapt Disney to French
culture, Burke:. * Removed the ban on
alcohol in the theme parks. * Lowered customary
Disney premium prices by 20 percent to 30 percent on admission, merchandise,
hotels, and food. * Relaxed Disney's normal
hierarchical managerial style and encouraged more individual initiative. * Cut managerial staff by
almost 1,000. These and other changes
had a positive impact on the park's financial results. Attendance figures
rose about 17 percent. Hotel occupancy rates went up, and the hotels were
fully booked during peak times. People spent more money in the park. In the
third quarter of the 1995 fiscal year, the park posted its first operating
profits. By the time Burke left in 1997, the press had mostly positive things
to say about the park. Burke balanced various
tensions between global corporate imperatives and local market conditions. He
not only managed well in the high uncertainty between headquarters in Burbank
and executives in Paris, but between Disney management and local employees
and among banks, creditors, the parent company, and the park's own interests.
According to Burke, "Balancing tensions is both the art and fun of
global leadership.". BUSINESS SAVVY: STEVE
HOLLIDAYSteve Holliday, age forty, is managing director of British-Borneo Oil
& Gas Ltd., a medium-sized British oil and gas exploration and production
company with international operations that range from Southeast Asia to the
Gulf of Mexico. Holliday knows that recognizing global market opportunities
is far more than "playing global chess" with competitors. Simply watching
where competitors move and then defending against those moves is not enough.
He commented:. "In the early 1990s,
Hong Kong-based China Light & Power (CL&P) was supplying about
two-thirds of Hong Kong's electric power. We saw an almost insatiable, unmet
demand for electricity in southern China. So we formed a joint venture with
CL&P to build a $3.5 billion coal-powered plant at Black Point in Hong
Kong's New Territories. We agreed to provide 60 percent of the capital; the
rest was to come from CL&P. CL&P's expertise was in coal-fired
plants, and the intention was for them to serve as plant operator. "As the negotiations
proceeded, ARCO China came into the picture. It had just discovered a major
gas field in the South China Sea and wanted to find a market for its gas. In
the end, Exxon had a huge power plant that would rely on a competitor's gas.
Some would argue that the deal just didn't make sense. But since the plant
began operations in early 1996, it has proven to be a great, highly
profitable investment for Exxon.". It is this ability to
think beyond the borders in a borderless world and to recognize business
opportunities through the fog of time zones, cultures, and past experiences
that separates global leaders from the rest. ORGANIZATIONAL SAVVY:
TA-TUNG WANGTa-Tung Wang was born in the Peoples' Republic of China in 1944.
After completing an undergraduate degree in Taiwan, Wang moved to the United
States for graduate work. After graduation, he worked for Kentucky Fried
Chicken. In 1986, he was made vice president of KFC Southeast Asia with
headquarters in Singapore. Wang saw that KFC had a
competitive edge over any other major U.S. fast-food chain in developing the
Chinese market; the Chinese preferred chicken to beef. Initially, Wang found
a required local partner with access to a consistent supply of KFC-approved
chickens by tapping into resources at KFC's parent company (R.J. Reynolds, at
the time), resulting in contacts at the Ministry of Light Industry in
Beijing. These contacts led Wang to the Beijing Corporation Animal Production
(BCAP), a secure supplier of KFC's most important ingredient, chicken. After countless visits to
Beijing to find a site for the restaurant, Wang learned that a three-story
building across the street from Tiananmen Square was available. As lease
negotiations proceeded, the city agency that controlled the lease asked Wang
for ten years rent up front, a total of U.S. $1 million in cash. Wang
remarked:. "I asked the local
negotiators how they came up with the $1 million figure. They said they
needed that much to finish the building. My local Chinese partners said,
'That's crazy! Don't sign. Of course I didn't have signing authority for $1
million from KFC, but I said to the negotiators on the spot, 'Let's do it.
". Wang knew who to call at
KFC and what to say. The money arrived in Beijing a few days later. The
results of this risk? According to Wang, "It was a fantastic success.
KFC got all its money back in less than a year.". How did KFC achieve such
returns when it could not exchange China profits into hard currency and was
stuck with soft local currency RMB? Wang tapped the parent company's
world-class countertrade financial skills. By this time, KFC had been sold to
PepsiCo, which also owned Taco Bell and Pizza Hut. Between KFC and these
other chains, there was a huge, on-going need for employee uniforms. Wang met
this need by funneling most of KFC's soft currency RMB profits in China into
buying uniforms for export to the United States and other countries, thus
exporting the profits from China to the United States. Without Wang's organizational savvy, KFC would never have moved so quickly and so profitably into China or found such capable partners. |
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