These managers may have factories or laboratories in a dozen countries. They may have joint ventures in a dozen more. They may source materials and sell in markets all over the world. But when push comes to shove, their field of vision is dominated by home-country customers and the organizational units that serve them. No responsible manager purposefully devises or implements an astigmatic strategy. But by the same token, too few managers consciously try to set plans and build organizations as if they saw all key customers equidistant from the corporate center.
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These managers may have factories or laboratories in a dozen countries. They may have joint ventures in a dozen more. They may source materials and sell in markets all over the world. But when push comes to shove, their field of vision is dominated by home-country customers and the organizational units that serve them.
No responsible manager purposefully devises or implements an astigmatic strategy. But by the same token, too few managers consciously try to set plans and build organizations as if they saw all key customers equidistant from the corporate center.
Whatever the trade figures show, home markets are usually in focus; overseas markets are not. Effective global operations require a genuine equidistance of perspective. But even with the best will in the world, managers find that kind of vision hard to develop—and harder to maintain. When I asked him if he would have done the same for a Belgian dealer, one who did a larger volume of business each year than his late counterpart in Japan, the unequivocal answer was no.
Perhaps headquarters would have had the relevant European manager send a letter of condolence. No more than that. After all, he was the head of a global, not just a Japanese organization. By violating the principle of equidistance, his attendance underscored distinctions among dealers. He was sending the wrong signals and reinforcing the wrong values. Poor vision has consequences. It may be unfamiliar and awkward, but the primary rule of equidistance is to see—and to think—global first.
Honda, for example, has manufacturing divisions in Japan, North America, and Europe—all three legs of the Triad—but its managers do not think or act as if the company were divided between Japanese and overseas operations.
At Casio, the top managers gather information directly from each of their primary markets and then sit down together once a month to lay out revised plans for global product development.
There is no single best way to avoid or overcome nearsightedness. An equidistant perspective can take many forms. A Geography Without Borders On a political map, the boundaries between countries are as clear as ever.
But on a competitive map, a map showing the real flows of financial and industrial activity, those boundaries have largely disappeared. What has eaten them away is the persistent, ever speedier flow of information—information that governments previously monopolized, cooking it up as they saw fit and redistributing in forms of their own devising. Their monopoly of knowledge about things happening around the world enabled them to fool, mislead, or control the people because only the governments possessed real facts in anything like real time.
Today, of course, people everywhere are more and more able to get the information they want directly from all corners of the world. They can see for themselves what the tastes and preferences are in other countries, the styles of clothing now in fashion, the sports, the lifestyles. In Japan, for example, our leaders can no longer keep the people in substandard housing because we now know—directly—how people elsewhere live. We now travel abroad. In fact, ten million Japanese travel abroad annually these days.
Or we can sit in our living rooms at home, watch CNN, and know instantaneously what is happening in the United States. This kind of fact is hard to ignore. The government now seriously recognizes that it has built plants and offices but has failed to meet the needs of its young people for relaxation and recreation. So, for the first time in 2, years, our people are revolting against their government and telling it what it must do for them.
This would have been unthinkable when only a small, official elite controlled access to all information. In the past, there were gross inefficiencies—some purposeful, some not—in the flow of information around the world. New technologies are eliminating those inefficiencies, and, with them, the opportunity for a kind of top-down information arbitrage—that is, the ability of a government to benefit itself or powerful special interests at the expense of its people by following policies that would never win their support if they had unfettered access to all relevant information.
A government could, for example, protect weak industries for fear of provoking social unrest over unemployment. That is less easy to do now, for more of its people have become cosmopolitan and have their own sources of information. They know what such a policy would cost them. In Korea, students demonstrate in front of the American embassy because the government allows the United States to export cigarettes to Korea and thus threaten local farmers. So does government.
People want to buy the best and the cheapest products—no matter where in the world they are produced. People become genuinely global consumers. Ten years ago, however, our students would have been the ones throwing stones at the American embassy.
Our leaders used to tell us American and Australian beef was too lean and too tough to chew. Black-and-white television sets extensively penetrated households in the United States nearly a dozen years before they reached comparable numbers of viewers in Europe and Japan. With color television, the time lag fell to about five or six years for Japan and a few more for Europe.
With videocassette recorders, the difference was only three or four years—but this time, Europe and Japan led the way; the United States, with its focus on cable TV, followed. With the compact disc, household penetration rates evened up after only one year. Now, with MTV available by satellite across Europe, there is no lag at all. New music, styles, and fashion reach all European youngsters almost at the same time they are reaching their counterparts in America.
We all share the same information. More than that, we are all coming to share it in a common language. Ten years ago when I would speak in English to students at Bocconi, an Italian university, most of them would listen to me through a translator. Last year, they listened to me directly in English and asked me questions in English.
They even laughed when they should at what I said, although my jokes have not improved. This is a momentous change. The preparation for has taken place in language much sooner than it has in politics.
We can all talk to each other now, understand each other, and governments cannot stop us. It is every bit as real and concrete as measurable changes in GNP or trade flows.
It is actually coming to pass. The same is true for corporations. In the pharmaceutical industry, for example, the critical activities of drug discovery, screening, and testing are now virtually the same among the best companies everywhere in the world.
Scientists can move from one laboratory to another and start working the next day with few hesitations or problems. They will find equipment with which they are familiar, equipment they have used before, equipment that comes from the same manufacturers. The drug companies are not alone in this. Not so. They caught up with the rest of the Triad in only a few short years.
During the weekend, they would work privately for Korean semiconductor companies. Their trip would have made no sense, however, if semiconductor-related machines, methods, software, and workstations had not already become quite similar throughout the developed world. Walk into a capital-goods factory anywhere in the developed world, and you will find the same welding machines, the same robots, the same machine tools. When information flows with relative freedom, the old geographic barriers become irrelevant.
Global needs lead to global products. For managers, this universal flow of information puts a high premium on learning how to build the strategies and the organizations capable of meeting the requirements of a borderless world.
What Is a Universal Product? Imagine that you are the CEO of a major automobile company reviewing your product plans for the years ahead. Your market data tell you that you will have to develop four dozen different models if you want to design separate cars for each distinct segment of the Triad market.
No one does. America, Europe, and Japan are quite different markets with quite different mixes of needs and preferences. Worse still, as head of a worldwide company, you cannot write off any of these Triad markets.
You simply have to be in each of them—and with first-rate successful products. What do you do? In the United Kingdom, for example, tax policies make it essential that you develop a car suitable for corporate fleet sales. But you start with the lead-country models. Low-cost, incremental sales never hurt. Our main challenge, however, was to avoid the trap of pleasing no one well by trying to please everyone halfway.
Their only possible response would have been to add up all the various national preferences and divide by the number of countries. They would have had to optimize across markets by a kind of rough averaging. But when it comes to questions of taste and, especially, aesthetic preference, consumers do not like averages.
They like what they like, not some mathematical compromise. Kume is emphatic about this particular point. If you mix together the primary colors of red, blue, and yellow, what you get is black. If Europe says its consumers want a product in green, let them have it.
If Japan says red, let them have red. No one wants the average. No one wants the colors all mixed together. Of course it makes sense to take advantage of, say, any technological commonalities in creating the paint. But local managers close to local customers have to be able to pick the color.
Kenichi Ohmae, The Borderless World – Neoliberal Radical Globalism
Managing in a borderless world.
Managing in a Borderless World