“You might buy a local [mobile phone] plan.”
Intercultural management consultant Mrs. Begoña (Bego) Lozano has over 17 years experience living and working in different countries and cultures while helping Fortune 500 executives understand, manage and utilize cultural differences to build successful business relationships. Someone like Bego knows how to get what she needs locally while travelling globally. In a discussion this month about the relatively new concept of Globally Integrated Enterprises (see below for definition), Bego made an analogy between the desire of local consumers (any global enterprise) for best service, and the simple act of buying a local mobile plan when abroad. “When you travel and you have AT&T or T-Mobile or Sprint or whatever and you go to Germany, not necessarily the best roaming provider will be the best provider for your carrier…You might buy a local [mobile phone] plan.” The lesson: Though the architecture of global enterprises may be built to present customers with international offerings (e.g., roaming providers), the customer benefits most from local offerings (e.g., local plans) of global enterprises.
What are Globally Integrated Enterprises (GIEs)?
In part, Globally Integrated Enterprises are defined by what they are not. GIEs are not multinationals.
GIEs are characterized by their balance between centralized and decentralized business functions; they “shed national identity and serve customers from wherever in the world makes most sense, backed by a global supply chain and global support functions” (Financial Times, Hill, 2014).
Bego uses the word, „utopic“ to define GIEs. „Countries are so different; laws are so different; cultures are so different,“ she says, „that you need to take into account those differences. If you just pretend they don’t exist…eventually you explode!“
Balancing the Local and the Global
According to the April 2014 Financial Times article, „Business is going native again,” former chief executive of IBM, Sam Palmisano, publically shared the idea of GIEs in June 2006 in an article in the same publication where he argued that, “Multinationals have been superseded”:
“[T]here has been a lot less in-depth thought about the institution many see as globalisation’s primary driver, the multinational corporation. The very word we use suggests how antiquated our thinking about it is. The emerging business model of the 21st century is not, in fact, ‘multinational’. This new kind of organization—at IBM we call it ‘the globally integrated enterprise’—is very different in its structure and operations.” (Financial Times, Palmisano, 2006).
At IBM, for example, business had been previously organized into “mini IBMs” that duplicated all main corporate functions in each country. Palmisano points to IBM as an enterprise who is instead now being organized around global services (e.g., Human Resources, Finance, Legal and Real Estate) which will free country-specific leadership to focus on client work and the development of “centers of excellence”. Bego Lozano sees such centers of excellence as perhaps the single commonality between GIEs and the concept of Purple Space (see below for definition). According to her professional calculations, Purple Space is a better investment.
Purple Space: Enabling long-term sustainable growth
Purple Space is another recent and innovative concept that balances the local with the global. In the multiple spaces of global collaboration, Purple Space is a collaboration space “characterized by a certain degree of frictionless communication and collaboration processes in a global environment and is thus an artificial social innovation that has to be built on purpose” (Closeness at a Distance, 2013). The concept was specifically developed as a solution for virtual teams, groups and networks, and as one of a set of Virtual Performance Improvement® blended portfolio of products and services.
Bego is an advocate for Purple Space and simply defines it as, “Taking the best of both worlds and making a ‘game plan’ that will work for everyone and that everyone will feel comfortable with.”
GIE Challenges & Purple Space Solutions
“What better example than the [2016] Olympics?,” asked Bego when discussing practical examples of GIE-like global organizations gone wrong. “They’ve [the International Olympic Committee (IOC)] given seven years advantage to every city who will be hosting the Olympics and Rio is nowhere near where it should be…Maybe if the IOC knew the cultural differences they might have given a little bit more close follow up on what’s going on.“ She is clear that, „It’s not only the very developed countries that will be able to host the Olympics,“ and suggests a culture-specific approach to management of diverse country cultures: „How do you do it with countries like Brazil where they are very conflict averse?…You have to give them opportunities to tell you what’s going on…We all know it’s going to be a great party. But will the logistics work? I doubt it.” Likewise, “One challenge [of GIEs] will be to strike the right balance between global and local functions” (Financial Times, Hill, 2014).
While more “straightforward” functions may successfully be centralized globally, says Bego, locals will necessarily more effectively manage relationships with global enterprise headquarters in order to secure local business needs. “Things like taxes and Human Resources and Legal—if you have to do that globally, I think it will be very inefficient. That’s my opinion lately,” says Bego as she considers her current experience relocating from Sao Paulo to San Francisco. “It’s a local person that knows how to deal with headquarters…a person that can create a Purple Space with headquarters. It’s not only about speaking the language and understanding the culture, but being able to explain the local needs/intricacies and really making sure that they harness what’s needed.” In the case of the 2016 Olympics in Rio, “Purple Space solutions” may have included culturally-informed management of the process by the IOC global enterprise, locally-adapted best practices from past years Olympics, joint IOC and Brazilian collaboration about alternate models of Olympics management in developing country economies—or, all of the above.
In Bego’s eyes, long-term globally functional and locally effective GIEs are an illusion; she sees GIEs as oriented toward short-term success. “If you want sustainable growth,” Bego advises, “you need Purple Space. There’s no way around it. Will it take more time? Yes. Will it take more energy? Yes. Will it take more expense? Initially, yes. But in the end, [applying Purple Space to global enterprise processes] will be more efficient and less expensive…Purple Culture will enable that long term sustainable growth that GIEs will not.”
Our “Glocal” Future?
For those global enterprises that seek to re/organize their business structures into GIEs, Bego Lozano anticipates that “there will be a need for intercultural consultants to help understand how to deal with local cultural situations. I think it will be an area of growth and opportunity because unfortunately so many things will not work.” As it always does, pursuit of intercultural competence development will represent an opportunity for all—HQ and country-based employees of global enterprises; local employees of those enterprises; and intercultural consultants. “Let’s just hope that they find that the expertise should come from cultural experts and not blame it [business challenges] on product or other functions. Sometimes culture is the last part that you think is not working…When you overlook the cultural part you might be losing precious time.”
The above article was included in the May 2014 intercultures e-newsletter.
Photo credit title picture: Getty Images.