Globalisation : Wanted : Chief Globalization Officer
Trevor O'Hara is the founder and Principal of Renarc.
Prior to founding Renarc, Trevor spent over 20 yeas living and working internationally. Most of this time was spent as a senior executive in global-facing roles such as MCI, Nortel Networks, and Schlumberger Sema. Fluent in 4 languages, he was educated in Dublin, Oxford, Paris and Berlin.
The tidal wave of 9/11, corporate scandals, war in Iraq and economic downturn seems to be subsiding. And with light at the end of the economic tunnel at long last, many organizations will be setting their sights again on overseas expansion.
But, for every CEO, global expansion can be a double-edged sword. On the one hand, the "global imperative" has forced many business leaders to expand (globally) at whatever the cost, and for whatever the reason, often ignoring the basic principles of true value creation. On the other hand, global expansion has proven to be a very daunting task for even the most talented business leaders, and many companies have never really responded to the global opportunity with a real sense of ownership. They have either simply "muddled through" within no real expansion framework, or completely foregone a very promising opportunity. Either way, CEOs would do well to learn from the mistakes of the 1990s, and consider entrusting this key challenge to somebody who can give it the attention it deserves.
A recent study by Bain Consulting in New York tracked the 1996 - 2000 financial results of 7,500 publicly traded companies with revenues in excess of $500 million from 7 countries. The results were astonishing: only 1 in 6 companies showed a growth in foreign sales and operating profits as rapidly as its domestic ones.
The $500 million+ revenue club can somewhat afford to smart from the pain associated with failed overseas ventures. Aside from a blow or two to their credibility and a gaping hole in their budgets, many will at least be fortunate enough to pick up the pieces quickly and learn from the whole global experience. On the other hand, the large swath of growing small to medium sized businesses that forms the backbone of every market economy simply may not have the luxury of a second chance. Indeed, the CEO of a promising mid-sized firm could well be forgiven in concluding: "If the chances of global profitability are merely 1 in 6 for the larger corporations, what chances will my organization have of even surviving global expansion at all ?" Small wonder then that many organizations are tempted to simply "'put off" this terrifying prospect of failure.
Ironically, if CEOs really came to this conclusion in the first place, the fate of many organizations on the global stage would be spared. For the real words of a true leader are: " I'm not convinced we've found our reason for creating value in global markets yet. So let's not commit to investing in expansion today before doing some more homework." The truth is that all too often however, executives succumb to the temptation of the siren's call to globalization without first really understanding why it is they are expanding in the first place. History is replete with the tales of organizations that followed the seductive lure of the siren's song of "Follow Your Customers Overseas!", "Beat the Competition on their Own Doorstep!", "It's Now or Never!", "Go Global or Die!" CEOs found themselves beguiled ever deeper into global waters until they realized that their boats were never really built originally to withstand a global voyage, and they crashed on the rocks of tough local market conditions, drowning in the liability of their own "foreignness".
How then can CEOs ensure a watertight ship for navigating global waters ? What are the ingredients that ensure global organizational success the first time around ? And how can the organization build and ensure commitment to exploiting competitive advantage in overseas markets, based on rigorous and thorough analysis ? Enter the Chief Globalization Officer.
The temptation to utter, "Oh no, yet another Chief something or other" is all too profound. Perish the thought that global organizational success could be so worthy of resting in the hands of one mere mortal human being. After all, isn't globalization the responsibility of everybody in the organization, and not just the select few ? And could not Finance, Operations, Marketing, Human Resources and Sales all lay claim to a stake in this potential gold mine of a role ?
The trouble is precisely this. The clear absence of an experienced global "champion" only serves to dilute organizational focus and distract attention away from the reasons why the organization was successful in the first place: competitive advantage in its domestic markets. One of the first challenges of globalization is for an organization to preserve a high level of domestic focus and responsiveness, and yet still champion the paradigm shift to global organizational thinking. This can be a major juggling act for any CEO. Yet by entrusting the focus of the global challenge to somebody who may often be more globally experienced and savvy than the CEO, the organization has taken its first major step so characteristic of successful global companies - maintaining the fine balance between global focus and local relevance.
Secondly, if ever there was a chance for the words "global expansion", "ownership" and "commitment" to find the opportunity of peaceful cohabitation in the same sentence, then the catalyst for this is a globalization champion with the patience, experience, thick skin, insight, foresight, intuition and above all the communications skills of a particular type of global leader. The mere title Chief Globalization Officer is tantamount to throwing the cat among the domestically-minded pigeons, causing ripples throughout the entire organization, challenging the very existence of the business itself.
For it takes a particular type of leader to stop the organization dead in its tracks and ask: "Are we really sure what we are doing here ? Are we really clear on the reasons for globalization that will allow us to create value globally or expanding at whatever the cost ? Are we realistic about the true cost in terms of time, effort and organizational commitment to really make this happen, or are we just going to figure it out as we go along ? Are we prepared to invest in recruiting, developing and retaining the best international skills and talent that will make us successful, or are we going to make do with the people we have ? And ultimately, are we really prepared for the profound organizational transformation to a corporate global mindset, or shall we continue with the same old philosophy of: "Well, it worked at home for so long, so it should work overseas".
Finally, it is precisely the corporate global mindset that so many organizations ignore at their peril. A CEO driving global organizational growth focusing on PROCESS alone is akin to driving a stick-shift car with one-hand. Sooner or later, the gear needs to be changed, either upwards or downwards, depending on desired thrust, speed and driving conditions. And the use of a single hand for both driving and changing gear is not only risky. It's utterly dangerous. Sooner or later, driving an organization towards global markets will require a second steady hand, a GLOBAL MINDSET for both balancing direction and also changing speed and thrust.
The CGO is that second steady hand: the catalyst for global thinking, perspective and responsiveness. The CGO ensures that not only does a corporate global mindset help organizations to enter new markets, but also to maintain competitiveness in those markets for years to come, by keeping up with the changes and shifts in demand, and rising and falling levels of complexity and unpredictability in global markets. This is brought about through a relentless pursuit of the best global leadership talent to be able to respond to local conditions, through a continuous refinement of organizational structures to meet local conditions, through the management of knowledge and information, through the best use of technology to harness that knowledge and information.
The fact that CEOs often find expansion such a daunting task is because it is a phenomenon they may encounter perhaps only once or twice in their entire career. But for precisely this reason, it seems almost hard to believe that the role of Chief Globalization Officer has never been taken so seriously before. Surely, investing in a champion that focuses and challenges the very heart of the organization, steers it through profound change and transformation, becomes a catalyst for a the development of a greater global mindset, and helps maintain a balance global responsiveness and local relevance, is a more cost-effective option than driving with one hand on the wheel towards possible extinction.
© Copyright Trevor O'Hara 2004