Chapter One: The New Business Reality
I still remember my first trip to Japan. Surrounded by the signs and sounds of Japanese, I felt utterly lost. Unable to decipher even the most basic information in restaurants and on city streets, I retreated into myself. It was hard to stretch into unfamiliar territory. When I asked questions, people reacted in ways I couldn't quite understand. I simply couldn't read their psychology.
In an instant, I understood what it means to be illiterate. Only when I got home, relieved to be back in the United States, did I fully recognize the personal cost of global illiteracy. Like adults who can't read, I had hidden the fact that I couldn't understand the verbal and nonverbal cues around me. Although intrigued by the differences, I spent a lot of energy protecting myself for fear of appearing foolish. I felt defensive, making it difficult to fully experience the world of Japan.
Being illiterate, even for that short period of time, taught me a lot about the power of literacy in our lives. Many of us take literacy for granted. We can't imagine or remember a world in which we were not able to read. But all of us were there at one time.
Watching a child learn to read is like witnessing a miraculous process unfold. A whole world suddenly opens up to him or her, enriching life beyond measure, adding depth and feeling to every experience.
We urge children to read at such an early age, and we worry when they don't proceed at the right pace. We do everything we can buy them books, take them to libraries, show them flash cards to ensure they master this new language, these strange, black hieroglyphics.
Once children have mastered basic words, we urge them toward greater complexity of ideas. One-syllable words give way to three-syllable ones, complex descriptions paint a picture richer than simple picture books, and dialogues become multilayered and more subtle.
But literacy doesn't matter just to children. In the new global world of business, we're all beginning readers. Like children, we must learn to read the world's new language by deciphering the handwriting, engaging in dialogues, and sharing ourselves in the process.
Literacy matters. And the worst thing for adults in the twenty-first century is being unable to read the world. Being able to read this emerging world allows us to witness an unfolding, an opening up of new possibilities. To fully participate in the global society, we need a common vocabulary, syntax, and grammar, and a rich base of knowledge. We need to move beyond comprehension of letters and language to a deeper understanding of ourselves, our customers, our markets, and the cultures of the world.
Global literacy is our new language for the twenty-first century.
The Twenty-first-Century Marketplace
We stand on a precipice, stepping into a new era, a time of enormous change and uncertainty characterized by the emergence of the first truly borderless, interconnected global economy. It's the world's youngest economy, fueled by the spread of free markets and democracy around the world.
Walls are crumbling among markets, organizations, and nations. People, information, labor, and capital move freely as never before. Global media, international travel, and communications have eroded distance and borders, linking us instantly to one another from Prague to Shanghai, from Lima to London. A tightly woven fabric of distant encounters and instant connections knits our diverse world together.
Ours is a unique place in history. Not since the Industrial Revolution have we faced such forces in two fundamental areas of world society: the electronic information revolution and global economic interdependence. This isn't just a change in degree, but a fundamental change in kind. Globalization is a new international system that is shaping domestic and international politics and changing the rules of trade. A dynamic and ongoing process, globalization involves the integration of markets and nation-states, enabling individuals, corporations, and countries to reach the world farther, faster, deeper, and cheaper.
We live in a networked, interconnected world with computer devices embedded in telephones, cars, televisions, and household appliances. The Internet and electronic commerce are dramatically changing how we do business. Our relationships with customers and suppliers have forever been altered, and employees have access to information never dreamed of ten years ago. Everyone is talking to everyone else in real time.
Add to that the fact that all business is global and all markets are local. World markets rise and fall together. Currency traders in Shanghai, Toronto, and London interact at a moment's notice. Global mergers and acquisitions have created megabusinesses with social and political ramifications we couldn't have planned for. The sheer number of competitors around the world continues to increase exponentially, and we're now racing to serve global customers, not just local ones.
In the twenty-first century, competition comes from all corners. Not only does the United States compete with Taiwan and Switzerland for jobs and customers, but businesses in Chicago must also compete locally with companies from Canada and Sweden.
Furthermore, businesses in various countries are infiltrating one another's territories as never before. For example, European firms own large portions of the American publishing industry, while the United States owns much of the Brazilian banking system. Japan owns a large portion of the world's automobile market, while Scandinavian companies provide a majority of the world's mobile telephones. India produces the world's tractors, France is the largest producer of glass, Chile is the leading supplier of copper, and China produces many of the world's apples.
Global brands bring us together, linking people in Cape Town to unlikely partners in the West Bank. Global consumerism has skyrocketed, creating a proliferation of global brands while homogenizing consumer tastes. People in the most remote regions of our world recognize the red Coke can, McDonald's golden arches, and the silver medallion of Mercedes-Benz.
International trade is burgeoning, as evidenced by explosions of foreign direct investment, export expansion, and the growth of multinational corporations. Globally connected capital markets are producing open, transparent exchanges where investment flows seamlessly among trading floors worldwide.
Even within companies, cubicles are disappearing in favor of virtual teams. Companies seek suppliers, customers, and employees globally. Sharing techniques among industries and across national borders, they develop network organizations that are fast, flat, flexible knowledge companies. Their corporate cultures are characterized by less bureaucracy, more teamwork, and infectious entrepreneurship. In this competitive marketplace of winners and losers, there is a race for brainpower, creating whole new knowledge-generating industries.
Government's role is also diminishing as the world moves from state control to market economies and the privatization of business. Increasing pluralism and democracy accelerate the creation of one global community with common interests and concerns.
But not all is good news and global harmony. New threats proliferate. Chemical and biological warfare, urban terrorism, and digital espionage represent only a portion of our global minefield. And threats of nationalism are lurking just under the surface.
Still, there's no turning back. These trends toward a truly integrated, borderless, global economy will continue and accelerate. The overarching market in the twenty-first century is the global market, an interconnected and complex system we must understand. Globalization is the tidal wave our worldwide tsunami of the twenty-first century. As Peter Bonfield, CEO of British Telecommunications, put it, "I can't promise anyone a smooth ride over the next few years, but I think that's good news, because great turbulence also means great opportunities."
Traveling Around the World
To fully understand this new twenty-first century marketplace, we need to go out into the world and experience it.
This book will take you on such a journey through the world's major regions Europe, the Americas, Asia, Africa, and beyond each with its own unique personality, economy, and geography, and each with its own distinctive leaders.
North America is the land of shareholder capitalism, individualism, and economic triumph. Home of the primary world superpower, North America thrives on venture capital, Hollywood, and the technological revolution. The land of opportunity, the United States is also a nation of the middle class, yet with great disparities among social and economic classes and violence, drug use, and broken families. The North American Free Trade Agreement links the United States with both Canada, home of multiculturalism and tolerance, and Mexico, a nation of survivalists and relationship builders. With the economic convergence of "Euroland," North America will need to learn to function better as a partner, not a superpower.
North America is also home to Doug Ivester, CEO of the Coca-Cola Company. Ivester is a strong and restless leader who, like American frontiersmen before him, has a destination in mind. He is driven to create value, to communicate aggressively, and to teach others how to reach their goals.
Latin America is a region of paradox. Vulnerable to external shocks, like the recent global financial turmoil that began in Asia, this region also demonstrates a growing resilience and capacity for response. Home of capital flight, collapsing trade, and lower commodity prices, Latin America is also a land with a rich cultural and intellectual history and home of some of the world's greatest writers and artists. In an increasingly chaotic global environment, its trials by fire may prepare it best for what's ahead.
Gustavo Cisneros knows the strengths and shortcomings of this part of the world. A powerful media king, Cisneros and his Caracas-based Cisneros Group of Companies is committed to bringing the world to Latin America and bringing Latin America to the world. A man intent on creating networks of partners, Cisneros personifies the cultural norm of relationship building that defines Latin America.
Europe is a continent in transition, a land of unprecedented economic and political convergence. A culture of intellectualism and social responsibility, the European Union is just beginning to realize its aggregate power. With a healthy respect for tradition, Europe is also learning how to embrace the future. The cultural differences among Europeans have narrowed over the past few decades, though economic conditions in the EU nations vary widely. The role of business is also changing, becoming more focused on shareholder value than ever and driven in part by the fact that 35 percent of stock on the French stock exchange is foreign-owned; in Germany, 25 percent; in Spain, 35 percent; and in the Netherlands, 40 percent.
No one tracks these changes more closely than Helen Alexander, CEO of the Economist Group in Great Britain. Her job is to provide other business leaders with the latest global news and a point of view. The Economist is global to its bones, delivering the news with intellect and insight. "We teach international perspective and communicate context," she says. To do that, she must be able to move fluidly across the world's cultures herself.
Asia brings us traditions of diversity and collectivism. A region with an emerging middle class despite its economic crisis, it is shifting from being labor-intensive and agricultural to developing high-tech manufacturing and service-oriented economies. Asians value education, hard work, relationships, and collective mindsets. They are masters at understanding paradox and creating mutually dependent networks of customers, suppliers, and companies. Coping with the changing role of women and youth, Asian businesses are shifting from hierarchical to participative management and from seniority-based to performance-based reward systems.
At more than 80 years of age, Canon's honorary chairman, Ryuzaburo Kaku, exemplifies both the old and the new Asia. A visionary leader, Kaku works to ensure that the world's business leaders know about the concept of kyosei living and working for the common good. It's a philosophy that allows Kaku to seek innovative ways for Canon to do good while making money, and to be a powerful force for social, political, and economic transformation.
This is just a taste of our journey around the world. Yet the idea of hopping from one region to another is itself antiquated. Even this viewpoint is changing as regions compete and cooperate, changing identities and personalities, developing new strengths and shortcomings, and bumping up against one another in a borderless, multicultural world.
The Borderless Economy in a Multicultural World
Beware. And be ready.
This new, borderless economy is changing faster than our ability to manage it. For companies to thrive, they must learn to excel in a multicultural world. They must also learn how to cross the new invisible borders of national culture. But as Doug Ivester, CEO of Coca-Cola, discovered after the 1999 "Coke scare" in Belgium and France, it's easy to be fooled by the transparency of such borders: "As economic borders come down, cultural barriers go up, presenting new challenges and opportunities in business."
All this turbulence and confusion make us nervous and defensive. Our sensitivities are heightened as competitors and collaborators emerge from unlikely places. We may respond by pulling in, becoming more ethnocentric and nationalistic. There is a backlash to globalization, one born of our lack of knowledge and readiness and exacerbated by the economic pinches we feel. Not everyone is equipped to run fast, but some are and they respond by opening up, soaking up cultural differences in order to maximize their own awareness and learning.
This porous economy will not bring an end to national history, politics, identity, and nationalism. In fact, the values and identities of culture are being challenged and enhanced as never before. We must leap at the opportunity to learn from our differences and leverage that learning for competitive advantage, rather than hide, ridicule, or ignore them.
The world is at once borderless, multicultural, and a burgeoning hybrid of cultures. Expanded tourism, the dissemination of pop culture, global migration, Internet communities all these have led to unprecedented worldwide connectedness. Traditional boundaries between politics, culture, technology, finance, national security, and ecology are disappearing. There are ecological connections between the Hong Kong flu and the Chernobyl nuclear reactor disaster, political connections between NATO and the war in Kosovo, and economic connections such as those we saw played out during the Asian financial crisis. The media TV, newspapers, and film bring us closer to others simultaneously. Business leaders must be capitalists, psychologists, technologists, and culturalists: they must understand the seamless interaction of all these dimensions, the interconnectedness of which creates our twenty-first-century culture.
But this seeming dissolution of national borders triggers the "immune system," moving people and countries into self-protection mode, resulting in increased nationalistic fervor, higher import barriers, hostility to foreign control and ownership, clashes among countries and multinationals, and a backlash against American culture.
As Russia's economy crumbled, the Russians wanted to turn from their new free marketplace back to their old controlled economy. As Malaysia's economy faltered, the government closed its doors to foreign investment, believing that "outsider" money had held the country hostage. And the United States and Europe continue to have trade spats about bananas and beef while the world's DaimlerChryslers and Deutsche Banks create massive transglobal mergers.
As a result of these cultural clashes, we resent the "others," fearful of the jobs they'll take and the market share they'll gain. Economic collapse in Asia once so far removed from us has hit everyone's bottom line, and we have reverted to an "us-versus-them" mentality. People's raw selves surface more easily. And as chronically turbulent times become more commonplace, more, not fewer, cross-cultural barriers will confront us. How will we navigate?
We feel threatened and defensive for reasons both simple and complex: while our world has changed dramatically, our models of how to see, think, act, and mobilize in that world have not changed. Much of the world still thinks in absolute dichotomies black/white, good/bad, win/lose, have/take which leads us to this defensive posture against "difference."
Simply put, we don't have the mental software the operating system to fully grasp what our new world means. We're using old minds to grapple with new rules. But it's not just our mental models that aren't sufficient; we don't have the systems in place to deal with globalization, either. Hesitant to pass judgment in an environment of political correctness, we try to ignore the fact that cultural differences exist, or we paint them as obstacles to overcome. Instead, they are resources we must learn from, opportunities we must exploit, and differences we must manage.
The New Global Assets
Companies used to live or die primarily by the availability of materials steel, plastic, and pig iron from which they manufactured their products. They were in the business of moving molecules: objects and manufactured goods. But now those commodities have changed somewhat. Steel has given way to brain cells, and we don't just move molecules anymore, we move knowledge. Because globalization and technology have leveled the playing field, and since we've reached a high level of sophistication in our systems and processes, our people provide our only remaining competitive advantage.
Companies such as Toyota, Vivendi, and Motorola understand this. They mobilize three key global assets: people, relationships, and culture. They work hard to develop cultures of "globally literate" leaders at all levels: leaders who develop their own potential and that of others, who cultivate collaborative relationships, and who manage their own culture and the cultures of others.
To understand how this focus evolved, it's important to look back at the management revolutions of the past twenty years. From quality and customer service in the 1980s through reengineering, renewal, and growth in the 1990s, we have witnessed a steady increase in the importance of people to the bottom line. Our new focus on global leadership and world-class companies is a natural outgrowth of these management revolutions. Driven by globalization, the integration of the soft and hard issues of business is becoming a twenty-first century leadership imperative.
- People. Increasingly, people are the new corporate resource. Businesses fight to attract, retain, develop, and motivate the best and brightest, seeking new ways to measure and enhance the value of their human capital. People's knowledge, skills, experience, and capabilities are seen as the new corporate assets. And as the value of people becomes more obvious, companies create organizational practices, processes, and systems that leverage human capital to create value for their customers.
- Relationships. People work not in isolation but in close interaction with others, both inside and outside their companies. Companies must cultivate strong, healthy internal and external relationships to enhance value through teams, networks, suppliers, and even alliances and joint ventures with competitors. In some cases, virtual teams work together indefinitely without meeting, linked by technology that erases boundaries of time and place.
- Culture. The third key asset is cultural wisdom our deep understanding of our own culture and those of others which enables companies to mobilize diverse peoples, serve diverse customers, and operate around the world.
These three assets are inextricably linked. Each is indelibly influenced by the electronic technology revolution and global interdependence. And when they are mobilized, they create value and wealth for the organization. "It's one thing to be successful in the borderless economy, it's another thing altogether to thrive in a multicultural world," says Daniel Vasella, chairman and CEO of Switzerland-based Novartis, one of the world's leading pharmaceutical companies. Leaders who leverage employees' intellectual capital, collaborative relationships, and cultures will thrive in the new millennium.
A New Approach to Leadership
"Leadership is taking an organization to a place it could not have otherwise gone and doing it in a way that gives people a sense of optimism and confidence in the future." George Fisher, retired CEO of Kodak, in the United States, knows that the next century's challenges will be human ones.
By making the most of their global assets today, world-class companies such as Kodak are positioning themselves to be the business leaders of the twenty-first century. All of this requires a new approach to leadership.
Yet we're in a leadership dilemma. We need global leaders at a time when markets and companies are changing faster than the ability of leaders to reinvent themselves. We have a shortage of global leaders at a time when international exposure and experience are vital to business success. And we need internationally minded, globally literate leaders at a time when leadership styles are in transition around the world.
Good leadership is a major catalyst for growth; bad leadership can be the primary cause of business failure. Leading people through change is leaders' most important challenge; overcoming resistance to that change is the toughest obstacle of all. Culture and traditions are our greatest roadblocks. To maneuver around them, we need a new cadre of globally literate leaders who understand both themselves and others. We need leaders who are comfortable working across and around the many cultural barriers that threaten to divide us.
The world of today's leaders is full of paradoxes and contradictions. Leaders negotiate through minefields every day: balancing the needs of stakeholders, choosing between cutting costs and developing people, managing in both the short and long term, deciding whether to centralize or decentralize operations, and simultaneously leading global and local lives.
Leaders are kept awake at night by hard business realities: the need to generate profitable growth, reach markets quickly, protect their reputation, and anticipate the unexpected.
But their deeper sleeplessness comes from the human challenges: How can they acquire and retain the best talent to lead their companies through change? How can they promote teamwork across boundaries and borders? How can they develop executives to lead in the world? "Our scarcest resource is globally literate leaders," warns Alfred Zeien, chairman and CEO of Gillette, one of the United States' most global companies.
So who are these new, globally literate leaders? They include people such as Ogilvy & Mather CEO Shelly Lazarus in the United States, Toyota CEO Hiroshi Okuda in Japan, China Resources CEO Madame Zhu Youlan in Hong Kong; and British Telecommunications CEO Sir Peter Bonfield
in London. Singapore Airlines CEO Cheong Choong Kong and Ericsson chairman Lars Ramqvist in Sweden are also globally literate.
These men and women have spent their lives operating in the global business environment. They are exemplars of the kind of leaders we will need in the twenty-first century. Emotionally intelligent and business-savvy, they apply their cultural wisdom to teach the world about the import of global literacy. They see the world through a new lens and build new kinds of companies. Because they value the power of human assets, they work
hard to create environments that liberate people's passions and unleash their talents. Building a globally literate workforce is their key to world-class excellence.
A Landmark Study of CEOs
Global Literacies is based on a landmark four-year study of global leadership and world-class companies.
Our objective was to create a fresh, practical, and teachable framework that could be used by business leaders throughout the world. By identifying common characteristics of leading CEOs and their world-class companies, and by defining the factors most likely to predict business success, we wanted to demonstrate how leaders must think, act, and mobilize people to succeed in the twenty-first century.
Our three-part strategy included face-to-face CEO interviews, a global CEO survey, and research into national cultures around the world. And we went straight to the source: the CEOs themselves.
We first met with seventy-five leading CEOs of multinational companies from twenty-eight countries. Through in-depth, face-to-face interviews coupled with extensive corporate background research, we explored the origins, character, and effectiveness of business leadership. We also sought to understand how national culture influences leadership and corporate competitiveness. We asked: How are you leading in the global environment? What kinds of business challenges are you facing? What is your leadership philosophy? How are you building a world-class company? How are you developing a culture of leaders? And what are the unique contributions that your country makes to our understanding of global leadership? Their answers shed new light on the universal qualities of leadership and how leadership varies around the world.
Part two was designed to reach well beyond these interviews. We conducted a quantitative survey of more than a thousand CEOs in eighteen countries. As you will see later in the book, we created a "Global Quotient" based on these survey findings to assess how well prepared CEOs from different countries are for these new, global challenges.
Finally, fascinated by the role of national culture, we conducted a series of in-depth studies of national cultures, examining the impact of history, geography, economics, politics, and culture on leadership and business success in twenty-eight countries.
This three-part strategy qualitative interviews, quantitative surveys, and country research enabled us to produce an intellectually well grounded, real-world picture of leadership in the twenty-first century. Our list of global literacies emerged from our listening to people around the world.
How to Read This Book
"Jet-setters" aren't the only ones with international portfolios anymore. Whether you're in the executive suite of a Global 1000 corporation, seeking career advancement in a government agency, or answering phones in the customer service center of a nonprofit organization, you're faced with a barrage of global issues every day.
All of us, not just CEOs, are citizens of and traders in the global economy. When we get up in the morning, we may brew coffee in a pot from Germany, shave with a razor made in Taiwan, eat butter shipped from New Zealand, and drive a car made in Japan. While images of the conflict in Kosovo invade our living rooms at night, we may be eating a Chinese dinner with chopsticks made in Mexico. We e-mail friends and associates in Israel on computers made in Malaysia.
Global Literacies provides a new approach to leadership to help you navigate this world terrain. It's written for all people at all levels in all regions of the world. It outlines a new language for mobilizing people in a globalized world, even if we never leave our home country. And it centers on the lessons we can learn from the stories of extraordinary leaders and their national cultures to be globally literate ourselves.
This isn't a book about cross-cultural etiquette. It's not an encyclopedia of facts and figures. We don't describe theory or unattainable ideals. Nor is it a book of quick fixes.
Rather, Global Literacies is a blueprint for learning. As with learning the rules of grammar learning these literacies is not the same as being able to speak or sing, but with time and practice, doing so will make for fluent leading. That's why we call them "global literacies."
This book will show you how to survive and thrive in the borderless, multicultural marketplace. You'll learn how to develop your own global leadership philosophy and turn that philosophy into leadership practice by hardwiring your organization with the beliefs and behaviors necessary for success.
By learning about lessons and innovations from around the world, you'll also learn more about your own culture and how both your own culture and those of others influence the way you do business. By successfully traversing the new invisible borders of culture, we'll help you use culture as a tool for competitive advantage. Whether you work for a multinational in Germany, a regional supermarket in Japan, or a local bank in the United States, every leader must become globally literate to compete at home and abroad.
The book is organized into four parts:
Part I: The Search for Global Competitiveness
Today's leaders are bombarded with the complexity of our borderless, multicultural world. Part I will uncover the new global assets of successful business people, relationships, and culture and show why we need global leadership to make sense of this new world. We'll explore the universals for twenty-first-century business: the world drivers, national realities, business questions, and leadership literacies critical for success in business.
Part II: The Four Global Literacies
What's needed in this new, increasingly complex world is a new language of global business, a language where leaders see the world's business challenges as opportunities, think with an international mindset, act with fresh global-centric leadership behaviors, and mobilize world-class companies. The four global literacies outlined in Part II will explain the new language that leaders must learn to speak and understand:
Personal literacy: Understanding and valuing yourself
Social literacy: Engaging and challenging others
Business literacy: Focusing and mobilizing your organization
Cultural literacy: Valuing and leveraging cultural difference
Through profiles of CEOs and their world-class companies, we'll see clearly what these literacies require and how they apply to business situations.
Part III: The Global Literacies at Work
Theory is one thing; practice is another. The bottom line is that the four global literacies must be implemented inside your own company. These literacies help you solve the five universal business questions that all organizations, regardless of industry, size, or country must answer:
Purpose: Where are we going?
Plan: How do we get there?
Networks: How do we work together?
Tools: What resources do we need?
Results: How do we measure success?
The CEOs themselves will be your guide through each of these questions. Through their stories, you'll get real-life examples of how leaders and their businesses are answering these universal questions in culturally unique ways.
Part IV: Becoming a Globally Literate Leader
To become a globally literate leader, you'll have to accept the challenge and plot your own learning plan for literacy. Like learning a foreign language, this takes continual, daily practice and dialogue with others who are fluent in the same language. We'll close with your leadership challenge for global literacy.
Copyright © 2000 by RHR Enterprises