Implementing Global Mindset

Global mindset is not just part of a vision statement; it is the way a company makes strategic decisions and goes about implementing them. It starts at the top. The first step is top management articulating and reinforcing it, in clear and consistent language, across all levels and units. During his tenure as ABB's first CEO, Percy Barnevik spent over 200 days per year visiting the operating companies around the world, personally presenting his vision of a global enterprise to thousands of managers and employees worldwide. Even today, further down the organization, “Barnevik's slides” serve as a common source of reference. For Barnevik, communicating the business vision, organizational values, and management philosophy was not something that could be delegated. Creating the proper context for the actions of the whole firm was the core of his own leadership responsibilities. The same is true for GE's Jack Welch and other global leaders.

While top management provides the context for how to think about global strategy, it is up to the senior managers (business unit, function, and country leaders) to make global mindset inside an organization a reality. Their respective roles may be different,^[20] but they ultimately share the responsibility for the synergy of responsiveness and integration. Accepting this responsibility is not easy or natural. Acceptance of global mindset requires an environment that creates consistency across the elements of an organization—the underlying communication network and coordination mechanisms, the requisite clarity of responsibilities and the empowerment linked to responsibility that is necessary for performance management, the attention to leadership development, and the underlying culture and values (see Figure 3-2).

The elements of this model are interdependent. But if one factor perhaps stands out above the others it is the emphasis on horizontal coordination. In our research on global mindset, a high degree of coordination across organizational subunits was the key differentiator between balanced and polarized businesses. Best practices forums, knowledge networks, task forces, project teams, steering boards, and other cross-border coordinating mechanisms are the fundamental building blocks for the successful deployment of global mindset. However, all of these organizational mechanisms rest on a single foundation—person-to-person relationships built on trust and common values.^[21]

Having a global mindset implies recognizing the benefits that can flow to the whole organization from encouraging and valuing cultural diversity in people, not just as members of distinct cultural groups, but as individuals. Success in building cross-border networks of relationships—the principal arteries of effective global organizations—depends on understanding and valuing cultural diversity. Yet valuing diversity must go well beyond the traditional emphasis on bridging the distance between clusters of national cultures by focusing on average—and stereotypical—national characteristics.

Cultural knowledge in international management requires understanding differences within a culture as well as across cultures. The barrier that hinders effective cross-cultural interactions is not just the average distance between national cultures. It is also outsiders' lack of comprehension of the diversity within a given culture, because they do not understand the historical, political, and social context of “within-culture” differences, and thus have to rely on often misleading general assumptions and stereotypes. We have stopped stereotyping about gender and race; perhaps we should tackle culture with the same determination. A genuine emphasis on global mindset implies recognizing not only often-quoted cultural diversity but also human diversity.

Equal Opportunity for All—Regardless of Passport

As global mindset is one of the key characteristics of future global leaders, one of the principal tasks of global leadership development should be to create and support an environment where global mindsets can flourish. But where will the future global leaders come from? Will global opportunities be available to employees all over the world, or only to those located in one of a few key countries or regions?

Perhaps the biggest barrier to the development of global mindset is the impression of local staff around the world that one's passport counts more than one's talent. Attracting and developing local leadership is not enough. Often, companies announce with great fanfare a campaign to “localize” management. The intention is certainly right, but what are the consequences? If at the end of the campaign all managers are local, then who is global? Effective localization implies attracting, developing, and retaining local talent with a mindset that can support global strategies. If global development opportunities are restricted to people from the mother country or those from a few lead countries (even if this is not intentional), then local employees will inevitably tend to adopt local perspectives (i.e., the only direction for their own future). Thus a key task for those responsible for international HR development is to ensure equitable access to career opportunities for talented employees worldwide.

From a long-term perspective, the transnational enterprise must satisfy a simple but demanding test: for future success, does it matter where an employee enters the organization? Today, there are probably only a few companies that can meet this benchmark, especially if global really means outside of the northern hemisphere. Among established multinational firms, only a handful, such as Citigroup, ABB, and McKinsey & Company, have developed a cadre of senior executives representing all continents. It took decades of effort to ensure that selection criteria are not biased toward one cultural group and that early identification of talent works equally well in Karachi as in New York. But things are speeding up. The new transnationals of the dotcom variety are totally focused on meritocracy. They are increasingly seen as the new beacons of opportunities for the best and the brightest worldwide. This is partly the challenge of the job and partly the attraction of stock options, but it is also the belief that nothing else but capability matters.

Changing the Globalization Paradigm

At this point, it may be useful to remind ourselves that global mindset is about balancing perspectives that at first glance may appear contradictory. In their passion to promote global mindset, academics and others writing from a normative perspective sometimes tend to see global or cosmopolitan as superior to local, calling for a “universal way that transcends the particulars of places.”^[22] What is “local” is seen as parochial and narrow-minded. However, in our view, global mindset requires an approach that may be seen as the opposite to such one-dimensional universalism—it calls for a dualistic perspective, an immersion in local particulars, while at the same time retaining a wider cross-border perspective.

The nature of the whole debate about the benefits and cost of globalization is closely tied to how open we are to the idea that we do not all necessarily share the same preferences. Acceptance of diversity should include tolerance of people who are not “global,” perhaps because of lack of opportunities, or perhaps because of personal choice or circumstances. Anything taken to an extreme risks becoming pathological; global mindset is no exception. This is true for companies as well as for individuals. International management textbooks are full of examples of “dumb” multinationals that are not sensitive enough to the cultural differences that the savvy “globals” navigate with ease. But years of successful navigation sometimes make one forget about the rocks below the water line. The difficulties facing Coca-Cola—the ultimate global firm—as the firm tries to rediscover its local roots is one recent example.

During the last decade, a catchy paradigm “Think globally, act locally” has often been used to capture the concept of a progressive global corporation that considers the whole world as its market, but at the same time carefully nurtures and adapts to local priorities and requirements.^[23] Implementing this vision is, however, a longer and more difficult process than most companies envisioned.

What is the key problem? In a multinational firm that used this popular slogan on the first page of its annual report, one local subsidiary manager commented on its application in practice: “Our firm is organized on a simple premise. When operating under stress, and that is most of the time, they do the thinking, and we do the acting.” In other words, the thinking and acting are two separate roles, performed by two separate groups. The headquarters takes the strategic initiatives, which the locals are left to implement. Although such a paradoxical outcome may not be what was intended, it may be unavoidable when tensions embedded in managing a business on a global basis are dealt with by separating responsibilities rather than through developing shared ways of thinking about what globalization implies.

Perhaps the way out of this dilemma is to return to the logic of the globalization process. Today, leveraging technologies and service platforms increasingly requires a world-scale approach and global mobilization of corporate resources. At the same time, customer needs are increasingly individualized, and customers worldwide exhibit a strong preference to be treated as individuals—the secret of the business model implemented by Dell, Mercedes-Benz, Ritz-Carlton, and others. What, then, is the competitive advantage of a global firm? In simple terms, it is the ability to tap global knowledge and skills to satisfy local customer needs.

The very specific needs of customers have to be carefully assessed; hence the requirement to be able to learn and understand the local context, the “local” immersion advocated earlier. The ability to satisfy those needs through delivery and execution is, however, dependent on the “global” mobilization of corporate resources. It may be useful, therefore, to rephrase the original paradigm. Creating a global mindset inside an organization is really about developing leaders who learn locally, but act globally. Looked at from this perspective, it is not so easy to separate the corporate mind and the body spread out over the globe.