By guest blogger Margaret Jennings, M Squared Consulting

Cybersphere’s newest celebrity, Steven Slater - the Jet Blue flight attendant who announced to the world he was quitting his job by releasing the emergency chute at JFK and, literally, leaping to freedom – was reportedly provoked by a difficult passenger who pushed his patience too far.  For his actions, Slater has become an instant folk hero.

If Slater is to be believed, it may be that, in this instance, “the customer is not always right.”  But some pundits say that Slater, like any other flight attendant on any given day, should have bitten his tongue and continued working normally despite the apparent abuse from the passenger.  But at what point do we, as individuals and as business leaders, draw a line and take responsibility for the well-being of employees over demanding and/or abusive customers? 

Many successful, savvy executives (including Richard Branson, founder of Virgin Atlantic Airways, and Herb Kelleher, CEO of Southwest Airlines) have built their empires on flexible employee-customer policies.  They believe that the happiness of their employees comes first, because disgruntled staff are not well-positioned, nor, at the very least, motivated, to provide excellent customer service.   Kelleher once wrote a personal reply to a passenger who regularly flew on Southwest, and, consequently, complained after every flight.  ‘Dear Mrs. Crabapple, We will miss you. Love, Herb.’

Yet, when an employee accepts a job offer, shouldn’t they be aware of, and take some responsibility for, the type of stress (and abuse?) inherent in the new position?  Certainly, employers should be recruiting people with the right temperament for the job and providing them with adequate customer training.  But it is not always possible to walk away from challenging customers, just to keep your employees happy.  Small businesses in particular face a dilemma when dealing with difficult customers, as a single lost account could mean disaster.

So, if the customer is not always right, where do you draw the line between ‘right’ and ‘wrong’?  Set the line too high or too low, and you risk alienating either the customer or the employee. Finding that perfect balance is difficult, and different for every business.

For information about how M Squared Consulting can help you manage your flexible workforce strategies, visit www.msquared.com or call 888-818-2505.

By guest blogger Margaret Jennings, M Squared Consulting

Keeping your staff motivated and engaged can be far from straightforward. 

Author  Peter Bregman, in a recent blog in the Harvard Business Review, suggests a simple concept to help:  connect your staff with the source of an idea or business practice to inspire their commitment through a sense of ownership. By doing so, he finds employees are “always happier with the outcome. They feel something deeper than the success of a project gone well. They feel pride of ownership. They feel satisfied by the journey that brought them to their success.”

Larry Sternberg, writing for Workforce.com (‘Give Employees What They Need’), takes this idea further and believes there are two interlinked principles to keep in mind when motivating staff.  Firstly, “Each person has a unique configuration of need - their own goals, wants, desires and aspirations.” And secondly, “People stay in organizations that meet their needs.”

He provides some detailed tactics for meeting such needs.  In summary;

1.     Ask your staff what their needs are.

2.     Don’t be afraid to change precedent for your best performers.

3.     Make staff feel important, have time to listen to them.

4.     Emotionally rehire people.

Not surprisingly, in today’s economy many employees have diminished confidence in employment stability, feel vulnerable and are no longer happy working for someone else.  The trend toward a flexible and self-employed workforce looks set to continue.  Projections from the U.S. Bureau of Labor Statistics predict that the flexible workforce will grow 19% through 2016, almost twice the rate of total job growth of 10%.

This change in approach to employment has an upside for employers too.  More on this topic in upcoming posts.

To help your organization leverage the top-tier of the flexible workforce, visit www.msquared.com

Back in April in this space we discussed whether there’s a talent shortage in America, particularly in light of the coming retirement of many baby boomers.  We examined whether there is indeed a pervasive labor shortfall, or if the laws of supply and demand are out of balance in certain industries or geographies.

An article this week in the Wall Street Journal by Mark Whitehouse expands on this topic.  The piece, titled “Some Firms Struggle to Hire Despite High Unemployment”, cites why, despite the tough economy, some companies are having a difficult time filling job openings.

Some excerpts: 

…With a 9.5% jobless rate and some 15 million Americans looking for work, many employers are inundated with applicants. But a surprising number say they are getting an underwhelming response, and many are having trouble filling open positions.

“This is as bad now as at the height of business back in the 1990s,” says Dan Cunningham, chief executive of the Long-Stanton Manufacturing Co., a maker of stamped-metal parts in West Chester, Ohio, that has been struggling to hire a few toolmakers. “It’s bizarre. We are just not getting applicants.”

Employers and economists point to several explanations. Extending jobless benefits to 99 weeks gives the unemployed less incentive to search out new work. Millions of homeowners are unable to move for a job because the real-estate collapse leaves them owing more on their homes than they are worth.

The job market itself also has changed. During the crisis, companies slashed millions of middle-skill, middle-wage jobs. That has created a glut of people who can’t qualify for highly skilled jobs but have a hard time adjusting to low-pay, unskilled work like the food servers that Pilot Flying J seeks for its truck stops.

… Matching people with available jobs is always difficult after a recession as the economy remakes itself. But Labor Department data suggest the disconnect is particularly acute this time around. Since the economy bottomed out in mid-2009, the number of job openings has risen more than twice as fast as actual hires, a gap that didn’t appear until much later in the last recovery. The disparity is most notable in manufacturing, which has had among the biggest increases in openings. But it is also appearing in other areas, such as business services, education and health care.

If the job market were working normally—that is, if openings were getting filled as they usually do—the U.S. should have about five million more gainfully employed people than it does, estimates David Altig, research director at the Federal Reserve Bank of Atlanta. That would correspond to an unemployment rate of 6.8%, instead of 9.5%.

… Longer-term trends are at play. For one, the U.S. education system hasn’t been producing enough people with the highly specialized skills that many companies, particularly in manufacturing, require to keep driving productivity gains. “There are a lot of people who are unemployed, but those aren’t necessarily the people employers are looking for,” says David Autor, an economist at the Massachusetts Institute of Technology.

Manufacturers of high-precision products such as automobile and aircraft parts are in a particularly tough spot. Global competition keeps them from raising wages much. But they need workers with the combination of math skills, intuition and stamina required to operate the computer-controlled metalworking machines that now dominate the factory floor.

Clearly, there are many angles to explore here, ranging from the state of the economy to the effects of long-term unemployment benefits to the quality of our public education system. 

For the high end of the market, there is also a healthy debate about whether there are enough skilled workers in the right place at the right time to help companies advance their strategic priorities.  Many companies continue to seek out interim specialists and consulting talent to help them during the peaks and valleys of normal business cycles.

Stay tuned as we continue to follow developments on this important subject.

To help your organization leverage the top-tier of the flexible workforce, visit www.msquared.com or call 1-888-818-2505

A recent online HBR essay by Matt Dixon and Lara Ponomareff is a worrisome read for any marketing executive who’s focused on helping their company develop deeper, more meaningful relationships with customers.  It exposes the challenges facing organizations that want to gain more insight from their clients in order to better serve their needs.

An excerpt:

Have you ever walked into an airport, seen that there is nobody in line at the check-in counter, but still made a bee-line for the self-service kiosk? Better yet, have you ever waited in line for an ATM machine even though there is nobody in line for the teller inside the bank?

If you answered “yes” to either of these questions, you’re not alone. Most customers these days demonstrate a huge — and increasing — appetite for self-service, yet most companies run their operations as if customers prefer to interact with them live.

In our research on this topic, we’ve found that corporate leaders dramatically overestimate the extent to which their customers actually want to talk to them. In fact, on average, companies tend to think their customers value live service more than twice as much as they value self service. But our data show that customers today are statistically indifferent about this — they value self-service just as much as using the phone. And guess what? By and large, this indifference holds regardless of their age, demographic, issue type, or urgency.

This attitude toward self-service has been a long time coming. Two-thirds of the customers we surveyed told us that three to five years ago, they primarily used the phone for service interactions. Today, less than a third do, and the number is shrinking fast.

What is it that makes self service so appealing? Maybe it’s the efficiency of the interaction — the airport kiosk is probably faster than interacting with a check-in agent — but that wouldn’t explain why we go out of our way to take care of our service needs ourselves. On a psychological level, it might have more to do with the unique element of control that self service affords. Or, maybe this self-service love affair is a product of our infatuation with gadgetry and electronic communication. All fairly benign explanations, to be sure.

But here’s a hypothesis that would be concerning if it’s right: maybe customers are shifting toward self service because they don’t want a relationship with companies. While this secular trend could be explained away as just a change in consumers’ channel preferences, skeptics might argue that customers never wanted the kind of relationship that companies have always hoped for, and that self service now allows customers the “out” they’ve been looking for all along. For managers hell-bent on deepening relationships with their customers, that’s a sobering thought.

Consider this: Running your company as if customers want to talk to you isn’t just expensive, it’s potentially undermining your efforts to build longer-term loyalty. Our research shows that customers who attempt to self serve, fail, and are forced to pick up the phone are 10% more likely to be disloyal than those customers who were able to fully resolve their issues in their channel of choice. As one CFO remarked to us recently, “When you think about the relative cost of live service and the disloyalty effect of channel switching…it’s like paying your customers to be disloyal to you.”

How often does channel switching happen? All the time.

We found that a staggering 57% of inbound calls come from customers who first attempted to resolve their issue on the company’s website. And over 30% of callers are on the company’s website at the same time that they are talking to a rep on the phone. That’s a lot of frustrated customers.

For information on how M Squared consultants can fine-tune your customer strategies, please call 1-888-818-2505 or visit www.msquared.com

By guest writer Margaret Jennings, M Squared Consulting

Despite being aware that balance in all things in life (including business) is a good thing, I was quite surprised to read some of the figures quoted by Whitney Johnson in her recent HBR post about the impact women in leadership positions can have on a business.

She cited findings by the University of Michigan and Cornell University that showed that “…IPOs of companies with greater gender diversity outperformed (others) by as much as 30%.”   She also quotes the research of David Gaddis Ross of Columbia University that “organizations most inclusive of women in top management achieve 35% higher ROE and 34% better total return to shareholders versus their peers.”

It is not difficult to reason that there are significant benefits for a business with a female presence in senior management in any business.  However, the 2009 Catalyst Census of FORTUNE 500 Women Board Directors revealed that less than one fifth of companies have three or more women on their boards, and more than 40 percent have no women directors whatsoever.

How can organizations increase the presence of women in leadership roles and across the workforce?  An article in HR Management offers insight from some leading companies:

• “What General Mills does is look at everything from soup to nuts. It looks at the hiring of women to make sure that they’re bringing in women that they know are going to stay and succeed. And, interestingly, the turnover rate is very low at General Mills. They think long-term. They hire someone to stay and not just to fill a gap.”
• Healthcare company WellPoint consistently ranks in NAFE’s list of the top 50 companies for executive women. CEO Angela Braly is also the only woman to serve as CEO of a Fortune 50 company.  Their company ethos is “…you don’t have to check who you are at the front door. Bring your whole self to work. You’re not just an executive, but you’re an executive and a mom or a dad, if you have kids, and it’s important that you be able to spend time on both.”  They also have many work-at-home programs.
• IBM has been supporting women in the work place for over 120 years.  “Work/life integration is extremely important and luckily IBM is a leader in this field. For example, we offer flexible work options and job sharing, and in 2000 IBM created a $50 million global work/life fund to support our employee’s child and elderly care needs around the world.”

Clearly, gender diversity in corporate leadership is good for business, and there is no shortage of examples to demonstrate that fact.

To help your organization leverage the top-tier of the flexible workforce, visit www.msquared.com

A recent article on CFO.com by Russ Banham about the balance of power between clients and consultants is enlightening.  It may lead some to consider alternatives to traditional big consultancy practices.

An excerpt follows:

Over the course of his finance career, Jeff Henderson, CFO of Cardinal Health Inc., has hired consulting firms to offer insight on strategy, outsourcing initiatives, expense-reduction tactics, and large IT projects. While he believes strongly that consultants are an important management resource, he, like many other finance chiefs, is wary of their downsides, from high cost to inferior advice. “I’ve learned the hard way,” he confides. “You can spend too much, not get the service you thought you were getting, and end up with the second-tier team [rather than] the ’stars’ you were told you’d get.”

Such complaints about consulting engagements are commonplace. As David Bean, vice president of finance at Vertex Pharmaceuticals, a Cambridge, Massachusetts-based biotech company, sees it, “There is a tendency among consultants to get hired merely for the purpose of getting more work.” In CFO’s recent survey of 400 finance executives, the majority — 55% — said they were only somewhat confident that their consulting spending was producing an acceptable return on investment, while 16% said they were not confident or didn’t know: not exactly a stunning endorsement of the consulting universe.

But the situation may be about to improve. Thanks to a spate of mergers and acquisitions, along with the emergence of newly energized firms, a very different consulting industry is rising from the ashes of the recession, one in which competitive pressures are driving prices down for buyers.

In addition, new pricing structures, in which consultancies are willing to take it on the chin financially if their promises fail to materialize, are emerging. All told, prices for consulting services have dropped anywhere from 5% to 20% in the past year. “It’s a buyer’s market out there,” says Lynne Schneider, senior analyst at Kennedy Consulting Research & Advisory.

To be sure, the U.S. consulting industry, remains a financial powerhouse. Last year, it generated $397 billion in revenue ($240 billion for IT consulting alone), according to Jenny Sutton, co-author of Extract Value from Consultants (Greenleaf Book Group, 2010). That’s a mere 2% decline from 2008, suggesting that, despite client misgivings, consulting remains virtually recession-proof. Sutton projects that total consulting revenue will resume an upward trend this year.

The industry tumult has several causes. For one, the Big Four accounting firms have returned to consulting with a vengeance now that Sarbanes-Oxley-related compliance work is drying up. In addition, a wave of megamergers has created more-comprehensive “soup-to-nuts” consultancies, particularly in IT. In the past 18 months, hardware providers Dell, Xerox, and Hewlett-Packard have acquired Perot Systems, ACS, and EDS, respectively. Now, “the acquirers are looking to leverage their existing distribution channels to sell more of everything, and they are more willing to cut their rates if asked” says Susan Tan, research director of IT services at Gartner.

Be Prepared
But this metamorphosis also poses a risk: in their rush to compete, consultancies may be more prone than ever to overpromise and underdeliver. “Clients hire a multiservice consulting firm to do strategy, and then are pressured to hire the same firm to implement that strategy even though this may not be its core expertise,” says Sutton. “Too many buyers end up using consultants in areas that are not their power alleys.”

Of course, clients also bear some responsibility for engagements that come unglued. One of their main peccadilloes, some experts say, is driving too hard a bargain. “We’ve seen buyers press the consulting firm to discount services so far that they ended up with the ‘B’ team on their projects,” Kennedy’s Schneider says, resulting in “bargain basement” advice.

Clients also suffer for not being well prepared. A “major trap,” says Sutton, is allowing the consultant to define the scope of the engagement. “It’s up to the buyer to know what problems it has to solve. And it should do that by spending more time upfront defining its needs,” she says.

To help your organization leverage the top-tier of the flexible workforce, visit www.msquared.com

A recent article in the MIT Sloan Management Review  asks “Is Your Company As Customer-Focused As You Think?”   It is a terrific piece about assessing and improving your organizational readiness:

Most managers agree that achieving sustainable, organic profit growth requires delivering on a clear, precise customer promise; continuously improving on that promise; periodically innovating beyond the familiar; and supporting all of that with an organization open to new ideas and negative feedback.

But how can senior executives ensure that everyone in the organization grasps and supports the brand promise? How can managers create an open organization, so that rank-and-file employees are unabashed about sharing customer complaints with upper management?

Based on interactions with more than 150 senior managers and a wide-ranging review of pertinent case studies, marketing professors Patrick Barwise and Seán Meehan developed five questions managers can pose to help assess their organization’s ongoing ability to satisfy customers–and thereby ensure that their products and services stay relevant.

No. 1: Can your middle managers accurately describe your customer promise?

By asking middle managers this question, senior executives can gauge whether those further down in the hierarchy understand the customer promise. Encouraging middle managers to articulate the customer promise can also help senior executives learn how clear and explicit the customer promise really is. The more clear and explicit it is, the better it is.

For example, Procter & Gamble’s Tide detergent promised to get clothes cleaner than any other product when it launched in 1946. This clear and explicit promise was–and remains–easy to state; it is not subject to misinterpretation by the customer. It is unambiguous. By contrast, “overnight delivery” implies delivery first thing in the morning. But to an office worker, it probably means 9 a.m., whereas to a construction site foreman it could mean 7 a.m.

No. 2: Can all the members of your senior executive team name the three things that most undermine trust among your existing customers?

Since bad news tends to get filtered on its way up the hierarchy, there’s a danger top management won’t hear about the organization’s failures to deliver on its customer promise. The goal of this question is to transmit the voice of unhappy customers to the top of the company.

Yes, focusing on customer dissatisfaction–which typically occurs when the company fails to deliver on its promise–is hard, because it involves pointing fingers or revisiting bad decisions. But focusing on dissatisfaction also allows managers to uncover and act on the root causes. Why is this important? Because customer dissatisfaction undermines customer trust, which in turn diminishes the value of the brand.

A recent piece in Workforce Management (www.workforce.com) about the influence of community on work caught my eye.  It confirmed that online communities of practice give far-flung employees a chance to network, share knowledge and communicate best practices that trainers can capture and incorporate into future learning events.

For example, early in 2008, American soldiers training Afghan and Iraqi armies were having problems using a rocket-propelled grenade launcher. The equipment was old and had a tendency to jam, misfire and explode prematurely.  Frustrated, a unit commander posted a question to one of the U.S. Army’s communities of practice, which are online forums where soldiers ask questions and share ideas with peers around the world.

“Within a few days, someone who’d had a similar experience with the launcher posted a simple solution to the site on how to safely prevent misfiring,” says Mike Prevou, president and co-founder of Strategic Knowledge Solutions and senior knowledge management advisor to the Army in Leavenworth, Kansas.

The solution worked, and when the unit commander followed up to discuss his experiences, the issue became a hot topic in the community. The conversation thread was soon picked up by the Army’s safety commander, who issued a formal safety policy on how to deal with the rocket launcher’s safety issues that was sent out to all the units using this equipment. And it all took place within 15 days of the original post.

“Without the community, those soldiers may never have found a solution to their problem, and they probably would have just put the equipment away,” Prevou says.

Communities of practice aren’t just valuable for military personnel. They are becoming vital corporate tools that allow employees with similar jobs or interests to get advice and share best practices. “Communities of practice are a super-fast way for users to produce and share content,” says Eric Suave, CEO and co-founder of Tomoye, a collaboration software vendor in Ottawa. Prevou uses Tomoye’s technology to build the Army’s communities. “It’s a more responsive way to share information when it’s needed that allows organizations to collect ideas for formal training.”

That capturing of knowledge is critical for organizations that need to tap into the expertise of a far-flung employee population. It’s also an important issue for organizations with aging employee populations who might soon retire, taking with them important but informal knowledge about processes, customers or corporate culture.

 ”Both groups can work in concert,” Suave says. “On one side you have fast dissemination of information; on the other you have long-term planning that can draw on what people are talking about and turn it into policies and core content.”

This combined value is why communities of practice are cropping up in organizations around the world. They link globally dispersed workers who can serve as mentors to each other and share knowledge in an informal setting. There are pockets of excellence everywhere in organizations, Prevou says. “Communities of practice are a tool to tap into that excellence. It’s a way to share knowledge and build networks among people who might otherwise never connect.”

To help your organization develop strategies about how to best leverage the top-tier of the flexible workforce, visit www.msquared.com

At the World Economic Forum’s meeting in Dalian, China, experts discussed the challenges and opportunities that aging populations present to business.

(excerpted from strategy + business)

The world is in the midst of an epochal demographic shift that will reshape societies, economies, and markets over the next century. The big news is that the world population, according to United Nations forecasts, will either stabilize or peak around 2050, after growing for centuries at an ever-accelerating rate. The main reason is the decline occurring in birthrates as nations advance economically, and it is already having a significant impact: As birthrates drop and better health care prolongs life spans, the world’s population is aging rapidly. For example, between 1950 and 2000, the percentage of the world population older than 60 rose almost imperceptibly to 10 percent from 8 percent. By 2050, however, that percentage will more than double, to 21 percent. And in many countries — notably Japan and those in western Europe — the share of population age 60-plus will be more than 40 percent by mid-century.

The demographic dynamics in the developing world are radically different. Birthrates are still high, and populations are both growing and becoming younger. Over the next few decades, many of these countries will experience what David Bloom, chair of the department of global health and population at Harvard’s School of Public Health, has called a “demographic dividend”: a rising proportion of young people entering the workforce, driving productivity and economic growth.

There are also anomalies among nations. In the developed world, the United States has many of the same demographic attributes as Japan and Europe, but high rates of immigration are offsetting the trend toward aging. In the developing world, the population of China is destined to begin aging rapidly as the result of the government’s past policies to limit population growth. Today, only 11 percent of the Chinese population is older than 60, but by 2040 the proportion will rise to 28 percent.

These demographic shifts will drive massive change in markets and economies, and will require entirely new approaches on the part of both policymakers and business leaders. But the shifts seem to get less attention than they deserve — largely because they take place over time spans much longer than the political and business cycles that drive most legislative and managerial agendas. To identify some of the most significant challenges that will need to be addressed as populations age, strategy+business teamed with the World Economic Forum to convene a roundtable of notable thought leaders with expertise in Asia.

What would you consider the most significant challenge that political and business leaders face related to aging populations?

Yoshito Hori, Dean of the Globis Management School: We’re seeing a very big generation gap opening up, between the older people who are enjoying government benefits and the younger generations that are bearing the financial burden. Japan is a rich country, as are many of the other countries where the population is aging, and people today seem to feel we can afford the policies we have; there is no apparent urgent need for policies to change. But people are not aware enough of what’s going to happen in 10 or 15 years’ time. Budgets and resources are limited, and at some point you have to make decisions: Is the priority of the country to care for the elderly or to look to younger generations for innovation? It will be an issue in the future, and there will be a need for much discussion.

As we turn to potential solutions to some of the problems posed by population aging, are there approaches from business that could be helpful?

Jean-Pierre Lehmann, Professor of international political economy at IMD in Lausanne, Switzerland: We have to explore all sorts of different options. One obvious solution that would be beneficial for both Japan and Europe as they try to deal with aging populations would be to open up the frontiers to migration and allow in younger workers from less-developed countries. Another idea is to encourage elderly people to live elsewhere — it’s something the Japanese tried in the past, but dropped. It was unpopular, but it’s something I’m advocating in Europe. It helps on the pension front. You say, “Look, the bad news is that we have to reduce your pension. The good news is we’re moving you to Libya, where the standard of living is much lower and your pension will go a much longer way.”

What about the skills gaps that we see opening in the developed countries where the aging population is currently rising? The demographic forecasts show that the same kinds of gaps will begin to appear in China a decade or two out. What are the challenges and the opportunities for corporations?

HORI: I think there are two main things. One challenge for corporations is losing a market, which is what you see if you look at Japan. There’s a shortage of children; when you look at primary schools, for example, you just don’t need the number that exist. This is a big burden for companies that are serving the younger-generation market. There has to be a big market shift in terms of the corporate sector.

The second challenge is the workforce, because it is going to shrink as well. How should we incorporate such a decline? There are several dimensions: One is the need to increase productivity through approaches like robotics and IT. The second is migrant and immigrant workers, as we discussed. The third is offshoring, shifting the business to either China or India. So I think this is going to be a major challenge as companies adjust to these shifts.

Your mention of offshoring raises the question of the degree to which companies are going to be able to do demographic arbitrage — locating their headquarters and production in relation to where they can find an employee base or markets for their goods and services.

Vanessa Wang, Mercer LLC: For 90 percent of the companies in these countries, there is a labor force issue. Companies that I consult with are offshoring many, many jobs to China and India because of skills issues and the advantage of the youth dividend there.

One of the main costs of running a business is represented by the cost of fixed salaries, because salaries don’t go backward — they keep going upward; the same is true of health-care premiums and pension costs. It costs companies a lot to hire older employees. So rather than fill their skills gaps locally or by hiring older workers, companies go offshore to solve their problems. And until there are good incentives for them to meet the skills shortages in their own countries, that will continue. In many ways, companies can’t stop what they do; at the end of the day their job is to keep producing more profit. Solving this problem would require innovation in financing pensions and health care so the companies aren’t bearing all the costs, as well as retraining and other issues. It will take a shifting — a redistribution — of social resources.

For information about how to intelligently use the high-end of the flexible workforce, visit www.msquared.com or call us at 888-818-2505.

by Beth Gorell, guest writer and M Squared consultant

How can something that sounds so simple be so complex?  The nature of globalization as a business phenomenon today goes beyond earlier attempts that simply paid lip service to the term.  Now, business drivers, customers and partners truly are operating globally, and organizations that want to compete need to change how they operate in order not only to keep up but to lead.  But what does “operating globally” really mean?

Key Elements of Globalization Now

In a way, globalization represents the ultimate “free market.”  Structures are now in place to allow wider trade in goods, services and investment internationally than ever before.  Technology makes the ability to trade internationally fast and accurate, and allows participants to react immediately to economic, social and political changes that affect their business decisions.  Large, corporate customers are recognizing their global buying power and using it to negotiate from an increased position of strength.  But perhaps the most noticeable change of the last decade has been the shift away from a “multi-national” approach to international trade, to one that is truly global.

Not What It Once Was

Not so long ago, it was accepted that multi-national US-based companies approached their international business as an opportunistic extension of their US interests.  Product and service introductions, events and partner programs were designed from the US perspective, then “localized” for other countries as a secondary step.  International legal and tax implications were left to local country experts, and – particularly if budgets were tight – English was often the only mandatory language for training and sales tools.  Events were scheduled at times convenient for the US and (possibly) Europe.  Managers with serious career aspirations had to reside in (or move to) the US.

Not so anymore. The rise of business opportunities in countries such as China, India and Korea (just to mention a few) has forced US-based powerhouses to re-think how they approach “emerging” markets.  Competition from companies based outside the US has risen, and both customers and partners have increasing expectations that vendors accommodate their needs.  Companies that continue to operate the old way do so at their own peril.

Getting Ahead of the Curve

Is there a magic formula for succeeding in this brave new world?  Of course not.  But there are some steps that are key for heading in the right direction:

Build Global Knowledge

It is no longer “good enough” for international knowledge to be silo’d with local country experts.  To lead in future, organizations must have greater global understanding at all levels and use this knowledge in their planning and execution.  This means building a knowledge base of how business is done in key geographies – key business practices at the direct and partner levels; economic and political drivers; the competitive landscape; legal, tax and language requirements; etc. – and keeping global requirements at the forefront of planning and decision-making.  How to build this knowledge?  Organizations historically comprised of US-based staff should get more creative than simply sending people to classes or asking them to read books.  Foreign service assignments and temporary job exchange programs, as well as internationally located positions in high-potential geographies at the staff, management and senior management levels, and the inclusion of staff and management with experience at local levels, will pay off for organizations with enough vision and conviction to use them.

Align Globally

While there will always be a need to consider local differences, a significant level of baseline consistency – from programs to organizational alignment – will be required to reap the real benefits of a global approach. This will likely also mean greater fortitude by senior management, both with regions that have traditionally had a large say in how programs and organizations are designed (notably the US and Europe), as well as with program owners who must now think globally right from the start.  Strong and consistent sponsorship from senior management will be required to ensure that business does not slip back into comfortable patterns from the past, and that significant mindset changes are successfully adopted.

Anticipate Customer Demands

As corporations begin to think and act more globally, they will do so not only as vendors, but as customers of other corporations.  Companies that anticipate what this could mean in terms of trade expectations and customer satisfaction will be positioned to take market share away from those that have not thought this through.  Account management, discounts, service agreements and channel support are just some of the areas that will be affected by rising global customer demands.

Embrace Global Scalability

Growth in a global economy requires global scalability.  By building an organizational infrastructure that is optimized to meet current global business requirements, yet able to respond to changing global and local needs, companies can increase alignment on business priorities, build internal efficiencies, develop consistent metrics, provide staff with improved career opportunities, and respond to changing industry dynamics more quickly and effectively.

But building a scalable global infrastructure is not without its pitfalls.  Demographic diversity presents challenges in terms of language, time zones and approach – all of which combine to test organizations in their ability to build expertise, teamwork and trust.  Fortunately, the tools for doing this have never been better, and will only continue to improve. 

A Final Thought

Globalization is an ongoing process that is affected by many geo-political factors outside the control of the businesses that want to participate.  A careful eye on the world economy and ever-changing elements that affect the business climate in specific geographic areas as well as across the globe is required to play successfully in this arena.  But for companies that choose to take a leadership stance, there is much to be won.  A strategic approach to globalization can make the difference between being one of the leaders or being left behind.

Beth Gorell is an independent consultant who has worked in Silicon Valley since the mid-1980’s.  She specializes in strategic planning and execution, change management and channel strategy, and can be reached at gorell@saje-consulting.com.