|
Business
Designing a global organisation
|
Designing a global organisation is complex and requires several competing elements to be judiciously balanced.
|
IMAGINE THAT you make electronic components for the auto industry. You receive a large order from a global auto manufacturer for rapidly designing and delivering a new type of electronic sensors in three different sizes. Completing the order requires frequent consultation among design experts, material suppliers, software developers, and strategic allies who are stationed in three different countries, separated by four different time zones, and speak five different languages.
Or, you are a manufacturer and exporter of industrial chemicals. You find that you must frequently communicate with vendors, customers, chemical experts, freight forwarders, foreign banks, regulatory agencies, and customs officials from all across the globe to effectively run your business.
More and more businesses now find themselves operating amidst such global scenarios. Increasingly, they find the need for consultative interaction among diverse experts, separated by functional lines, geographic boundaries, and language barriers. Dramatic changes in science, information technology, consumer lifestyle, and government legislation have globalised markets and complicated business decision-making, thereby intensifying the need for frequent managerial consultation and information exchange.
To effectively facilitate this exchange, firms must restructure their organisation. The emphasis in this new organisation will not be on managing men and material flow but on managing human intellect and information flow. To be congruent with this shift in focus, managerial philosophy, structural forms, and management practices must also correspondingly change.
Traditional v today's organisation
The traditional organisation aimed at operational efficiency that yesterday's markets and competitive environment demanded. Markets of the past were homogenous, staid, and, most importantly, regional. Customer tastes were stable and local, technological change was predictable, and foreign competitive entry in the form of superior products was non-existent. The single factor contributing to competitive success in this steady environment was efficiency in current operations.
Companies achieved this by standardising tasks and sequentially organising work. Any behaviour-related deviation to this arrangement was controlled through rules and standard operating procedures. Market-related deviations were controlled by vertical integration strategies. What emerged was a rigid organisation that guaranteed efficiency by performing the current task repeatedly and preventing change. That was a machine bureaucracy.
Today's environment demands an organisation that is flexible, besides being efficient, and global. Customer tastes have become differentiated and a firm should customise design, packaging, and delivery to effectively serve multiple segments. Technologies are rapidly changing and it is imperative for a firm to frequently innovate and offer higher quality products at standard prices to remain competitive. Markets have become global and a firm must employ global procurement, processing, and distribution strategies to be effective. It must design products in one place, make the components in another, assemble them in a third place, and market/deliver them globally. To be successful in this environment, a firm must have the ability to efficiently manage and move information across the globe rapidly. Moving materials, from one stage of processing to the next, will be uneconomical and unwise.
The focus in today's organisation is thus on the management and transfer of knowledge and information globally as opposed to the management and transfer of tangible materials. How do we design this organisation?
Create a learning environment
If information-sharing is a vital attribute for a global firm, its personnel must be capable of sending and receiving critical information. To effectively achieve this, organisational members must be well-informed all the time. A learning environment is thus a sine qua non for a global firm. Managerial decisions and organisational systems in this firm must emphasise continuous company-wide learning as a dominant value.
For a learning environment to emerge, top management commitment toward pursuit and acquisition of new information, distribution mechanisms to share learned information, and an adaptive mentality must be present. To realise these, managers must act more as coaches, information providers, and facilitators of knowledge acquisition, rather than as allocators and controllers of organisational resources. They must aggressively empower employees and additionally foster a ``risk-driven'' organisational culture, wherein employees experiment and encounter failures but learn from their mistakes. 3-M, Sony, and Motorola are some examples of successful global firms that adopt an experimentation approach in organising to encourage risk-taking and consequent learning.
Seeking management's permission to try a new method is considered as loathsome in these firms. What is viewed as an appropriate behaviour is, ``asking forgiveness rather than requesting permission''.
Some successful global firms use benchmark techniques as a learning tool. Ford Motor Company learned how to create an ``invoice-less system'' in its supplier relations by bench marking Mazda's accounts payable operations. Xerox learned to be efficient in order fulfilment by benchmarking L.L. Bean's order filling techniques. Japanese firms generally use job rotation techniques for learning and some use temporary assignment of personnel to the customer, supplier, or strategic alliance partner sites for this purpose. Some, such as 3-M, create a university type of environment within the firm by organising educational seminars through which R&D personnel share their research results.
Others religiously invite academicians for this purpose or send their personnel to seminars/workshops conducted by outsiders. Yet others provide company-paid foreign travel to employees as a means to learn.
Organisational learning is not just about acquiring new knowledge or updating current insights. It is also about unlearning what was previously learned. To be successful, learning strategies should include unlearning outmoded assumptions (for example, ``it is extremely difficult for Indian products to enter and successfully compete in the U.S. market'') and old methods that are now obsolete. By encouraging employees to accept change and rewarding them for it, a firm can bring about the unlearning of previously learned information that is no longer relevant.
Adopt a network structure
A global organisation is one that transcends its home base by competing in international markets. To be successful as a global firm, it must be capable of responding to customer needs from diverse and distant markets, rapidly and effectively. Not only is virtual information flow from these markets to the firm's headquarters critical, but the headquarters should be capable of processing the received information effectively.
A network structure is an appropriate arrangement for this purpose. It has a well-informed headquarters staff, arranged according to functional lines, but with minimal hierarchy and maximal horizontal interaction that is achieved through cross-functional teams and committees. The field staff, spread across the globe, consist of specialist firms with whom the headquarters has a temporary relationship. Thus, one firm in the field may design the product, the second may make the components, the third may assemble the end-product, and so on, whereas the headquarters is responsible for coordinating activities among the field units.
The network is thus a flexible organisation with several loosely hanging satellites as members of the network. Members are held together by partnership or alliance contracts that emphasise the pursuit of common goals. Membership in the network often changes, depending on the needs of the headquarters firm or when a member is no longer needed because goals have been met. Nike is a good example of a network organisation with field subcontractors operating in China, South Korea, Taiwan, and Thailand. The subcontractors act as independent units, making and selling sneakers globally while Nike engages in R&D activities, providing design information to the subcontractors. Nike is able to respond faster to changes in the fashion environment by rearranging the network.
Cultivate a global manager mindset
A global firm requires a band of managers with a global knowledge-frame and mindset. These managers must have the knowledge, attitude, and requisite competence to effectively deal with foreign government agencies and non-business stakeholders.
This means proficiency in communication and in cross-country politics, cultures, and economics. Managers of global firms should especially be: familiar with the functioning of the supranational entities such as the WTO and the European Union, and various regional trading blocks such as ASEAN and NAFTA; skilled in representing his/her company at international business gatherings, trade shows, and conferences; able to effectively handle foreign TV media and press conferences; aware of the norms and values of predominant foreign cultures; and well-informed about diplomatic protocol, etiquette, and practice. By encouraging managers to take university courses that cover the gamut of international politics, diplomacy, and trade issues, a firm can satisfy its needs in this area. Alternatively, these criteria may be included in managerial selection and in-house training.
To conclude, designing a global organisation is complex and requires several competing elements to be judiciously balanced. No model recipe exists and one can proceed in this area only through incremental adjustments. By fine-tuning organisational elements in a methodical and systematic manner, a firm must be able to arrive at a structure that is ideal for its purpose.
Raghavan Parthasarthy
Send this article to Friends by
E-Mail
Business
|
