Some Thoughts on “Globality”
I’d like to gush about “Globality: Competing with Everyone from Everywhere for Everything.” It made some best books 
lists in 2008. The authors, Harold L. Sirkin, James W. Hemerling and Arindam K. Bhattacharya, all of Boston Consulting Group, have a sweeping vision:
We look forward and see a new era emerging. We call it globality, a different kind of environment, in which business flows in every direction. Companies have no centers. The idea of foreignness is foreign. Commerce swirls and market dominance shifts. Western business orthodoxy entwines with eastern business philosophy and creates a whole new mind-set that embraces profit and competition as well as sustainability and collaboration.
They back this up with interesting data and case studies showing that the companies to watch might not be Google and Apple, but Embraer, Bharat Forge, Tata and Goodbaby. In fact, they offer some good evidence for one of the ideas I think will
shape business and society in this century, which is that real innovation will come from
everywhere.
So I’d like to shout out that “Globality” is “The World is Flat” for business.
But
it doesn’t quite get there. Perhaps these authors are too honest —
Thomas Friedman goes 375 pages (out of 469) in “The World is Flat” before he confesses that the world
isn’t really flat and talks about what that means. Sirkin et al know
that we’ll never literally compete everywhere, with everyone, for
everything — even their star conglomerate, Tata, is in a limited
number of businesses, and cooperates through joint ventures in
addition to competing directly. Mostly, though, they must tell Western CEOs how to respond to their vision, which means they end up writing a self-help book, and those are only compelling to people who need the help.
Their audience may not realize how much help it needs. One powerful aspect of “Globality” is the way it breaks down the operating strategies of fast-rising companies in China, India, Brazil and elsewhere.
Still, I find a number of things to recommend about the book. It becomes clear why many of these companies are gaining market share in the West, and even buying iconic Western companies — big firms in the developing world are well-run by ambitious leaders who’ve got effective strategies for global expansion. Translation — they’re set to clean the clocks of Western firms who take it for granted that they are better run than some firm in a backwater like Brazil.
Most executives will also appreciate chapters on how to develop and keep talent in a global environment, how to delve deeply into the business environment in emerging markets, and on ‘pinpointing,’ their method of making the invisible hand visible and strategic. To me, the best stuff comes from insights into how the big companies in the developing world operate, and the disadvantages they face (Chinese firms have no choice but to sometimes do what the government tells them, whether or not it’s good for business) as well as their likely ongoing advantages (they assert that even if wages for typical Chinese workers grow at 8 percent a year and those for U.S. workers by 2.5 percent a year, by 2040, Chinese labor on average will still cost one-quarter what it does in the U.S.A.). And there’s a chapter on some of the genuine, world-beating innovation taking place in emerging markets, a theme of my own reporting that I think is a harbinger of a better future for us all.
The $150 washing machine
There are also good examples of how Western firms can harness the best parts of their existing business and emerging markets. My favorite was the three-page recounting of how Whirlpool developed a $150 washing machine for Brazil, where washing machines are something consumers aspire to own. It was a lovely bit of work on why washing machines are an important status symbol in a large swath of Brazilian society, and how Whirlpool was able to profitably develop and manufacture a low-end product.
This is just one of a number of examples of effective innovation in emerging markets by Western businesses. One thing I like about “Globality” is that it doesn’t think Western firms should panic, or will be inevitably crushed by the wave of innovation brewingn at what they call ‘challenger’ companies in developing markets.
But the book is also tinged by the suggestion that one advantage any firm gains in emerging markets is the ability to operate sweatshops with impunity. Sirkin et al. quote Zhou Susu, a top executive at ZTE, the biggest Chinese maker of wireless networking equipment, as saying “Our local staff usually works twelve to fourteen hours a day. It sounds terrible to our competitors.” It ought to sound terrible to Zhou, especially given that the authors note (much, much later) that “as many as 20 million kids are left at home alone for weeks and months while their parents take jobs in cities or at distant work sites.” Heck, their parents could just be down the street at a ZTE facility. Maybe the kids can live in Ms. Susu’s home. She’s probably not there very much.
Perhaps ZTE pays overtime and adheres to other reasonable labor practices. Sirkin et al. say nothing of the sort. Instead, they cite a piece in the Atlantic in which an anonymous American executive says “There’s none of this ‘I have to go pick up the kids’ nonsense you get in the States.”
The thesis of the book will stand up better than most pre-Crisis books. Yet it would clearly benefit in paperback from a chapter assessing what the credit crisis means to companies in the developing world. Some stars in the book are Cemex, the big Mexican cement firm, which has run into serious problems due to its use of debt to fuel acquisitions, and Tata Motors, which just posted a loss. There are many reasons to expect that the challenger companies of the emerging world will come through the crisis well, but their expansion plans will certainly be delayed, and in some cases perhaps even derailed.