One underlying fact successful globalizers understand is that services globalization has come a long way from offshore outsourcing and continues to evolve every day.As services globalization evolves,new opportunities arise. The reality,as Applied Materials GVP and CIO Ron Kifer sees it, is that a company can embrace, leverage and be a part of that globalization or it can become its victim.
“It’s greatly important that global organizations understand that we’re moving to a globalized economy and understand that they have to have the flexibility to be able to do the work wherever the work is more cost-effectively done and wherever the work is high-touch to the customer. That’s why we’re pushing globalization as a key strategic initiative in our organization: because we want to be on the leading edge of that,” Kifer explains.
That concept of flexibility – of being open to new opportunities– leads into the first secret of successful globalizers: Embrace globalization. Successful globalizers welcome services globalization into their organizations with open arms; they allow themselves to be constantly learning, constantly open to the new opportunities – and challenges – that the evolution of services globalization presents. Embracing globalization means looking at the big picture; considering every corner of the world as a potential sourcing destination and thinking about the unique advantages and opportunities that each location offers.
Embracing globalization is also an important stepping stone in the development of a services globalization strategy. Whatever may come, organizations must be always mindful that they are embracing globalization for all that it may offer.
MODEL FOR EMBRACING GLOBALIZATION
The basic model for embracing globalization has four components:
- Embrace globalization across the business
- Ask whether your processes should be performed better elsewhere
- Mandate the globalization of processesthat can be performed better elsewhere
- Keep an eye on the future
When the offshore outsourcing trend first caught hold of US businesses, most firms saw it as an opportunity to reduce costs through labor arbitrage. But as the movement has evolved – as offshore outsourcing has become services globalization – companies have looked past cost considerations.
In fact, flexibility is even more important than cost in services globalization. “If cost was your primary consideration, I think that you’re going to fall short of meeting the real objectives,” Kifer says.
“The real objective of a sound globalization strategy is to have a flexible workforce and global model and to realize that the markets, customers and competitive environment is going to change, which will require a company to maintain competitiveness to be able to do work in a different model in a different place over time,” he adds. And that’s why successful globalizers embrace it across the business.
Bill Gates, Co-Founder of Microsoft, once said, “If we are not realistic about what we’re good at, then there is a chance of going backwards in the face of further competition.”
In asking why each process cannot be done elsewhere, an organization must be realistic about which processes are:
- core competencies
- performed most efficiently in-house.
There’s no room for egoism in this process: to survive, a business must be willing to strip itself bare, down to only those processes that are true core competencies. Every business function should be on the table for globalization until it’s taken off, and only because it can be performed most efficiently in-house domestically.
Mandating the globalization of processes that cannot be done elsewhere is an important part of stripping an organization bare. Within a company, some people will resist globalization. Successful globalizers neither back down from that resistance nor tolerate it. Effective change management that secures top-level commitment and buy-in and addresses points of resistance is a critical part of a successful globalization initiative.
Companies must be constantly vigilant and always prepared to scrap the old way of doing business to take advantage of new opportunities. It used to be that to engage in this sort of flexibility made companies leaders. Today, it is a business imperative. As Thomas Friedman wrote in ‘The World is Flat’, “If you want to grow and flourish in a flat world, you better learn how to change and align yourself with it.”
Companies that have embraced globalization, including leading companies such as GE, Aviva, Texas Instruments, Google and Proctor & Gamble, have found large pools of productive labour in offshore destinations. But they have found something more in offshore employees as well: top engineering talent, attention to detail and quality, sophisticated mid-level and seniorlevel management, and even a level of brand identity and loyalty that rivals that of their domestic staff.
The most successful globalizers are companies who have visionary leaders at their helms. Steve Bandrowczak, former Lenovo CIO, says that trying to succeed in globalization without visionary leaders is like trying to bake a delicious cake with stale ingredients. “I don’t care how you mix it,” he explains, “you’re going to come out with a bad cake.”
Visionary leaders – the ones at the helm of globalization since the beginning of globalization – saw the big picture as it emerged: how the playing field expanded from the US and Western Europe to encompass India, the Philippines, China, Ireland, Poland, Chile, Brazil, Russia, South Africa and more. These visionary leaders understood, even in the early days of globalization, that global sourcing would become a key competitive advantage. They saw that global sourcing could not only allow them to reduce their costs, but could also allow them to grow more quickly, to cut time to market, and even to improve efficiency and raise quality levels.
Embracing globalization is the first secret of successful globalizers not because it is necessarily the most important, but because it lays the foundation for the six secrets that follow. Indeed, we’ll see the principles that underlie this first secret pop-up throughout the next chapters.
Embracing globalization is about seeing the big picture. It’s about looking beyond a single destination or a particular set of processes. It’s about an attitude change; about bringing the principles of services globalization into the business and embracing them in every decision that’s made.