Chartered Management Institute: In My Opinion

Article excerpt

Business leaders need experience of working abroad to develop an international mindset, argues Chartered Management Institute Companion Patrick Macdonald.

Businesses are steadily becoming more global. As a result, it's more important than ever for business leaders to have a genuinely international outlook. This can only truly be gained by living and working abroad.

The challenges are enormous. Capital moves freely across national and continental boundaries and, increasingly, so do goods and services Supply-chains lengthen as businesses chase global economies of scale. New technologies reduce communication and transport costs and we face competition from all parts of the world.

The stock markets have played an important role too. Investors have pressured companies to 'focus', by which they mean: 'Concentrate on building strong positions in a few sectors - or just one - rather than lots of weak positions in lots of sectors'. Investors prefer to diversify for themselves rather than let management diversify for them. Leaders must concentrate on making a single business successful rather than hedging their bets across several businesses. In response, more and more businesses are going global.

This means that business leaders have to understand the issues, risks and opportunities their organisations face in diverse countries across the globe. They need to adapt to leading their local management teams from a distance, allowing them enough autonomy and authority to respond to local needs without losing sight of the disciplines that make the business greater than the sum of its parts. There are no simple solutions: different companies have different ways of adapting to local styles and conditions - as I've experienced. GE imposes its own strong culture across all parts of its business, while Unilever puts the emphasis on adapting to local conditions. These solutions reflect the different sectors of each firm: technology is universal, while consumer tastes are not.

Leaders of global businesses need to be sensitive to new sources of reputational risk. Cor- porate behaviour is a hot topic, and customer awareness of business problems can spread rapidly from one country to another, fuelled by 24-hour news, e-mail and blogs. It's hard for a firm to combat stakeholder journalism without seeming uncaring and thoughtless. Businesses have been under pressure over trans-national issues as diverse as sweatshop labour, food miles and the source of the timber in garden furniture.

All this puts a premium on understanding how local leaders, opinion-formers and consumers behave and think. John Mole's book Mind Your Manners (Nicholas Brealey, 2003) offers an excellent illustration of how business cultures differ. He differentiates between 'Individual' and 'Group' leadership styles, and the organisation of businesses along 'Organic' or 'Systematic' lines. …