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Business Globalization: Growth Management

Globalization is a double or quits game. It is not possible for a company to create new value from globalization and be only part global. The leap to globalization therefore entails the risk that the company will not get to its envisioned future safely: it may abandon its goal in midflight, be taken over, or fail. We have called this the risk of unsustainability. Although the ambition is to dominate the future, the leap to globalization has to pay back enough today to survive the present. Generating payoffs during the leap demands hard-nosed management of growth.

The globalizing competence of growth management can be thought of as the supply line of a campaign. Growth management maintains the functions that keep the leap going: exploitation of nascent scale economies, sharing of knowledge about developments around the world, financial management, and critically, strategic controls. Take the example of CMS Energy, a novice to international business. Within a short time after launching its leap to globalization, the company was pushing supplier Siemens for scale economies in the purchase of generating equipment, negotiating favorable relationships with major financial houses like Citibank on the basis of recent successes, and transferring Argentine managers to Venezuela in an effort to leverage skills in Latin American provincial government relations. Even more striking, CMS Energy has made international financial and political risk management a core practice.

As the CMS example illustrates, in order to generate sufficient payoffs en route to see the leap to globalization through, one of the things globalizers must do is carefully manage the cost side of their business. Because managing costs involves optimization of crosscountry differences, globalizers can learn a lot from the best practices of leading multinationals like ABB, Procter & Gamble, and Sony. This is not to say that globalizers should organize like long-established global firms - this would be akin to trying to fit a tailored suit on an athlete in constant motion. But globalizers can use certain best practices of multinationals for their own objectives.

Not surprisingly, then, we find the presence of star hires from multinational companies in leading positions a striking feature of successful globalizers. Yahoo! has Tim Koogle; DoubleClick has Barry Salzman; Fresenius has Udo Werle; WorldCom has Liam Strong. The pedigrees of these managers read like a who's who of famous multinational companies: Motorola, McKinsey, ABB, British Airways. What roles do these global managers play? The presence of one or more key global managers in companies that accomplish leaps to globalization is testimony to the truism that no leader can do it alone. However autocratic they may sometimes appear from the outside, leaders like Bernie Ebbers and Gerd Krick have delegated substantial authority. Global managers typically play central operational roles in making the promise of globalization a working reality in a company. They introduce best practices in the management of business across borders, ensuring that information systems, financial controls, and legal frameworks are suited to administer the complexity of a company seeking to jump-start in ten, twenty, or more country environments.

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