Friday, 14 December 2007

Global / virtual x local / personal = social?

In my VIEW session, I introduced Bartlett and Ghoshal’s Integration Responsiveness Framework. This consists of four quadrants shown:

  • An International company clones itself around the world.

  • A Global company forms one integrated whole and provides standardised products across the world, responding to what Theodore Levitt sees as the convergence of global tastes and values and resulting in economies of scale.

  • Multinational companies form businesses in each different country responding to local tastes, responding to what Kenichi Ohmae sees as the need to become an insider in each market.

  • Transnational companies seek to gain all the benefits of these different approaches: global economies of scale together with local market customisation. So for example, in forming ABB, Percy Barnevik set out to create ‘a company that is big and small, global and local, decentralised but with centralised control’.

The transnational model is a later development, but is the most mature form in most business areas, and you can often see companies from the three other forms gravitating towards this one. An example is Proctor & Gamble, which for Bartlett and Ghoshal was an international company but has since moved firstly towards a global approach, cutting out the country manager’s role and handing all strategic questions about brands to new global divisions, and then towards a transnational approach, differentiating between high-income and low-income markets. In richer countries, the global business unit has main responsibility for profits and the allocation of resources; in poorer countries, which are often tougher and less familiar, it is the regions, in order to give country managers more clout over sourcing and the flow of goods, as well as over marketing.

The model your business uses will have a significant impact on how global and local your HR processes need to operate, and also on how your HR function needs to be organised. However, you might need to organise policies and practices in different ways. And you may find that the strength of needs for localisation vary according to each country. This means that you might end up with varying application of global processes which is leading many transnational organisations to segment their global business into a small number of different categories.

But the major problem with the model is that it doesn’t take account of globalisation and e-commerce, blurring boundaries between international and global firms. Today, companies can move directly to a virtual organisation without having to become global in a physical sense in order to maximise their global customer range and without having to diversify operations to different countries. This also helps to ensure greater consistency in service every time it is provided. The power of the Internet therefore creates a force which acts beyond globalisation.

And the model also fails to respond to the need to get closer to customers regardless of geography through mass customisation. This focus goes far beyond simple national distinctions. The combination of virtualisation and mass customisation creates a new opportunity which CK Prahalad refers to personalisation - involving a customer in co-creating their own experience based upon a blending of a firm’s products and services

These new options can be combined with the Integration Responsiveness Framework as shown below.

The e-personal model here is one which operates globally but deals with all organisational and individual customers on an individual basis. This is the area that is driven by social media and is governed by what Don Tapscott calls Wikinomics.

So in my business, my website, blog and social networking give me a global footprint, and most of my work is now generated from outside the UK. But I deal with all clients on an individual basis, with an approach that is informed by, but not limited by, the country that they're from.