non-box global management for a non-flat world
TRANSCRIPT
NON-BOX GLOBAL MANAGEMENT
FOR A NON-FLAT WORLD Based on true life stories
This is Arturo.
He’s a CEO
He runs a successful company
He has operations in the U.S., Peru, and Brazil
They wanted to continue expanding…
But first… he had to manage the companies acquired and created to become a global organization.
But how?
He had been told the world was the same everywhere…
That he could compete the same everywhere.
THE REALITY: He Hadn’t Been Told The Truth
For Arturo & His Company to Succeed
HERE
HERE
HERE
HERE
HERE
HERE
EVERYWHERE
“THE IMPORTANCE OF DIFFERENCES.”
He had to accept…
Cultural Differences
“The whore”,
in Spanish
Administrative Differences
Apr 23, 2012 Wal-Mart
shares fall 4.7 percent after bribery allegations. The company continues
to face government
probes into allegations of bribery at its Mexican unit.
USA Mexico
Ease of Doing Business Rank
4
53
Source:: The World Bank. Doing Business. June, 2011.
Apr 23, 2012 Wal-Mart
shares fall 4.7 percent after bribery allegations. The company continues
to face government
probes into allegations of bribery at its Mexican unit.
USA Mexico
Ranking of corruption as a problem to do business
12
2
Source: World Economic Forum, The Global Competitiveness Report 2011–2012.
Geographic Differences
“It’s cheaper to move a load from
Buenaventura Port (in Colombia) to Los Angeles (USA) than to Bogotá”. -Universidad del Rosario
Economic Differences
Dinamarca Cundinamarca
GDP per Capita = $59,928 GDP per Capita = $7,132
Arturo should not fight the differences…
Arturo needed a strategy
to make the most out of
any differences!
Arturo’s Needed Strategy
Fuente: Managing Differences: The Central Challenge of Global Strategy, HBR
Adaptation
Arbitrage Aggregation
Adjusting for
Differences
Exploiting
Differences
Overcoming The
Differences
What Was Needed Implied Team Work
But, over time, corporate &
subsidiaries had grown apart, did
not work well together, and they
had very negative perceptions of
each other.
“They are expensive, slow, bureaucratic, won’t respond”
“Everybody intervenes in his own way; there are many touch points; they request too much information”
“Don’t understand that we are different”
“Their practices are complicated, inefficient, and do not apply to us”
“They do not understand the role and value of headquarters; they refuse to be controlled; don’t follow policies and instructions; do not give the information requested”
“They request everything at the last minute, they want it now, tailor-made, and free”
“They are small but demand too much attention; we already have enough handling our own business”
Subsidiaries’ Opinion on Headquarters Headquarters’ Opinion on Subsidiaries
Why?
A dysfunctional governance had led to
power games, behind-the-back work,
meeting-itis, committee-itis, bad decisions,
poor performance, slowness, uncertainty,
and conflict.
And that in turn had prevented optimal…
Strategic alignment
Value creation Risk
management Resources
management Empowerment
Arturo Needed Managerial Governance
Managerial governance consists
of actively allocating decision
rights and responsibilities in order
to achieve results.
First, Arturo understood
the context.
Then he followed
3 Easy Steps
Understand Value
in the Context or
Strategy
Understand
Where to
Intervene to
Capture Value
Define
Managerial
Governance
Understand Value
in the Context or
Strategy
Portfolist Strategy
guide Operation
guide Operator
Value added by headquarters
Managing the
investment portfolio
Creating links and synergies
among subsidiaries
To provide knowledge
and experience in technical and commercial
matters of the subsidiary
To manage and control the business
Value added by subsidiaries
To deliver financial
results
To execute what is asked
To execute as asked
To execute under
supervision
He explicited all the value that headquarters and subsidiaries could bring to the table
Understand Value
in the Context or
Strategy
Understand
Where to
Intervene to
Capture Value
Define
Governanace
Coordination Unification
Diversification Replication In
form
atio
n In
teg
ratio
n
Process Standardization
He decided to intervene only those processes where there was
value to be captured
Understand Value
in the Context or
Strategy
Coordination Unification
Diversification Replication In
form
atio
n In
teg
ratio
n
Process Standardization
He decided to intervene only those processes where there was
value to be captured
Interaction
Model
Economic
Model
Decision
Model
Define
Managerial
Governance
Key decision and responsibility domains Key decision instances
Decision rights and responsibilities allocation to decision instances
Coordination mechanisms
Authority relationships
between headquarters and subisidiaries
Economics signals between companies
in the group
He allocated decision rights and responsibilities in a way that would
promote the convergence in the operating model and the materialization of al value
Strategy and capabilities
Organzational structure
Process and IT
Incentives
People
PEOPLE
Strategy & Capabilities
Organizational
Structure
Process & IT
Incentives
ARTURO THEN EXECUTED A ROADMAP TO TRANSFORM THE
ORGANIZATION AROUND MANAGERIAL GOVERNANCE
It Was Hard Work
He provided executive leadership along the way.
He promoted participation – although not
democracy.
He designed governance actively.
And, above all, he was disciplined in implementation.
Arturo and his business
now thrive in globalization.
His business acts as the whole
and not as the sum of the parts
They materialize all
value there is.
Headquarters know when to intervene… and when not to.
His Employees Work Stronger As a Team…
HERE
HERE
HERE
HERE
HERE
HERE
EVERYWHERE
