Managing effective teams in a global environment

EE-Evaluation Engineering, Feb, 2008 by Amir Aghdaei

A Google search under the key word globalization yields more than 1.6 million hits--ample proof that both interest and definitions abound. What does it really mean to be a global business? What is the best management infrastructure for this business? How then do you successfully lead and manage in a global business environment?

For the more than two decades that I've spent growing and managing global teams, I've learned through trial and error that successful global organizations begin with the recognition that a global strategy really is only a collection of local strategies built around a common core (Chart 1).

Businesses are far more global today than they have ever been, especially as we examine the shift in general to Asia and, in particular, to China and India. From an outsourcing perspective, China has become a manufacturer to the world, and India is considered the software designer for the world.

We also are experiencing the phenomenon of an exploding customer base counted in billions. In India, for example, an estimated three million new cell phone subscribers are added every month, and this is expected to continue for the next 10 years.

It becomes very apparent then that understanding these dynamics, quickly relating to them, and practically managing a global business are not tasks you can conduct remotely out of Silicon Valley or any other single location on the planet. Clearly, a business now must be interconnected in ways that didn't matter as much before--collecting detailed information about the customer base, then digesting and articulating this data, and finally providing services and products that meet the needs of the local environment.

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For example, when service providers in the United States or Europe plan their investments, they count on an average rate per user (ARPU) of $50 per month to assess their ROI. However, when the same ROI assessment is made in emerging markets, a $5 ARPU is assumed.

Global companies then ask, "How do I make money? Do I have the right technologies and infrastructure?" This shift in mindset translates into the development of a business model and sound implementation of this model. As managers, we want to know what this transformation will look like from an organizational perspective. What is the optimum leadership and management infrastructure?

For businesses to truly succeed in this dynamic global environment, they must follow an all-important maxim, which I strongly reiterate here: Make your management structure global but operate and execute in a local format. What do I mean by this? As we examine some important aspects of a global management infrastructure, I'd like to share with you my guiding principles.

Manufacturing Realities

Most businesses today want their manufacturing centers in Asia because there is a large installed base, an already well-developed supply chain, a critical mass of potential customers, and ready access to a deep pool of talent at a lower cost. If your intention is to have a manufacturing base in Asia, then the person who leads this organization must be hired and based in Asia. This allows the manager to build his or her own future rather than fight against a physical relocation and mindset transition to Asia.

R & D and IP Creation

IP creation, which provides a company with a competitive advantage, is not easily transferable. In highly sophisticated areas of technology, it takes a minimum of three to five years to start a core in any location that would allow you to build expertise and know-how.

In my experience, the home base, where IP is created, should house a minimum 25% of a company's entire R & D team. When it comes to maintenance and sustainability, I believe that 75% of this team could be transferred closer to the manufacturing base with direct access to customers.

At a minimum, a comprehensive three-year program should be put in place to effectively complete this knowledge transfer. Most importantly, the head of this global R & D organization should be a very versatile and flexible person to manage this worldwide organization, stay in touch with customers, create products in a lab, present effective solutions, and refine them based on direct input.

Field and Marketing

The lines between inbound/outbound marketing and traditional sales organizations are blurring. The field organization must be located as close as possible to the purchasing decision makers and end users.

In many cases, decisions are made in the Western hemisphere, but implementation and support are done from other regions. Linking these organizations with global reach and local touch has to be embedded into an organization's DNA. All supporting functions have to deal with this fluid and seamless organization. Marketing communications, for example, cannot follow the traditional model of corporate diktat and regional execution.

Let's move on now to the very real challenges of overcoming issues like multiple time zones, cultural barriers, and style issues. My theory is that you cannot allow any of these issues to become an obstacle. Instead, use them to your advantage.