Globalisation and management

Updated 9.12.12

Globalisation is an interesting word for me as being British, I spell it with an ‘S’ and Americans spell it with a ‘Z’. Proof that even languages, such as English (currently, the global language for business) have become affected by globalisation. I also find it fascinating that in the land of my fore fathers (historically known as the Indo/Pak sub continent –currently, India, Pakistan and Bangladesh), the word, ‘anyway’ is always spoken as, ‘anyways’. These permutations of language also affect how we trade, live and interact as a global society.

Globalization or globalisation as we know it was termed, in 1983, by Theodore Levitt, a former Harvard Business Review editor who used the term for an article about the emergence of standardised, low- priced consumer products. Globalisation has been fuelled within the last 10-15 years by IT. That includes hardware (HW), software (SW), connectivity (falling costs of HW, SW, ever larger pipes globally and VOIP solutions), cheaper travelling costs and a truly global workforce. As a result, CEOs and boards have used successful globalisation case studies to convince their businesses that it would lead to profitability and competitive advantage. For example, a software problem submitted at close of play (COP) today could be solved by the time America wakes up the following day (arguably saving costs and solving problems while sleeping).

The decisions that need to be explored in great detail are the reasons for deciding to go beyond your own border with a view of going global. I would categorise the reasons as one of the following:

  1. International opportunity
  2. Saving costs
  3. Skills shortage
  4. Legislative requirements
  5. Social and Corporate responsibility (CSR)
  6. IT Challenges

1. International opportunity:

This decision is usually taken when management realise that there is a demand for their product in another part of the world or that a demand for their product can be created. There are many examples of this such as Coca Cola. Coke as it is also known as is a trendsetter as it firstly; created a demand for their product (Did our grandparents know they needed to drink Coke?). This was followed by then satisfying the international demand. Recent success stories are led by Apple and the iPhone.

2. Saving costs:

Arguably, many would argue that this is an opportunity. I will discuss this later but for now let’s take it as it is. I would term this as ‘cost savings’ that can be realised through leveraging access to cheaper materials, labour or anything else that costs less than the local equivalent within a business’s own borders. Again, there are many examples of this such as Nike and Primark who outsource manufacturing facilities to countries such as India, Pakistan and South Africa etc.

3. Skills shortage:

Many businesses need to take this step and it is particularly true for IT led businesses, such as, software. Sometimes due to, for example, a skills shortage  a business may be forced to go beyond its borders. In my Indian software example (Para 2 above), it is recognised that another reason/advantage to outsource was the time difference.

4. Legislative requirements:

Countries allow international trade but will, for example, place a restriction on the amount of a product that can be imported by legislating import tariffs etc. For example, Toyota got around that problem in the early eighties by opening manufacturing plants in the US.

A business that wants to take advantage of this global reach has to consider the social and corporate responsibilities of globalisation and the IT challenges.

5. Social and corporate responsibility:

Anita Roddick of the body shop set the standard for being one of the first to prove that ethical business could be done globally. She pioneered the ‘green movement’ as we know it today by including only natural ingredients in her products, sourced globally at fair trade prices while protecting the local workforce, both at Littlehampton where she was born and bred and internationally where her products were used, sourced and produced. Businesses also need to ensure that a balance is struck between moving jobs abroad just to save costs against investing in the local workforce. Arguably, all businesses need to save costs and the rule to apply in these situations is that if a business is commercially profitable (for example, in millions of dollars) is to appreciate the effect of moving jobs abroad (in many cases referred to as outsourcing) against training workforces locally and producing a skilled workforce for the future.

In the short term that may translate to fewer profits but in the long term the business will benefit from a truly dedicated workforce and an investment in people that transcends the short term skills shortage. Globalisation should not be at the expense of a lack of investment in local people and infrastructure. Short term competitive advantage ( in a situation where saving costs is the primary driver) is usually lost to the outsourced country in the long term.

6. IT Challenges:

Connectivity costs within IT are falling daily and newer areas of the globe are becoming easier to connect. IT challenges still remain and businesses need to involve Chief Information Officers (CIOs) in the decision making process when they start to think globally. The earlier the business involves the CIO, the quicker the eventual deployment of IT enabled business becomes. In an earlier post on competitive advantage, I have emphasised the importance of the direct connection between the CEO and the CIO and that has to continue when businesses have global aspirations.

Providing IT internationally always has challenges and I would suggest that for globalisation to be successful, the CIO needs to be a visionary, businessman and a leader. The CIO will have to deal with issues where the IT capability may have to be imported, sourced locally (as importing IT may be too costly), have to deal with poor infrastructure, connectivity (in many parts of Africa) and have to deal with local legislation. Successful global CIOs will be the ones that can provide ‘out of the box’ solutions, have created great teams locally and globally, stay connected with their global staff, understand the different cultural variations and their impact to the business and have a network of advisors within and outside the business. CIOs have a great overview of how IT works and how it can assist the business but CIOs will never know everything, so they need to have access to peers, other CIOs and a network they can turn to and learn from without reinventing the wheel. If a CIO doesn’t have global exposure prior to a business going global it can sometimes be an advantage as it’s a clean slate and the CIO can utilise their own experience gained in various other industries.

To conclude, as the Coke slogan says, “Think globally, act locally?” Do you agree?

Advertisements

The future Graduate and the IT and Computing skills shortage

I have wanted to write this article for a while now.  When I was in university, the IT skills shortage stood at 3 million and the popular IT/Computing magazines were half full of employment adverts. That era has long gone but we, in the UK are still suffering as IT skills shortages reach the highest level in 10 years,  we continue not to learnt from the past and it seems that while we continue to churn out graduates, they seem to lack skills that employers want/need. In addition, the coming generation shun the industry because of a perceived lack of glamour and a reputation for hard work. It doesn’t all end there as recent reports suggest that The UK’s software development industry will suffer the same decline as the country’s manufacturing sector unless action is taken to tackle the skills shortage.

Have we become a nation that is forced to import talent from asia? Do we import talent because its, well, cheaper? I will let you decide.

This topic  is close to my heart as I strongly feel that the UK can become a leader in the IT/Computing arena. Well, if that is the case, how do we go about doing it?

I have realised now the secret of success for new graduates is to locate a degree course that equips them with the theoratical and practical knowledge of performing well in their area of study. Students would do well by using ‘pre-job board’ sites like Careerplayer. This site holds hundreds of videos with real people/graduates in real jobs, talking about their job and what it really entails, good and bad – sharing their honest view of their role. Using a site like Careerplayer will help them to de-select the IT/Computing career paths, if its not for them.

While researching this topic, I found an interesting article by Felix Redmill of Redmill Consultancy . I totally agree with all that has been said by Felix but would want to add by saying that both the government and industry have a role to play to ensure that the UK has a future equipped with suitable graduates, in essence creating a pseudo standard for such degrees with a vision for wider adoption.

I have split IT and Computing into three areas as I feel that these three areas need a slightly different kind of graduate and at least two of these areas have a pseudo standard that should be adopted/followed UK wide. In actual fact, to raise the bar of these degree courses, I would go as far as to say that all IT/Computing/gaming degrees should be validated by the government, with a minimum agreed of modules that are standard within all  three areas identfied below:

1. Information Technology Management

This is an area where government and industry have been brought together by eskills UK to validate IT management courses.  Read the following for more information:

News in Brief for new Information Technology Management for Business (ITMB) Degree course

HP teams with Thames Valley University to address UK Skills Shortage

eskills and IMTB

Universities offering the IMTB degree course (14)

Sample IMTB degree content from University of Manchester

 2. Software Engineering (Programming)

I couldn’t find any resources to indicate even any pseudo standards. This area would be covered well by a region by region basis and associated demand for programmers according to industries served within that region. For example, the universities near the UK’s silicon valley (Reading area) could offer courses on .net, Oracle etc due to local presence of these industry behomeths.

3. Computer Games Progamming

Again for games programming, 81 universities offer courses but only 4 are accredited by Skillset. Again, this suggests a lack of any standard degree for gaming.

It is no wonder, then that when graduates graduate, employers seem bewildered as to the calibre of graduate that they are taking onboard. I have even known of students that have completed their degree courses, employed by employers as programmers only to find that they do not know how to program in the language being used by that employer!