BUSINESSWEEK ONLINE : AUGUST 28, 2000 ISSUE
THE 21ST CENTURY CORPORATION -- THE NEW LEADERSHIP Q&A with INSEAD's Subramanian Rangan "The drive to explore is starting to catch up with the drive to exploit" During a series of interviews on management of global companies in the 21st century, Business Week spoke with Subramanian Rangan, professor of Strategy & Management at the European Institute of Business Administration (INSEAD) in Fontainebleau, France. Rangan's current research focuses on global teamwork and global innovation within multinationals. He is co-author of two books: Manager in the International Economy (1996) and A Prism on Globalization (1999). What follow are edited excerpts from the conversation: Q: How is the management of global companies changing? A: Over the past 100 years, the main purpose of going into foreign markets was exploitation. Since 1985, exploration has emerged as a driving force. Rather than going to markets to exploit brands or for cheap labor or resources, companies are going global to learn. The drive to explore is starting to catch up with the drive to exploit. It's not an exaggeration to say companies have to innovate globally or die. The shift to exploration is to create new competencies. Good ideas at home are running out. You have to recognize [that] demand in other parts of the world can become a trend-setter. It's not surprising that Coke missed opportunities around the world, because it was organized to exploit and not to explore. Now, it's more important to orient to the demand side. Hewlett-Packard took the demand for printers in Japan very seriously. They are among the companies which have been good at leveraging globalness for innovation. Q: How do you forge a structure that can channel intelligence from far-flung markets to decision makers? A: It's not the structure that's most important. It's internal ties. That will be what differentiates companies competing in the same market in the coming years. You need sufficient internal ties and joint decision-making, and then you can remove the scaffolding. Decision-making must be truly global. Many companies are struggling with this. It requires middle managers who say, "I work for Citibank" first and "I work for Citibank France" second. Q: How do you get people to work in a team when they are vying for individual recognition in their sphere? A: If you don't [give people incentives] to be team players, they won't do it. There must be an inclusive decision-making process. People have to feel plugged in and see the total success as their own success. There is no silver bullet for managing companies in the 21st century. But this is the central issue. It's not just culture, it's not just leadership, it's not just decision-making processes. Look at who rises to the top. That is one of the most important signals. If it is someone who selfishly optimizes a subunit's goals, it's hard to tell everyone "I want you all to work together." Q: How do you manage the three-dimensional challenge of geography, products, and customers? A: You have to have these multiple dimensions feeding into decisions. It's impossible to avoid complexity. Getting the structure right is a necessary but not sufficient condition. What's vital is the importance of internal ties between managers. The CEO has to signal that importance. You'd be surprised how many companies lack peer review [which would encourage stronger internal ties]. Q: Why do some companies seem to do this better than other companies? A: One thing that is dawning on me is that the recruiting process itself may have a major impact on what kind of people companies attract. Hewlett-Packard's values, for example, are infused into the recruitment process. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The New Leadership The Boss in the Web Age TABLE: The Boss in the Web Age TABLE: Now and Then: How CEOs Will Change over the Next 20 Years See the World, Erase Its Borders TABLE: Going Global: The Growing Importance of Worldwide Markets Up from Bean Counter TABLE: Desired Skills An Executive Whose Time Has Gone From Gearhead to Grand High Pooh-Bah TABLE: Not Just Any CIO Mining a Company's Mother Lode of Talent TABLE: What Does a Knowledge Manager Do for a Living? Hey, Are You Listening to Me? TABLE: What It Will Take to Keep Me as a Customer Perspectives: Getting Rid of Guesswork Wanted: Eclectic Visionary with a Sense of Humor TABLE: A Resume for the 21st Century Write Your Own Title Essential Reading for Modern Managers ONLINE ORIGINAL: Q&A with McKinsey's Lowell Bryan ONLINE ORIGINAL: Q&A with INSEAD's Subramanian Rangan ONLINE ORIGINAL: Custom-Designing the Global Corporation INTERACT E-Mail to Business Week Online

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