Technology

Beyond Outsourcing, to Worldsourcing


We are now in the era of Global 2.0, where successful companies know how to harness ideas and innovations from the fast-growing emerging markets

Over the next several years, virtually any global company's success will depend on its willingness to reorient its view of the world map. This attitudinal—and longitudinal—shift will have enormous ramifications for business leaders, employees, and customers alike. Here's one perspective on ways to prepare and put yourself in the best position to succeed in this new environment.

For some five decades, multinationals have been living in an era I call "Global 1.0." From this predominantly Western vantage point, many emerging markets are perceived as sitting at the map's outer edges. They're seen primarily as sources of cheap labor to mass-produce inexpensive consumer goods and, secondarily, as fertile markets for expansion and growth.

Through such a lens, the design of goods and services is guided by a minority of the world's citizens: those in the West. Business ideas and innovations come solely from the developed world and flow in one direction toward the developing world. This built-in bias thwarts companies from discovering creativity, culture, content, and ideas from the developing world that can create value—and command market premiums.

Global 2.0

Any company that clings to this Global 1.0 paradigm is in for a rude surprise. We're not just nearing the end of that era; I believe we're past it. We've now entered the early stages of "Global 2.0," an era where the most successful companies will look for ideas and innovation anywhere to meet customer needs everywhere. Only the organizations that adopt a flexible "worldsourcing" approach to their business models will survive.

Today, there are some 4 billion people, mostly Asians, who don't yet participate fully in the global economy. But they already are a crucial part of the economic equation and are fast exerting their influence through their market demands, as well as the ideas and innovations that emanate from their unique cultures. The upward mobility of Chinese, Indians, and other Asians into the middle class—an estimated 200 million to 300 million people have made this climb since the turn of the 21st century—is driving demand for all kinds of goods, including food, steel, concrete, energy, fuel, cars, and electronics.

Those who refuse to believe that the developing world is redefining the marketplace are shortsighted, bordering on arrogant. Adding these billions of voices to the global marketplace can't help but reshape the economic order. As evidence, look no further than Tata's $2,500 car, or Bollywood's movies, or the inexpensive TV-based computing device we at Lenovo launched for rural China.

So how do you put yourself and your company in the best position to succeed? Let's take a look at it in the context of three groups of BusinessWeek.com readers.

Owners and Executives: Business leaders should start looking in emerging markets for answers if they hope to find the "secret sauce" needed to harness the economic explosion in this new world order. They need to spin the map around and look at it from a Pacific-centric view. This is where worldsourcing plays a role. A distributed global management approach is required to make a company nimble enough to reconfigure its resources and talent in real time so it can respond to rapid shifts in local market demand. You can't get a feel for such shifts from an isolated corporate HQ. To truly grasp the nuance of local market dynamics, you need operational staff who know the cultures and norms. In addition to ensuring that your supply chain remains efficient, this will help you gauge and respond to cultural shifts that portend market demand changes.

Employees: Globalization, as represented by Global 1.0 in the 1970s and 1980s, holds a stigma from the very real dislocations it wrought in manufacturing and local economies. Global 2.0, by contrast, is about inclusion. It turns strategies such as outsourcing and offshoring on their heads; it's about embracing and enfranchising local talent in markets everywhere to capitalize on the best ideas from all pockets of a company. No doubt, globalization has consequences in terms of job movement, but that's inevitable in a highly competitive world economy. If you're working for a multinational company, you're competing against skill sets in countries around the world, but your job aptitude and career choices will no longer be limited by your geographic location. Employees who embrace this movement and look for ways to collaborate and contribute their best thinking, thereby driving and fostering innovation and better ways of doing business, will put themselves in career-growth situations—the antithesis of career stagnation.

Customers and Consumers: Customers of multinationals, in general, stand to gain the most from Global 2.0, as they will benefit from new goods and services that represent the best value from brands they trust. Since worldsourcing pulls new thinking and new products from every corner of the globe, the ultimate result is better, advanced goods at the most cost-competitive prices. As companies compete with one another to be the first to market with innovative ideas, consumers will benefit from an ever more rapid evolution and commercialization of new thinking.

Worldsourcing, in short, means understanding and engaging with an array of cultures—and leveraging the unique ideas that emanate from a diversity of thinking. Global 2.0 has arrived and is here to stay. Many predict that worldsourcing will be the dominant business model by 2015. So it's time to rethink that world map…or think about a new career.

William J. Amelio is president and CEO of Lenovo.

Steve Ballmer, Power Forward
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