Understanding our globalised world
Willie Esterhuyse
Jack Welch, previously the manager of the very successful and internationally powerful General Electric said the following: “If the pace of change inside your organisation does not keep up with the pace of change outside, then you are heading for trouble”. With that he expressed a point of view which has become very common on the business world or corporate sector: Change is the only invariable!
You realise how strong the emphasis on change in the business world is when, as an academic, you are continuously involved with the executive directors and senior managers of large companies. And what applies to large companies is especially applicable to smaller companies. If you can’t lead and manage change, you will either be swallowed or spat out along the way. There is a huge difference between your professorial office and boardroom of the directors; the classroom and your work area as employee of a business institution.
The business world can be described in many ways. Whether it’s big or small, every business enterprise is an organisation or institution where products, processes and people play a decisive role in success. Jack Welch does say that, after everything has been said about business enterprises, there is no institution where the success is so directly dependent on change and innovation and people’s ability to adapt to it, as in the case with business institutions. It’s a world where you must be able to think and do strategically if you want to be an entrepreneur and not just an employee. The reason for this is simple, but very challenging: You must be able to compete. Competitiveness and the ability to add value through innovation is the key to success. And competitiveness is different than having a degree qualification!
Dr Anton Rupert, undoubtedly one of the biggest entrepreneurs that South Africa has ever produced, and who started his big international business enterprise with a mere ₤10, always said: An entrepreneur is someone who thinks ahead; who is ahead of other people; who starts something new with his ideas. If you get behind, you stay behind.
Today companies and business organisations are the big and true generators of change. If it is so – as is generally accepted today – that knowledge and service workers, and not just financial capital, determine the wealth of a country, then one of the most important partnerships which exist today is the one between the business sector and the university and other research and training centres.
There is even a tendency to do more and more research and postgraduate training outside the university. General Electric is a good example. Today it is indeed the business sector that applies knowledge on a large scale, applications that drive our world and its changes.
Processes which determine our world
There are a few processes which directly determine the story of our world. Sometimes people refer to these processes as tendencies, powers that are let loose and must be managed and led by people – for example environmental erosion, global warming or even the occurrence of HIV/Aids.
Some of these processes and tendencies are indicated as mega processes, meaning that they are processes that, in terms of volume, duration and energy will not disappear soon. Over a period of thirty or fifty years they will have a significant influence on the corporate world. One such a process is the global warming issue, which will be discussed later in this chapter.
Other processes and tendencies are called macro processes. They don’t have the same voluminous and vital scale as mega processes, but are of vital importance because they stretch over country borders, are long term processes and concern a large number of people. These processes, which we are not going to discuss, are relevant to the role of the government. Whatever we do, we’ll never get rid of the government. The government, and the way it acts in the world, concern our comings and goings very closely – especially the comings and goings of the corporate sector. You cannot tackle good business projects in a weak, negative or restricting policy environment. The nature of the government’s policy can make or break the business sector.
The mega process that I want to discuss is called globalisation. It is a very powerful process which touches everyone, young and old, rich and poor.
The impact of globalisation
For many years globalisation has mainly been described in economic terms. Many authors reckon that globalisation is the integration of national economies by means of for example direct foreign investments by the multinational companies, network or commercial relations, the flow of short term capital over international borders, the flow of technology, the flow of managers, employers and even “guest workers” to other countries and the access to worldwide training opportunities.
It is true that the economy and the free market are important factors in globalisation. They are not the only factors, as can be seen by the worldwide resistance by numerous activist groups against globalisation in all its forms. Today globalisation is seen as a comprehensive, worldwide process of integration and transformation which for example also concerns people’s culture and value systems. There has also been referred to globalisation of information as the “internationalising” of selected languages and communication systems. The well-known Rijk’s University in Utrecht, the Netherlands, like many other “national” universities” decided a few years ago to “internationalise”. This didn’t only bring about a strong focus on international needs, but also increasingly made the student composition of the university and its lecturing and publication language more diverse.
There are a few facets of globalisation that deserve emphasis. The first is that the market for knowledgeable people and competent leaders are now open. Restrictions on migration of experts and people who can compete have vanished. One of the reasons why Dutch, Danish, British and other foreigners are beginning to flock to some South African business schools, is not only because of the excellent training at a low cost, but also because they want to experience the diversity of the South African world. They argue that one day they will work in a diverse environment, along with people of many languages, cultures and religious convictions. Where better to acquire knowledge and experience of this than in South Africa?
This open, globalised market requires people with the expertise, ability and temperament to enter this market. The inability of some graduates, especially those who don’t have good communication and interpersonal skills, as well as the capacity to adapt, has already led to the fact that developed countries talk of a loser generation.
The second facet is that national and cultural borders have become “soft” or even disappeared. We increasingly find ourselves in an interdependent, web-like world where vibrations at one point in the web is widely felt and experienced. Accelerated technological development, especially with regard to access to and distribution of information, is the most important reason for this. It will accelerate forward. The fact is: Digital information knows no boundaries. How the obliteration of borders with the tendency and right to cultural, religious and other forms of specified identifications must be balanced, is one of the big challenges that we face, especially in our own, very diverse country.
The third facet which must be mentioned is the appearance of the networking businessman, politician, academic, et cetera. A globalised world is a networking world. In the past people might have said: “Our power is in our isolation”, but today they say “Your place in the network determines your power”. It has already led to what today is called the businessman in transit; the travelling businessman; the businessman whose office is a private plane.
At the University of Harvard there are referred to the boundaryless firm. Naturally the boundaryless firm need people who can look after and manage the main office, the home base, the head office or the “group address”. They form the necessary office staff, the operational managers, and the people who receive and carry out the orders. The networkers are of another order. They determine policy and strategy; give direction; discover and develop opportunities.
It is inevitable that in a globalised world the competition between networkers and strategists on the one hand, and operational managers and office staff on the other hand is extremely fierce. Not everybody will be and are networkers. The differentiation between leadership and management is already busy growing. The previous century was the century of the “managerial revolution” (Galbraith). This century is the century of the leadership revolution, in other words, the focus is on leadership and the development of leadership.
A fourth facet of globalisation is becoming more and more important: the emphasis on sustainable development. Today this term is central in vocabulary of leading people and important opinion shapers. Simply put, it means that the decisions and actions of today must ensure that the world still exists tomorrow, and that hopefully it’s one that is better than ours. The choice for sustainable development is a very important choice. It requires a good balance between short term and long term goals. To put it more pertinently: It requires you to temper your inclination to make your decisions on the basis of short term benefits, by weighing it up against the long term benefits. And also weigh up long term benefits if there is another option in your choice.
It’s not easy. You should discipline yourself to think in terms of long term goals. That is something that Dr. Anton Rupert was very good at. Like Henry Ford he kept on living in the house that he had bought as young entrepreneur. He always said: “I have no desire to live in a new house. I have only one desire: to build an establishment [Rembrandt] that will hold it’s own longer after my death”. Henry Ford did the same.
A fifth facet of the globalised world in which we must find our way and plan our future, is related to something which is of increasing concern to people: the birth of an institutionalised power. That means the concentration of power and the ability to influence the course of matter, being established within institutions that are growing and becoming stronger. It is also called multilateral organisations.
In a networking world, with its focus on sustainable development, the big question is therefore how internal policy can be synchronised with international policies and tendencies, and especially how the possible conflicting interests must be managed. It makes heavy demands on new entrants to especially the professional market, the entrepreneurs’ class and the high-level management corps. They will need the training and ability to understand the networking world, as well as the social and political processes that play a role in it, and be able to play them in. That is why many companies are already busy with intense policy analysis in the light of questions like: “How does official policy affect the company’s activities?” and “How can official policy be influenced positively?”.
National governments like South Africa will always stay important and will not disappear. But their ability to follow their own route has already disappeared. This route is usually just downhill, as in the case with Zimbabwe. Financial multilateral organisations have a lot of influence. That includes organisations like the World Bank and the International Monetary Fund. The World Trade Organisation is another very influential organisation. Among other things it has a big influence on the future of agriculture in Africa, as well as South Africa. There are also organisations like the G8 countries. It consists of countries with a high level of industrial and economic development.
It is due to this state of affairs that national establishments, like universities, and national business organisations are forced to combine forces in order to better look after their own interests. Cooperation, or partnerships, as it is increasingly called, is what it’s about.
We especially see it in the business world. Joint projects on macro level, with their sights set on competing internationally by sharing expertise skills, have become unavoidable. Financing of mega or macro projects by international financial institutions require bargaining power and combined expertise and intelligence from those companies who want to be first in line. The cooperation of for example Murray & Roberts within a consortium which also includes foreign expertise in order to handle the Gautrein project is an example of this. By the way, project managers who lead and manage mega and macro projects, are definitely popular and scarce positions in the globalised world.
The growing institutional force of international organisations and the focus on globalised networks have also cost the universities something. For example, one university cannot now be everything for everyone by providing in all training needs. Neither can it compete with nearby universities in everything. Cooperation and partnerships, even to the point where division of work must be negotiated, is a growing tendency. This tendency already finds expression in the conviction that qualifications should not only be obtained at one university, but the exchange of courses help to better prepare people for a world of diversity.
Global rules and policy on global issues like trade, health, safety, environment, combating poverty and job creation has come into being. It has already had an effect on business enterprises and institutions like universities. This effect will become more visible as universities can no longer rely on financing from the government.
How does this affect you?
Since it still remains the biggest job provider to graduates and trained people, I will limit my answer to the business sector. Some of the principles that are applicable here, is however also applicable to other sectors.
Within this sector the need for knowledge and service workers will grow, as well as the need for entrepreneurs and project managers. In terms of the latter South Africa is still in its infancy.
Many graduates don’t make the grade in the business sector because their preparation was ineffectual or their expectations were too high. The most disillusioning experience that I have come across in my involvement in the business sector, came from the executive head of a company who at that stage had approximately 45 000 employees in his service. He placed a very large premium on university training. But, his damning opinion was the following: “I have to retrain graduates in order for them to understand what a business enterprise is about, how knowledge must be applied, how to manage people, processes and projects, and what the word ‘strategy’ means”. He even went further: “It is impossible to change some graduates. They are prisoners of their professors’ handbooks”.
This view is exaggerated, but it makes an important point: How to apply acquired knowledge in a business organisation, or even to throw it to one side in light of new insights and strategic challenges. The business sector is ruthless if you cannot throw a bridge between theory and practice. That is one of the reasons why in South Africa there exists a tension between business people and academics.
A good understanding of the pressures and workings of the business sector is an important requirement for a successful entrance. In fact, globalisation even makes it urgently necessary. As in the case of the South African managing director of a successful financial institution, who quickly had to learn to find his way through the complexities of the international financial world, often flew to London for the weekend to conduct negotiations, has to maintain a network, get the best information and understand what the latest tendencies and products in the financial market are. Meanwhile he has to manage his company and ensure that he gets good research on his desk! Interestingly enough, early on in his life this person chose wide exposure – not only with regard to studies, but also experience (in Europe). His goal was very specific: “I want to get to know everything about how financial institutions operate. At the age of thirty two I want to manage a financial institution.”
Strategic thinking, continued training and education, planning of goals and an excellent network are some of his success factors. He makes no secret of the fact that his training was his launch pad.
In a globalised world you quickly have to find an answer to the question as to whether you want to be part of the corporate leadership and management corps, or just a committed employee. The days where you progress on the ladder with years of committed and faithful service are over. As John Collins said in his book Good to Great: “It is not good enough to be good. Being good is actually the enemy of being great”.1
In South Africa globalisation will also separate the wheat from the chaff. Progress, and promotion, is no longer guaranteed, whether you have a degree or not. It is about whether you can make a contribution in the building of an establishment that promotes sustainable development. If you cannot do that, you and your degree will be declared “redundant”. It makes heavy demands. In a globalised world the business sector doesn’t allow for failures. It can no longer be afforded.
In the future the demand will become even higher and heavier. Training, experience, temperament and strategic abilities will determine the winners.
John Collins. 2001. Good to great. New York: Random House.↩︎