Transforming giants

Harvard guru Rosabeth Moss Kanter tells Venkatesan Vembu how a  new breed of companies is bridging the global-local divide — by emphasising the common factors that unite us all.

To hear Rosabeth Moss Kanter say it, 1989 was the year the world as we know it came into being. The Harvard Business School guru, billed as one of the “rock stars of business” and celebrated as one of the world’s “50 most powerful women”, dates the “era of modern globalisation” to that year. “Just look at all the things that happened around the world in 1989: the Berlin Wall fell, ending Communism in eastern Europe and opening markets; Asian financial markets were deregulated; Latin American countries liberalised; and preparations were being made in South Africa to bring Nelson Mandela out of prison…” And from this curious conjunction of events was born the brave new world of globalisation.

For Kanter, who took over as editor of Harvard Business Review that same year, the momentous nature of those developments was revealed in a somewhat unorthodox — and unacademic — fashion. “I was at a dinner with a Hungarian economic minister and his wife,” she recalls. “They were discussing the dramatic events in eastern Europe, and the underlying reasons that triggered those tectonic changes. The minister gave a long-winded macroeconomic explanation that had to do with trade flows, oil prices and currency rates. And when he finished, his wife, who ran a retail store in Hungary, stood up and said, ‘I don’t understand a thing of what my husband just told you. But I will tell you this: my friends and I, we want to go shopping’.”

Kanter says she pondered over that remark for a moment, and then the nickel dropped. “I said, ‘Wait a minute! She’s got it! That’s it!’” It was in part because of the opening up of communication about what the world had to offer that those people did in effect want to go shopping, she reasons. “It’s about not wanting to be restricted in any way to the offerings in their locality. It was, in short, the opening up of a new world!”

What started in 1989, Kanter explains, was an “enormous powershift”: from those who produce goods and services to those who buy them — or at least distribute them on behalf of the end user. And that, she reckons, has unleashed “all kinds of revolutions” and influenced companies to put customers at the centre of their business. “Overnight, globalisation created more competition,” she says. “Local producers and domestic companies were suddenly competing on a world scale because customers, who had access to information, held even local suppliers to world standards.”

But it also triggered a “major backlash” against globalisation, starting in the mid-1990s, recalls Kanter. The bullishness over the opening up of the world had to be tempered by an understanding of the tensions that crop up when some people benefit and others get left behind. “This sort of shifts the context for how companies operate, and I’ve been looking at that in several ways,” she adds. In particular, working on a project with a number of “exemplary multinational companies” — like Citigroup, IBM, BBC and Procter & Gamble — that have endeavoured to be both global, and locally-responsive, gave some interesting insights into how they managed “global-local tensions”.

Take IBM Egypt, says Kanter. Their research labs work closely with IBM Israel, and “the language of technology is so strong that it overcomes some of the worst political hostilities… They don’t care about politics; in fact, the company says you can’t talk politics or religion at work. Now, that is uniting people in a common purpose across an enormously hostile political divide.”

Kanter calls such companies “transforming giants” — a play on words. “Not only are they transforming themselves, they also transform the countries in which they operate.” They insist on consistency of standards, and demand that their suppliers abide by the higher levels of governance and transparency that they subject themselves to. “They are saying that even if we buy a company in a country that has low standards, we will operate to world standards.”

Today, what knits companies together, particularly as they spread out to far-flung places, is not traditional management practice, but the values and culture they embody.
“It’s all about finding commonality, and not about how different we are.”  That, she reckons, is an important characteristic. “It is going to bring a commonality of membership in a fairly thin but wide universal sense of what it means to be a human being in the 21st century.” These companies are going to bridge the cosmopolitan-local divide, not through politics, but through their products.

In Kanter’s reckoning, this offers “a great deal of hope for the future of peace and prosperity in the world”. To be sure, she acknowledges, it won’t get rid of North Korea’s nuclear weapons so fast, or solve every kind of problem in Africa and the rest of the world. “But it gives me hope” because it validates the idea that “we all occupy the same planet and we have more in common and more that unites us than divides us.” It’s a small world, after all.