BEST PRACTICE

MULTINATIONALS IN THE NEXT DECADE

BLUEPRINT, FLOW & SOUL
The builders of modern multinationals draw inspiration from the architecture of buildings: Design a blueprint, manage the flow of resources and inject some soul.

by Jorge H. Forteza and Gary L. Neilson

A

DECADE OF GLOBALIZATION

executives dreamed of consolidating their operations to serve markets without borders. Not unlike some other economic forecasts, this one fell a little short. As the 1990’s progressed, it became clear that the international marketplace was into exponential sales increases. Instead of the old concept of maintaining integrated operating units in the countries where they did business, fraught with economic risks that affected sales, and even the most nimble companies found connecting with customers more challenging than

— that was the forecast for the 1990’s. As the Cold War came to an

end, nations on both sides of the Iron Curtain reduced direct involvement in their respective economies. Multinational companies geared up for freer trade, fueled by deregulation and increased disposable consumer income. The companies banked on leveraging their brand names for everything from toothbrushes to cars

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Jorge H. Forteza is a senior vice president with Booz-Allen & Hamilton, president of Booz-Allen & Hamilton Argentina and the partner responsible for operations in the Southern Cone (i.e., Argentina, Brazil, Chile and Uruguay). He holds a degree in political economy from the Universidad de Buenos Aires and a master’s degree in management from the Sloan School of Management. Gary L. Neilson is a senior vice president with Booz-Allen based in Chicago. He focuses on assisting major companies with strategy-based organizational transformation and has worked with companies in the fields of consumer products, energy, airlines, electronics, glass, steel, medical products, financial services and automobiles. Mr. Neilson holds an M.B.A. from Columbia University.

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Issue 16

multinationals ignored the totality of what it takes to create a vital.. we believe that to succeed in global markets. PROMISE VS. and to attend to all three simultaneously. in the long run. and. multinationals need to concentrate simultaneously on three key disciplines: 1) the design of organizational structure. The job was no fun. formidable research and development and new-product capabilities. This creates problems .. pay and benefits. attractive career opportunities. with its “boundaryless” organization. global scale for sourcing and transferring knowledge. Among the problems are: • Who is in charge? No one can make a decision without a clear chain of command.” have managed to attend to all three. they have built management matrices that are even more confusing than the ones they replaced.. 2) the management processes for allocating resources and for measuring and rewarding performance... were not the problem. Most other companies are still struggling. this unattractive work environment made the multinationals unable to attract sufficient high-class local talent. In the process. the parent company of Hanes. EXHIBIT I MULTINATIONALS POSSESS MANY COMPETITIVE ADVANTAGES Source: Booz-Allen & Hamilton the three elements of structure. Local competitors proved much tougher than anticipated and local markets stubbornly resisted standardization.B... Why.. often after a great deal of experimentation. values and behavior. such as the General Electric Company. are they having so much trouble? We find that in attempting to serve new markets more efficiently. advanced management practices. REALITY OF GLOBAL ASSETS Modern multinationals have many impressive assets: famous brands. Looking forward to the next decade. financial staying power. Moreover. The products. and 3) the company’s culture. Their established names should have given them even more strength.. Bryan. They restructured in ways that left them unable to compete..” lamented John H. The problem was that in repositioning to serve global markets.. particularly emerging markets.B.. a $30 billion engineering and technology company operating in 100 countries that has dubbed itself “multidomestic. With companies like these. and market and political clout. “Even underwear has national characteristics. further undermining long-term competitiveness.. They have complicated their decision-making by moving responsibility from country operations (in consultation with a corporate center) to regional headquarters (with responsibility divided in the name of consensus and inclusion). geography as an organizing principle is less important than focus on customer needs. inadequately staffed and without productive customer relationships. many multinationals have had operations in countries around the world for a long time... and A. Complicated by the challenge of operating across borders — with different cultures.) These assets should give them enormous advantages in new markets.. companies have created new organizational bottlenecks. then. Employees found themselves absorbed with politics and internal rituals instead of interacting with customers or clients.. The time has come to stop treating process and people separately. regulatory schemes. The most successful multinationals. chief executive officer of the Sara Lee Corporation. customer-responsive organization. tastes and resentments based on na- tionality — the new structures failed to reward entrepreneurship.BEST PRACTICE expected. though... 2 Third Quarter ’99 . cost and scale advantages for manufacturing and logistics. (See Exhibit I.

. A true global corporation will have the capabilities to play it either way. a company’s advantages...) Yet.. Yet. • The best and brightest will not work for us. For better or for worse.. product managers and managers of functions such as strategic planning share responsibility and accountability. Allocation of corporate overhead — finance. they tend to overanalyze and miss out on market opportunities. Why should they? The new Source: Booz-Allen & Hamilton EXHIBIT II MULTINATIONALS NEED TO MOVE TOWARD A MORE OPEN AND DYNAMIC BUSINESS MODEL ... anything that has the aura of an established foreign brand will sell. In others. and in these. • I have to clear it with headquarters.. making them both professionally ineffective and personally unhappy. and leaves field managers at a competitive disadvantage. a fullscale marketing invasion may work. manufacturers of economy has created new opportunities for local talent. Yet. Neither can it impose a standard product line on all people in all markets. in most cases. This is what we hear from regional business managers whose territories are too wide... they are often so fragmented and complex that they cannot.... each catering to a particular marketplace.. most multinationals rely too heavily on expatriates for country management and devalue the career opportunities for local talent. • My job is impossible. restructuring efforts have been counterproductive.... They spend too much time traveling. For example..... • I cannot meet that price. cannot be ultimately sustained. A NEW MULTINATIONAL MODEL The old model is dead... no matter how formidable. They have concentrated on configuring the corporation and its product line in particular ways to reduce internal costs while neglecting other elements.. information systems and other areas — adds costs to operations... the foreign label is a liability.. • The buck stops where? If country managers.BEST PRACTICE not only of poor business responsiveness but also of poor morale. they got themselves into this quagmire and they can dig themselves out. Under conditions such as these. Multinationals lose out to local competitors because they have to call Geneva or New York.. In some countries. • Haven’t we invented this wheel before? Multinationals should be able to learn from their failures and mistakes by sharing knowledge.. However. Country managers without authority lose credibility in negotiations with local customers. no corporation can sustain itself while operating as hundreds of semi-autonomous local players. they have failed to achieve this kind of flexibility. demanding something on the order of a guerrilla insurgency. 3 Issue 16 . (See Exhibit II..

local competitors gained market share. Achieving this kind of sophistication is difficult enough in a single market. who may prefer top-loaders. who might want front-loading washers. Local companies with limited product lines face relatively simple challenges. The result was delay. The aim of any reorganization should be to serve that fundamental transaction. act local” has become the motto of many companies. while the French. can buy those instead. They are close to their customers and know what they want. in terms of price. Thus. with local operations managing their own sup- ply chains. There is no point in multinationals merely replicating what the locals do well. However. a number of multinationals reorganized their local sales forces into regional ones with the intent of simplifying their dealings with corporate customers. computers and household appliances have looked to the creation of “world” products to standardize production and achieve economies of scale. which bears responsibility for reporting. but this is not a zerosum game. Meanwhile. as well as the interests of its own people. the regional sales people ended up calling in the accustomed fashion but spread over a much larger territory. quality and functionality. They should concentrate on turning them into comparative advantages by packaging products with other values to create solutions targeted to specific customer needs. When tastes change. For example. What works in one market may not work in another. However. customs. We believe a better motto would be “think global. It is replaced by a Global Core. automobiles. they have neglected national and cultural preferences. confusion and burnout. This would have made sense if their customers were similarly consolidated. Italians. Multinational companies have innate strengths. Restructurings that are undertaken for internal considerations overlook the linkage between the corporation and its customers. because their customers remained in their accustomed configuration. can have them. regulatory and other corporate functions and leaves the businesses alone to do their work. Doing it across borders and oceans — with a range of tastes. account management. regulations and infrastructure — is that much harder. marketing and other capabilities so that they can add value. they change with them. but it continued on page 21 4 Third Quarter ’99 . resulting in a severe decline in market share in countries in which the world standard was not the local one. This seems self-evident now. The more complex the mix of their products and services. the more sophisticated must be their knowledge of customers.BEST PRACTICE The centerless corporation de-emphasizes the corporate headquarters as the focal point of operations. The answer has been to standardize components to the greatest extent possible and customize at the last possible moment. sell local” because each business ultimately succeeds or fails at the point where customers exchange money for goods and services. “Think global.

..) What makes this model especially appropriate to complex multinationals is a fundamental change in the organization of the business units... It is replaced by a Global Core.. often creating more problems than they solved... • Flow.. The centerless corporation de-emphasizes the corporate headquarters as the focal point of operations.. 1. In my opinion it is just the opposite.... • Soul... These units are “natural” because they are organized back from the customer — inside the corporation and outside. or 2) global product lines. using the best technology by inspiration rather than the idiosyncrasies of mere taste or averaging by the committee mind. consumers or industrial clients.. they are formed around something we call the Natural Business Unit. Instead of lines being redrawn on the organization chart according to internal considerations. plumbing and ventilation. (See Ex- We propose that multinationals restructure themselves across a range of criteria that correspond roughly to the criteria that make a competently designed building... Yet. the way the organiza- .... But the capabilities to meet the needs of those customers can be mobilized from a much broader resource base than would be the case in a freestanding local company. Blueprint hibit III. key management process- es for allocating resources. A good building also encompasses good heating.. such as retailers. BLUEPRINT.” Frank Lloyd Wright rewards for the right kind of behavior.. when senior managers thought they could get their organizations and their customers to accept change on their terms... and observing many more. They are true organisms. EXHIBIT III EMERGING BUSINESS MODEL FOR MULTINATIONALS tional structure is designed. even the best structure cannot be successful without the right kind of people and Source: Booz-Allen & Hamilton 5 Issue 16 .... we have seen a new organizational model forming that lends itself particularly well to realizing the theoretical advantages of the new multinational corporation. We call it the centerless corporation.BEST PRACTICE continued from page 16 was not obvious in the early years of globalization. such as personal care and “It is often thought that heaviness is synonymous with strength. and measuring and rewarding performance. The customer interface is local. values and behavior promoted in the company that characterize the experience of working there.. FLOW AND SOUL “Beautiful buildings are more than scientific. Natural business units are built around: 1) broad categories of customers. the culture.. We refer to these criteria as: • Blueprint.” Mies van der Rohe By working with hundreds of companies.. Most restructurings have been based on the blueprint — attempting to rationalize hundreds of operations worldwide through classic matrices. which bears responsibility for reporting.. regulatory and other corporate functions and leaves the businesses alone to do their work. and it is a place where people enjoy living and working.. Good architecture comprises more than just a handsome structure.

essentially mobile phones. data and media — are becoming one. By removing corporate administrative responsibilities from day-to-day operations. which in effect sells its services to the line businesses. How does this work in the multinational realm? Ericsson. In response. consumer products. reach their customers through a network of eight market development or“solutions” will act differently than a local customer looking for the best price. abetted by a worldwide trend of liberalization and deregulation. Finally. You may not be able to remain in all of them. Three previously separate industries — telecommunications. Ericsson has moved its focus on products to three distinct customer segments: network operators. P. You will have to serve them differently or give up on one or the other because other companies will meet some needs better than you will. • Distinguish among the priorities of your own businesses. some are growing and others are clearly in decline. A customer with regional deci- sion-power interested in comprehensive equipment Ericsson manufactured and outsourced products. transactional support processes included in human resources. • Do not dump yesterday’s products 6 Third Quarter ’99 . a person who coordinates presentation of best solutions from the entire product line. and senior management is being recast to promote functional knowledge and transfer of best practices. The China division has become Ericsson’s largest source of annual sales.BEST PRACTICE financial services. making and selling products and services. Thus. Ericsson’s operations are no longer centralized. providing both wireless and fixed solutions for data and telecommunications needs. manufacturing and marketing. has recast itself into seven global business units with responsibility for profits. Customers have a single point of contact. Deregulation allowed it to build on that familiarity. and enterprise solutions for businesses. including both ganizations. however. For example. the Swedish telephone maker. There are. in competition with external vendors. was faced with the radical realignment of the telecommunications industry. regional and country heads are reduced to eight. The role of the corporate center will include reporting obligations. Applying a “one size fits all” approach will not work. multinationals have a portfolio of businesses with widely different strategic requirements that range from high margin with high knowledge content. Establishing the right blueprint is a challenge unique to each organization.&G. new business. The business units are closer to local customers and have more responsibilities. the business units are free to concentrate on inventing. These business units. finance and information technology become the purview of a shared services organization. They hope to maximize the business potential of the entire product portfolio by developing both local and regional marketing strategies. In China. it had built intimate familiarity with markets such as Brazil through years of joint manufacturing operations. Some are global and some are local. strategic alliances and both existing and new distribution channels. to lower margin commodities. for example. product development. Ericsson’s success grew very naturally from its previous experience in markets around the world. they are regionalized to better service network operators and suppliers — the fastest growing mar- ket segment. in turn. The Procter & Gamble Company is another example of a company that redrew its organizational blueprint. a few general themes to consider: • Distinguish among customer priorities. Typically.

they will look elsewhere. behavior necessary for cross-disciplinary teamwork. the right behavior and the right measures to enforce that behavior. Pharmaceuticals are an industry with prohibitive research and development costs. You are trying to affect change across a broad range of corporate behavior. In a single language and culture. Hill and house should live together each the happier for the other. Solutions require the ability to work cooperatively. and to use information technology to promote collaborative thinking. to think from the outside in instead of the inside out. Cater to national cultures and pride. the traditional way of keeping score is financial. instead of at headquarters. He points out that BP Amoco “is not a collection of financial assets. Merck & Company created a Research Planning Model to help managers assess risks and returns for projects before committing to funding them. Faced with an everlarger bill for innovation. These problems are compounded in the multinational realm. Sir John Browne. selling “old” products to new markets in the search for incremental volume. people and learning needed to extract maximum value from those assets. The new generation of geographic models points toward centers of expertise Even the most visionary corporate design can be derailed without the definition of key objectives. Yet. Nationality and cultural differences exaggerate the problems presented by cliques. Compound that with more amorphous goals associated with growing a business and you are in for real trouble. Even the most visionary corporate design can be derailed without the definition of key objectives. 2. no one will know if you are winning or losing. power blocs and other corporate constituencies. Too often we to single product lines cannot suddenly make the switch to providing customer solutions. if they return to work only to be mired in the same old political struggles or if they find they receive the lamb’s share of the compensation for the lion’s share of the work. people who have devoted themselves 7 Issue 16 .” It has been a hallmark of BP under Sir John’s leadership to draw on talent from around the world to solve sophisticated engineering and extraction problems. allocation of resources sufficient to the task and performance measurement. They want their needs to be met. Likewise. By integrating financial analysis experts “No house should ever be on a hill or on anything. If customers sense that their market is not regarded as strategic. allocation of resources sufficient to the spread throughout the organization and closer to customers. It should be of the hill. do not concentrate them at the core. It is even less accurate in the international marketplace.” Frank Lloyd Wright Even a brilliant blueprint cannot succeed without the right people. Billions of dollars have been spent for lessons in everything from white-water rafting to gourmet cooking to help executives learn the task and performance measurement. Flow range of criteria. Emerging markets do not want castoffs..” Executives are subject to regular review within a broad have found that multinationals adopt an imperialist mindset in emerging countries. is forthright on the limitations of finance in his company. The corporate landscape is littered with the wreckage of experiments of one element without the others. “Processes linked to a purpose are powerful at changing behavior because people can see what they’re aiming for. • Distribute your capabilities geographically. It is a combination of assets and the activities.BEST PRACTICE into today’s markets. chief executive officer of BP Amoco. Without a new scorecard. if the most talented personnel feel their country is a secondclass market. Without a new scorecard. Of course. no one will know if you are winning or losing. they will work for someone else. As Sir John puts it. teamwork goes out the window. This is an imprecise tool even in a single currency...

Citicorp. niche players became a market force. not just financial measures. Culturally. and because of the utilities’ monopoly status. In trying to build its consumer business around the world. a leading manufacturer of equipment for generating and distributing power. business development and regional operating performance oversight. As a United States bank. dealt explicitly with the time executives devoted to community and nonprofit work in different countries. pricing and distribution. distribution. two things changed. product development and supply. Nations began to privatize utilities. and was able to transfer ideas to its markets abroad. building a management structure along traditional lines that would provide leverage across national borders was difficult. marketing and trading components. instituted a scorecard that. it was able to gain a more accurate picture of whether various efforts were likely to have high returns or lower ones. Yet.. before it merged with Travelers to become Citigroup Inc. if the strategy is to focus on 8 Third Quarter ’99 . ex- cal innovation began to pick up. and thus allocate capital more effectively. the premium on consensus bred conflict between regional and product-line executives.BEST PRACTICE A MULTINATIONAL CHANGES WITH THE TIMES A. however. they may be deemed critical to corporate success. B. the company felt it was particularly important to establish its credentials as a force for good. However. For ex- ample. As with an organization’s blueprint. resource allocation guidelines and other business processes will vary with each organization. it had expertise in this area as a result of its compliance with the terms of the Community Reinvestment Act. In the early part of the 1990’s. The result is an organization that is far more competitive. Geographic entities were formed to concentrate on administration. national customers. For example. Technology was stable. the operating units could be guaranteed a profit. Organizationally. in banking. In this new competitive setting. the key performance measures. Global business areas were created to focus on strate- gy. Some elements of performance do not lend themselves to analytical models.B. In the 1980’s. suppliers saw the importance of building global scale. and the pace of technologi- into project teams.. its customers were primarily state-owned. there was an attempt to forge a single culture and management philosophy out of what had been a mosaic of disparate country-specific modes. Our experience across several industries and countries suggests that the following general themes should be considered: • Define performance indicators according to key strategic variables. The value chain was unbundled into generation. The executive committee members were consumed by strategizing against one another rather than against the emplifies the shift from the classic multinational model to a global corporation. The stage was set for the formation of global utility operators who would use marketplace criteria to choose their suppliers. among many performance criteria. success in any market has frequently depended on the image of the institution as a constructive part of the community. highly regulated utilities that controlled the entire value chain — generation.

• If you want to promote teaming behavior. Narrow attention to nearterm profits will make cost-cutting the almost inevitable focus. In a command-and-control corporation. reorganizations will fail if the right people do not execute them.BEST PRACTICE market. and that takes teamwork. 3. Customers expect solu- • Make sure business processes promote transparency and clear accountability. with an attendant loss of prestige and rise in vulnerability to competition. No matter how close a new structure gets to customers in theory. When processes are people partnership — the culture. this company has done its best to balance its blueprint. By reducing management ranks by 100. Support services. flow and soul. Meanwhile. and the regional management layer was abolished. customized solutions to client needs.B. values and leadership methods that permeate an organization and that are critical to its success. and Products and Contracting. the company has freed line managers from many organizational concerns. and Petrochemicals. customer account management remains as it was at the global and country level. When people spend their time arguing about who is going to get paid for a piece of business. Spanish and South African. Even final pricing was complicated by factors that had more to do with internal considerations than with market criteria. In the too complex. One area where A. Likewise. Sales and marketing issues remain to be settled. measures should capture variables such as innovation. did not have much trouble was in adapting to the variety of cultures in which it does business. customer satisfaction and customer retention. individual and team contributions are hard to assess. the company made a decisive shift toward greater market orientation. along with other costs.” Mies van der Rohe The final key discipline that multinationals need to incorporate in their emerging market business model is a tions. as do manage- ment principles and sharing of support services. Vague umbrella segments were subdivided into global product lines. and no matter how carefully designed are processes and rewards. now report to the chief financial officer. allowing them to concentrate on their customers. For example.” He had also “been” Venezuelan. In sum. oncepowerful managers were reduced to a muddle of delay and indecisiveness. Automation. Manufacturing divisions fought with sales units over the division of profits.B. do not believe in them or are not prepared to step forward to make them work. Nenny Karl-Erik Olsson. Soul “I have wanted to keep everything reasonable and clean — to have an architecture that anybody can do. Gas. some areas have not changed. all these questions are irrelevant: you do your job or else. the company face remains essentially the same in its public identity. 9 Issue 16 . make sure that is what you reward. Local sales units fought for share of factory output with export units. they have trouble providing seamless service. POWER SHIFT In 1998. In each country. government relations and local management coaching. The Office of the Chief Executive Officer provides more strategic and operational guidance without taking a decisionmaking role at the local level. Business areas were consolidated from 40 to 30. a Swedishborn executive. At the customer level. Industrial and Building Systems was split into Oil. summed up the attitude of the company: “I’m Mexican. while still organized by geography.

these companies were often employers of choice for local recruits. found one such issue: worker safety. the bias against piecework was just too strong. business unit ownership and flexibility. In its place are teaming. multinationals were not always this out of touch. however. It pro- will work. one of the world’s largest makers of arc welding equipment. Oddly. Transcend nationality. both for workers and for consumers. open communication. business unit ownership and flexibility. In France. Now. individual performance versus team effort. unless people throughout the organization are willing to live it. though. fast-changing environment we now inhabit. This was an issue that could bind the top of the company to the shop floor. openness in communication. The multinational realm adds several dimensions to this already complex set of challenges. In its place are teaming. as opposed to “tribal” behavior? Spread the message. who became chief executive officer of Alcoa Inc. After the ensuing word of mouth about their earnings.” Constructing a favorable corporate “soul” will depend on dealing with a number of fundamental issues: • How will power and influence be dis- tributed across the organization? • What ethical standards should be upheld at all levels of the organization — not just honesty in business standards. where there was also a bias. In our work. A corporation will not be transformed unless people believe that the new behavior has been adopted by the senior management.BEST PRACTICE Even in single markets. development of human resources. One way duced instant solidarity. institutional relationships and treatment of staff? • How can leadership behavior be de- veloped and encouraged? • Which critical behavior will be pro- moted and at what levels. where employees earn up to three times the prevailing manufacturing wage. command-and-control people management is beating a fast retreat. the company was able to win more converts. and it was able to transfer this system successfully to many markets. and in the process greatly reduce the turnover rates in a high-skill industry where experience is really important. None of this of building corporate coherence is to find issues that have equal importance regardless of where you are doing business. such as entrepreneurship. In the days before the world economy began its current wave of opening. linked to quality. O’Neill. In Mexico. the market is more competitive. British Airways took a twopronged approach. in 1987. There were not many opportunities for employment. Why should a top talent work for a neo-colonial multinational. and willingness to take the broad corporate view. information-gathering and -sharing. Even in single markets. the company convinced just a couple of employees to try it. Paul H. found out. command-and-control people management is beating a fast retreat. Labor practices that are effective in one culture may not work in another. as the Lincoln Electric Company. reporting to a rotating cast of expatriate senior managers? The problem is not confined to the executive ranks. He decided that the company should do more than just meet minimum regulatory requirements in every facility worldwide — closing the gap between corporate performance and industry best practices by 80 percent within two years. although often not for the right reasons. One of its fundamental tenets was a compensation system based on piecework. deregulated airline environment — with a positive vision of the “world’s favorite airline. and he took every opportunity to pound the message home. but environmental attitudes. either. we have seen thoughtful (and expensive) redesign undermined because senior management signaled by their behavior that they 10 Third Quarter ’99 . open communication. This had served it very well in its union-heavy Cleveland base. Deregulated industries such as finance and telecommunications present exciting opportunities for top local talent. combining a “burning platform” — the very real possibility that the company would not be able to compete in a privatized. this is clearly not acceptable.

What message do you suppose he sent? If management behavior remains arrogant. Chief executive officers communicate their commitment to everyone. among employees and usually among customers.E. Executives from somewhat smaller countries — France in Europe or Mexico in Latin America — are often less arrogant. But these skills are not ideal for managing the complexity of human issues. John F. In the multinational realm the problem is that much greater..” The components of a new social contract must not only be clear. it is imperative to staff remaining operations with first-class people who project competence and commitment. not just in the perception that the local operation is seen somehow as second class. chief executive officer of DaimlerChrysler. When you close a plant. But we think the inherent advantages of the multinational are compelling. As Jürgen E. Schrempp. Somewhat paradoxically. or cut your work force. you gain by continuity and enhanced service to customers. The consequences for not changing are severe. Make it happen. Those from small countries with a heritage of living by their wits — Sweden. Reprint No.. Brazilians for Latin America. There is a widespread tendency to recruit key regional managers from the dominant national economy in a given region — Ger- 11 Issue 16 . more inclusive system of management. Senior managers are cautious with their bosses as well as other colleagues. says Sweden has “pound for pound.BEST PRACTICE did not mean it. In the longer term. more cosmopolitan and more skilled in the diplomatic arts. you disenfranchise employees.more good managers than any other country.” None of this is easy. rewards and penalties. Autocrats find it hard to recruit their successors. Welch. “Nothing has changed. Such managers tend to be less accommodating to the tapestry of cultures and sensibilities that are tied to success in a variety of countries. We recall a meeting in which a chief executive officer spent hours explaining a new. the Netherlands and Uruguay come to mind — often have the greatest success at mediating between disparate factions selling the broad range of cooperative behavior and values necessary. or create resentments that can disrupt operations or create public relations problems that will cost you customers. If a plant is to be closed in a valued market. “You never really hear the truth from your subordinates until after 10:00 in the evening. a company that fails to make provisions for coping with a diverse international marketplace will miss out on the kind of people who can build a lasting organization. Restructuring mans for Europe. Convincing the organization that the mandate to change is genuine is not easy.” In a corporation with “soul.” the impetus for change cascades from the top. but in our experience it can be managed. and then in a question-and-answer session reverted to his customary autocratic manner. and those people spread the message by word and by example. the three elements of the new multinationalism — blueprint. the message is. has observed. but in the perception that one country’s personnel may have deepseated cultural problems with those of their neighbors. they tend to excel at production and efficiency. the United States for the Americas. Your customers become your advocates.. Replacing local managers with regional executives can poison business on a number of levels. the same qualities that make these people successful in their own countries may make them inappropriate in the delicate process of multinational management. political or ethnocentric. Implemented together. 99303 any corporation creates winners and losers — among locales. The short-term consequences can be measured in declining market share against competitors who are better attuned to local markets around the world. you still do not count. but also be reinforced through training. chief executive officer of G. Balancing these considerations is a delicate art. Choosing your people is just as critical. flow and soul — will create potent competitive strength in the years to & SB come. That message is unlikely to take a turn for the better on the way down. Since they have managed operations for large domestic markets. What you lose on the overall employment side. Closing a plant might prejudice a government against your remaining operations.