July 05, 2020
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Borders And Bridges

Semi-globalisation is the big idea B-schools must work on

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Borders And Bridges
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What Coke Has Learned In The Last 10 Years

Goizueta's Strategy

  • One System
  • The labels 'global' and 'domestic' no longer apply.
  • Have to plant our flag everywhere.
  • Have 4 of 5 top soft drink brands.
  • In the US, people consume more soft drinks than water. We'll see the same wave (elsewhere).
Isdell's strategy
  • Distinct and different strategies for big emerging markets.
  • Reinstatement of separate US and international heads.
  • More nuanced resource allocation.
  • Learning from Japan about variety.
  • Halving of growth target.

***

Business schools have, in recent years, made a significant commitment to globalising themselves. But there is a general sense that the rhetoric of globalisation has outpaced reality. For instance, when I recently addressed a gathering of over 150 deans and directors-general of B-schools, less than 5 per cent of them thought B-schools were doing an adequate job in this regard.

Why, despite very public commitments to globalisation, has performance been so poor? There are many possible explanations for dulled attention if not outright resistance. Global research tends not to be very prestigious in academia, as evinced by the fact that well under 10 per cent of the articles published in the top 20 management journals in the last 10 years had specific cross-border content. There are political deadlocks between those who favour the globalisation of research and teaching and those who do not. And at least some of the ratings that deans get so wrapped up in 'ghetto-ise' global content: they recognise that it may be fine for "lesser" schools to focus on, but don't treat it as decisive in ranking the 'top' business schools, mostly still from the US.

My diagnosis reflects, in part, the number of B-school professors who don't work on globalisation-related issues and who say they would be happy to make more time for it as long as they are convinced of some distinctive content worth teaching around such issues. And another, even more compelling reason for thinking that content constraints are critical is related to the considerable effort by B-schools to create cross-border immersion and exchange programmes. The leading B-schools have come to emphasise relatively structured instruction in research-based content. The very fact that they are willing to engage in relatively unstructured immersion programs that simply emphasise 'going there' is suggestive of a dearth of specifiable content informed by research insights.

So it seems that a necessary—if not necessarily sufficient—condition for further progress is a more creative response to the question of what is different about globalisation, from a content perspective, than the single-country focus implicit in most of what gets taught in B-schools. And here, those in favour of the further globalisation of business education seem not to have done a very good job of convincing the sceptics. Rather, there has been an unfortunate tendency towards extremes. At one extreme, it has been stressed that the world is integrated or close to it—popularised by the notion that the world is flat. If this were true, the world would effectively be one giant country—and our single-country tools and frameworks could be applied to the problems of globalisation without much modification. And at the other extreme, those who do take the differences across countries seriously—unlike flat-earthers—have tended to get carried away by them.

Fortunately, those of us who focus on what is of distinct interest about globalisation, looking at the empirical evidence—or relying on common sense—suggest that actual levels of cross-border integration fall somewhere in between these extremes of complete integration and complete separation of countries. This is the broad condition that I refer to as semi-globalisation.

An example will help illustrate the logic of focusing on semi-globalisation as the way forward. Consider the case of Coke, a truly global company (operating in more than 200 countries) that derives nearly three-quarters of its revenues and operating income from outside North America. Under its celebrated CEO Roberto Goizueta, the Coca-Cola Company pursued a strategy of extreme centralisation predicated on the assumption that borders don't matter. When it ran into the limits of such an approach, it flirted briefly with a strategy of extreme decentralisation ("think local, act local") with even unhappier results. Under CEO Neville Isdell, it has shifted to a strategy that recognises the realities of a semi-globalised world, i.e., that both borders between countries and the bridges across them matter and must be taken into account.

While a few leading edge companies—Cemex, Toyota, ibm and tcs, for example—have or are figuring out how to deal with semi-globalisation, these lessons need to be codified, and to be diffused more broadly. One way or another, this will happen, because the stakes are simply too enormous to imagine any other outcome. The question is really how much of a role B-schools will play in advancing this process, with its immense potential for private and public value creation.




(Prof Ghemawat's book, Redefining Global Strategy, will be published this month.)

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