Great Global Managers

They don't come from the Great Powers. Here's where to look. By Karl Moore The Conference Board
Karl Moore is a professor in the Faculty of Management, McGill University, and an associate fellow at Templeton College, Oxford University. He is or has been a visiting professor at the Rotterdam School of Management, Erasmus University, ENPC in Paris, and the Technical University of Helsinki.

Of the many pressing questions that CEOs of global multinationals face, one remains constant: Where will I find the next generation of global managers? Traditionally, multinationals have recruited most of their top executives from their home countries; this is especially true in the head offices of firms based in major power countries such as the United States, Japan, France, the United Kingdom, and Germany. But this approach is changing: Companies recognize that it produces too narrow a pool of candidates and can have a demotivating impact on foreign high-potential employees who view their careers as limited by their nationality. Why bother striving to become an executive at Toyota if one is a gaijin and not Japanese? As firms evolve from nationally centric to multinational to truly transational new approaches, they must adopt new solutions. Since the early 1990s, I have both studied and consulted with a number of multinationals based in North America, the European Union, and Japan, including Nokia, Volvo, Hewlett-Packard, Accenture, IBM, Pfizer, and Hitachi. Recently, my McGill University colleague Henry Mintzberg and I have been discussing an observation we have both made about top global firms: Certain countries seem to produce more good global managers than their size would warrant; they punch above their weight in their output of global managers. This suggests an important component to incorporate into CEOs' search for the next generation of global managers. The list of countries includes those generally thought of as the most global in terms of their involvement in world trade and investment: Canada, Switzerland, Belgium, Singapore, Norway, Sweden, the Netherlands, Denmark, Australia, and Finland. Most are in northern Europe; one is in North America; two are on the Pacific Rim. These 10 countries are quite diverse. What do they have in common? To begin with, none of the 10 is a major power. Singapore is an island off the tip of Malaysia; Norway has but three million people. Canada has a population and GNP only one-tenth that of the United States; Australia, one-twentieth. Why do these countries produce great global managers? Let me first turn to an underlying question: What does it take to be a great global manager?

Research suggests a number of characteristics, the most important being the ability to understand, empathize, and work with multiple cultures. A multinational company investing around the world will face clients and customers from cultures totally different from that of the home country. For example, business in Latin America is based very much on relationships of personal trust: One gets to know a Mexican or Argentinian boss before one presents him with a formal contract. In France, one deals directly with the powerful patron at the top. In Germany, on the other hand, written rules and procedures are all-important: A foreign manager seeking to speak to a German CEO will immediately be directed to the appropriate department head. In contrast to Germany's strict written rules, the Japanese operate on strict unwritten rules, known as kata. Job security is considered in America to produce a mediocre employee, but in Japan, the lack of job security will do the same. The French admire intellectual prowess, the Americans short-term success; Australians are often wary of both. The old model of multinationals-styled after how the British ran their empire, in which each country manager was sovereign and little was shared between subsidiaries-is a sound approach in a limited set of industries. For most, however, regional if not global integration and synergies are paramount. In such industries, managers will spend a considerable amount of their careers in foreign countries and will need to manage and coordinate with people who have different views of the world than their own. That brings us back to our list of 10 countries: What sets apart these countries and their citizens? Economically, the 10 are all mid-range economic powers that must constantly take note of what the big powers are thinking. Managers in the United States, Japan, Germany, France, Britain, Russia, China, India, or any other economic or military power can all too easily begin to interpret the world from their own points of view. Having lived in the United States for six years and the United Kingdom for five, I recognize that both Americans and Britons see the world primarily from their own viewpoints. In the vast U.S. economy, the world's most important, a company can grow to a considerable size without ever leaving American soil. Dominant countries become dominant because of their very success, and their achievements ought to be admired and applauded. There is a downside, however, to such size and success: It can cause managers of big firms in big countries to become complacent and begin to think that, for instance, the American shareholder is the only one that matters or that the Japanese keiretsu system are the only ways to do business. When the global economy hits what Andy Grove of Intel calls a 10X Crisis-a major tectonic shift-such complacency can be dangerous. Middle-economy countries such as Canada or Finland, and the firms that they host, face the everyday reality that they are not the most dominant or important.

The United Nations recently ranked Norway as the nicest place to live, with Canada a close second, but neither can claim to be one of the great powerhouse economies of the world. Citizens of these middle countries often experience a tension between their own and a dominant foreign culture. Belgian Walloons are influenced by France, Belgian Flemings by Holland and Germany. Norwegians are influenced by Denmark, the Swiss by Germany, France, and Italy. The Canadian beaver always looks over his shoulder to ponder whether the American eagle is healthy or angry. What Ottawa thinks or does economically is usually less important to a Canadian than what Washington, London, Brussels, or New York thinks. Most countries in Europe have cultures that go back for centuries. Citizens have little doubt of their identity. Nor do Americans. But in the middle countries, people grow up with a different experience. They are caught between their own culture and that of the nearby dominant cultures. Canada provides a good example. English Canadians grow up with their own Canadian culture but are often just as well-versed in American culture. They know almost as much about U.S. politics as they do about their own. They watch American television as much as Canadian television and listen to NPR as well as CBC. Canadians must always be aware of what their cousins to the south are about. To make things even more complex, English Canadians must also consider what French Canadians think and what their views are. Canadians must think as North Americans but also as Canadians. French Canadians must think as North Americans, members of a global French cultural community, as Canadians, and as Quebecois. Americans can indulge in talk of economic nationalism, a luxury that Canadians can no longer afford, if they ever could-Canada is simply too dependent on the giant U.S. economy. The Dutch have to learn German, English, and French in addition to Dutch in order to trade with their dominant neighbors to the east, west, and south. In these bicultural countries, children grow up differently than children do in their dominant neighboring countries. Practically from birth, they are aware of the other reality: Swiss children whose neighbors speak French, German, or Italian; Singaporeans who hear Chinese and English side by side. The vast majority of Montrealers in the midst of a day at work or on the school playground switch multiple times between the two languages. They grow up in a duality that provides an excellent preparation for life as a global manager. It is interesting to consider the Nordic countries. Finnish and other Nordic managers cannot afford to focus on just their neck of the woods-it is simply too unimportant. Nokia chairman and CEO Jorma Ollila is an outstanding example of the new breed of Nordic global manager. He holds several advanced degrees, some from Helsinki universities and a master's from the London School of Economics. He realizes that a strong focus on Finland for a Nokia employee

makes no sense: Three out of every five Nokia employees now work outside of Finland, and one out of every three outside of Europe. Contrast this with Wal-Mart, the world's largest retailer but almost exclusively a North American business, with only 9.6 percent of its stores being outside of the NAFTA region. In terms of revenue, only 16.3 percent of Wal-Mart's revenue is international, and, again, most of this is in North America. The vast majority of Wal-Mart managers don't need to worry about global business. Nokia, Volvo, Alcan, and Bombardier, however, must be vitally concerned about markets outside their home countries-they have no alternative. Managers in medium-sized countries must by nature entertain two views of the world. They have to. If Nokia intends to set up its GSM cellphone technology in the European Union, Russia, and China, its executives had better know German, Russian, and Chinese. It is the ability to be all things to all countries based upon cultural experience that gives many executives from medium-sized countries the skills to be great global managers. When working on global teams or in other countries, the ability to think outside your own culture and see an issue through the eyes of another is critical to success. From a marketing point of view, empathizing with your customer's culture is paramount. Finns and Canadians do this naturally, not because they are better people but because it comes to them naturally as citizens of a multicultural environment. Where does that leave other, more dominant countries, like the United States, Germany, and Japan? Even these cannot afford to ignore the lessons of globalization. California, crucible for so much of the American future, as usual leads the way. The growing integration of the United States and Latin America is creating not only a California but a Texas, a Florida, and even a New York that is increasingly bicultural. The State Department has come to tolerate, if not fully embrace, the concept of dual citizenship, and acceptance of multiple citizenship is a strong barometer of globalization. As the United States continues to accept a more multicultural country, at least in some regions, American managers will also develop this duality of mind. Many will be of Hispanic heritage. I recently spent a couple of weeks teaching an executive program in Los Angeles. I had lived in L.A. for six years in the 1970s and it was eye-opening to see the differences between then and now. In the 1970s, Spanish was often seen as a second-class language that was stereotypically spoken by the maid or the gardener. In my MBA class at the University of Southern California, there was no discussion about learning Spanish or, indeed, any other language-English was sufficient. Today, Spanish is tremendously important in Southern California. Many signs are bilingual, and there are numerous Spanish radio and television stations. And no wonder: They are targeting a very attractive potential market.

Hispanics are the region's largest ethnic group. With a population of close to six million, if Hispanic Los Angeles were its own city, it would be the nation's sixth-largest city. In Canada, it is unthinkable that a prime minister not speak both English and French. Prime-ministerial hopefuls often signal their early interest by spending time in Quebec taking French-immersion programs. George W. Bush speaks fluent Spanish, more or less-how could a serious Texan politician do otherwise? Has Bush, unlikely as it may seem, set a language standard for future presidents? Will the United States ever again elect a president who is not bilingual? But while the nation is changing quite significantly, America still has a long way to catch up, for in being truly global, companies like Nokia and Bombardier are light-years ahead of most of those in big countries. Other big economies, like those of Germany, the United Kingdom, France, and Japan, lag considerably behind the United States. Having taught for five years in the United Kingdom and spent considerable time as a visiting professor in France, I know firsthand that although English has become the de facto lingua franca, the language skills of the vast majority of people in these countries are not at the level of the citizens of our 10 nations. And it's not just language-the British and the French lack a truly multicultural view that allows a bridge of understanding to be easily built between managers and their peers, employees, and customers. This is a gap that one finds in Europe's bigger countries. But the true laggard of the major economies is Japan. McGill University has an MBA program in Tokyo, and I have the pleasure of teaching there every year. It is truly one of the world's leading nations, but diversity in Japan is very low. Trying to find someone who speaks any language other than Japanese in Tokyo-let alone other parts of Japan-stands in marked contrast to my experience in the Netherlands, Finland, or Sweden. This is a considerable challenge for Japan, which ranks as the world's No. 2 country for the number of Fortune 500 multinationals. Traditionally, only natives can scale the heights within Japanese companies, which dramatically reduces the interest of ambitious young foreigners, cutting off Japanese multinationals from a critical source of new ideas and making it difficult for them to truly understand foreign markets and develop a cadre of global managers. Japan must change to maintain its premier ranking in the table of global multinationals. When CEOs of global firms look for their next generation of global managers, they should focus on the middle-economy countries I've named. The home countries of multinationals will continue to provide the bulk of global managers, but wise firms are widening the pool. It is a strength of Canada, Finland, the Netherlands, and others that their citizens learn from the cradle to take into

account other perspectives. We may not always agree, but we must listen and respect.