World Is Still Far from Flat, Contends Harvard Business Prof

Ann All

New York Times columnist Thomas Friedman's contention that "The World Is Flat" has not only sold a lot of books, but also helped radically alter the way that many companies do business.

 

But while technological advances and falling telecommunications costs have made it possible for companies to employ workers around the world and to reap the benefits of low-cost labor and 24/7 operations, they haven't canceled out the cultural differences that continue to make global operations a challenge.

 

CIO Insight has an excerpt from the book "Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter," in which author Pankaj Ghemawat, a professor of business administration at Harvard Business School, says many companies have been quick to prematurely declare the "death of distance."

 

He uses Web 2.0 darling Google to illustrate his point. Even as the search giant's stock price soars into the stratosphere, its efforts at international expansion have been far from a slam-dunk. Though Google has made serious strides in Russia, birthplace of co-founder Sergey Brin, it trails homegrown search services Yandex and Rambler.

 

The local services deal better not only with the linguistic complexities of the Russian language, says Ghemawat, but also with domestic realities such as a relative lack of credit cards and online payment infrastructure. And Google didn't begin making serious gains in Russia until it established a physical presence in the country.


 

Global businesses certainly can't discount the impact of politics, as evidenced by Google's struggles with heavy-handed government censorship in China.

 

Executives consistentlyidentify cultural differences as a key challenge in offshore outsourcing engagements, as in this Accenture survey from 3Q 2006 and a similar survey from the UK's National Outsourcing Association.



Add Comment      Leave a comment on this blog post
Oct 8, 2007 12:29 PM Richard Kampas Richard Kampas  says:
The best way to create commerce with any country is by establishing strategic partners who already have "Decision Makers" in their network. In India, as an example, unless you have millions of dollars to risk or you can throw one-hundred million dollars on the table at the start, it can take three to ten years to establish a business foothold of significance. Forget your traditional marketing methods. Strategic partners are the key to creating business and sales. Reply
Oct 8, 2007 12:33 PM Michael Jones Michael Jones  says:
Business leaders must be prudent with their decisions, so understanding the points given in Professor Ghemawat is certainly important. Mr. Friedman gives us insight into the causes and ramifications of the changing global economy and the technologies that support it. I don't recall a recommendation for any enterprise to blindly globalize their operation without the context of their industry and the cultures in which they want to operate.Authors such as Mr. Freidman help us understand the trends, what is causing (or fueling) them and what these trends mean for us. Professor Ghemawat adds the realities that must be recognized as we try to take advantage of these trends. A prudent executive or Board recognizes that both views are crucial as they view the strategy of their own enterprises.Vision must be guided by context and reality, not bound by it. Thankfully, we have both the vision and the guidelines of current realities as provided by these two authors. If you believe that the world is flat, but you don't recognize the challenges to leveraging that trend, then you will probably fail. However, if you don't recognize the trend of the world becoming flat and look for the potential impacts to your business, you may miss an enormous opportunity or get crushed by a competitor who didn't. Reply

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