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World Is Still Far from Flat, Contends Harvard Business Prof

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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.

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