The renewal process is based upon a common corporate dream of what the organization hopes to become. The dream could consist of many futuristic goals, ranging from manufacturing a “best-in-class” product to becoming known as a “cutting-edge” corporation. Corporate leaders use this dream as the emotional centerpiece that motivates individual employees to a high level of performance. The renewal process involves two separate sub-processes: rationalization and revitalization. Rationalization involves continuously reviewing and restructuring business units to optimize performance.
Revitalization involves challenging the ways things were always done and finding new innovative ways to improve the organization. In the renewal process, coaches are responsible to initiate organizational flexibility that facilitates smooth decision-making processes. However, the front-line entrepreneurs have the most impact on the renewal process by motivating the people under them to perform at a high level. A MODEL FOR THE FUTURE This new process-based management model is a significant departure from most traditional and existing organizational structures.
One of the most compelling challenges of companies seeking to implement the new management model is that of re-aligning the responsibilities of the employees. As an example, if a CEO of a traditional “top-down” company routinely makes decisions on resource allocation, he/she would need to cease performing this activity to focus on becoming the “corporate leader. ” The scope of these changes is significant, making employee transition at the corporate leader position the most difficult.
Similarly, traditional operational implementers and middle managers will also experience role changes as they transition to the positions of “entrepreneur” and “coach. ” SECTION II – CURRENT DEVELOPMENTS So where are we now and what does the future hold for transnational business and large MNC’s? It is apparent that the world has become much more competitive as well as smaller in a geographic sense. Technology has made many changes in the way business has been conducted and will be conducted. It should also be noted that the styles and organizational methods of conducting business are also changing.
Big businesses are closely watching the way the smaller entrepreneurial companies conduct everyday operations. These large businesses recognize the advantages associated with being a smaller, agile company. The day of being big and mowing over the competition is gone. Business today, and especially large transnational operations must be agile, flexible, and adapt fast to change. This simply means that the large companies should think like an entrepreneur, and convey business in the same manner. Never has there been more information, technology, and an environment for entrepreneurial thinking than there is today. TODAY’S CEO
The corporate leaders of large multinational corporations are responsible for restructuring their thought process for the good of the company. Today’s leaders must not only lead, but must share in the vision that the company must diversify it’s thinking and grow from the bottom up as well as the top down. Many companies that have become successful on the global front have moved away from a hierarchical organizational structure and began to focus on obtaining knowledge at all levels. This may well be a key attribute of the “entrepreneurial way of thinking” that will set the framework for organizational structure in the future.
Carly Fiorina (the current head of Hewlett-Packard) has a vision of self-empowerment, and feels this should be built upon at all levels. After taking over the reigns at Hewlett-Packard, she immediately eliminated many levels of structure as well as bureaucratic obstacles that choked information sharing. She explained, “A company must operate on the whole system, the structure, strategy, rewards, as well as the culture. You have to have the courage and capability to tackle everything at once. ” Fiorina also embraced the fact that independent thinking and entrepreneurial focus would be the major factors concerning big business in the future.
These are two key points in the new management model. TRANSNATIONAL COMMUNITIES Many of us are familiar with the effects of the “brain drain” phenomenon, and what a lack of knowledge can do to a city, region, or even a country. The definition of “brain drain” is: the depletion or loss of intellectual and technical personnel. Historically, brain drain applied to technically savvy immigrants (from countries such as Taiwan, China, and India) who came to the United States to take advantage of the large job base and the opportunity for a better life.
But what will the effects be of large MNC’s if “brain drain ” is reversed? This is exactly what is happening currently in Taiwan, China, and India. Talented immigrants, as well as engineers, scientists and others, are now reversing the brain drain phenomena and returning home to the countries they were originally from. Many of these people worked or studied in areas like Silicon Valley where much knowledge concerning the IT markets was learned. These people are now back home, and have a very good understanding of the United States business model.
This is an undesirable situation for the United States since many of these workers take their knowledge to home countries that are already using the new management model (with entrepreneurial emphasis). RAMIFICATIONS FOR THE TRANSNATIONAL Why should big business be concerned with this phenomena? What could possibly come out of foreigners taking knowledge back home? The answer is very straightforward and alarming to some multinational corporations. When these people take technical information and knowledge back to from their “host” country (the United States in this example), they form what is known as a technical communities.
The development of these communities is born from the knowledge and understanding of the person, along with their extensive experience. These communities have the potential to play an ever-increasing role in the evolution of global networks. In countries such as China and India, the government even subsidizes these communities. The knowledge brought back by these “entrepreneurs” spawn the development of communities that basically feed off of one another. Many of these communities, along with the scientists, and engineers, develop companies to compete with those they might have worked for in the U. S. or elsewhere.
Imagine if you were the head of a large IT firm such as IBM or Sun Micro Systems and you wanted to start operations in India or China where some of these entrepreneurial communities exist. Who would have the upper hand? The communities would already have local networks and suppliers, as well as linguistic problems worked out. Another aspect is that many of these people may have worked together previously in the United States, and now have friends in many different countries.
Many of these communities develop into small start-up companies that already have global alliances set up all over the world, are very flexible, and are at the cutting edge of change. These people have a constant source of knowledge coming back from the United States and network this knowledge at lightning-paced speed. In addition, many of these companies are subsidized both politically as well as indirectly by their home country. Transnational companies have no choice but to change the way they have done business.
The vertical way of thinking is gone for many, and some have attempted to harness this knowledge before it leaves. CHINA AND THE TRANSNATIONALS One of the hottest markets for transnational and multi-national focus is the Chinese region. As companies look toward the future and concentrate tactics on growth, many corporations view China as a key area. Beijing, China has already approved more than 20,000 foreign-funded enterprises with investment in the billions of dollars. Compaq, IBM. Samsung and ABB have all set up headquarters in China to position themselves for a possible growth explosion in this emerging market.
Transnationals must have their feet on the ground, and be able to compete with emerging startups as previously mentioned concerning entrepreneurs returning home. The Chinese market is considered huge, with billions at stake, so large that 150 of the top 500 transnational corporations have invested heavily in China. Will investment alone be enough? The stakes are very high, and it seems that only those companies that have adopted the new global management way of thinking will be the ones that capitalize on this market. Insiders are closely watching how the Chinese market shakes out, and will adjust future business strategies accordingly.
THE VIRTUAL CORPORATION
What has technological advances in information and communication brought to today’s company? The most important aspect is knowledge sharing. However, for many MNC’s it has also meant a way to do business and in fact, form corporations known as “virtual” corporations. Virtual corporations (such as Nike) have no physical assets and outsource all manufacturing. Information and communications technologies have made virtual corporations possible, and have significantly alleviated the constraints of distance and time.
People no longer need to hop on an airplane or take a train to conduct business in far-off places or overseas. These technologies have allowing networks of buyers, sellers, brokers, marketers, as well as many others, work simultaneously around the globe. Computers, telecommunications, satellites and video conferencing all link individuals together, regardless of where they are located. This global way of communication is now very apparent in business today. It should be noted however that several conditions must be adhered to when considering the virtual corporation.
First, global partners should have something of added value to bring to the corporation. Secondly, partners and corporate employees must work closely together to assure achievement of company goals. Hence, structure is still needed with virtual corporations to overcome time and geographic barriers. The virtual corporation is still relatively new, but many companies are looking at the cost savings it offers, and a way of entering markets that might not otherwise be possible. Currently the focus is mainly on IT corporations, but as the technology becomes much more streamlined others surely will utilize it.
If the United States will continue to be a leader on the corporate front, it can no longer rely on the likes of Microsoft or IBM. From everything that has been written it is apparent that big is not always better. The underlying theme in all of this is that knowledge, flexibility, and adaptation is the keys to future transnational success. If large companies are to survive the winds of change globally, they had better take note what is going on around the world. Thinking outside the box is no longer a solution, reinventing the box will be mandatory.