What is a global company, and how should transnational businesses comport themselves in today's complex, intensely competitive and highly interdependent global community? IBM chairman Sam Palmisano suggests one big change: Drop the anachronistic colonial attitude many companies have toward operations outside the home country.
The emerging business model of the 21st century, Palmisano wrote in a recent Financial Times opinion piece, is not merely multinational: It is "the globally integrated enterprise," very different in its organization and structure from the GMs, Fords and IBMs of the postwar period. In the colonial model, foreign labor is a commodity, like bauxite or coal, to be exploited for the benefit of headquarters. In this outdated approach, all design, research and development work is done in the home country.
Palmisano's call for a new business model rings true for the industry in general and the U.S. industry in particular. With anti-globalization and anti-American sentiment rising around the world, this industry would do well to heed his words.
In Palmisano's vision, the globally unified enterprise develops a strategy and a management/operations plan to integrate production "and deliver value to its clients worldwide." The tools of such integration are shared technologies and shared business standards, built around a global information technology and communications infrastructure.
In today's globally integrated enterprise, companies build stronger, closer ties to partners, suppliers and customers, and gain an edge in multifaceted, collaborative innovation.
In fairness to many innovative electronics leaders, nothing's new here. Companies like Intel, Texas Instruments and Freescale dropped their colonial posture decades ago, creating the "flat world" long before Tom Friedman ever heard of Bangalore.
But that's not enough.
As EE Times news editor Junko Yoshida pointed out last week on page one, "Silicon Valley is no longer the end of the rainbow." And a funny thing happened to EE Times EDA editor Richard Goering on a recent trip to Germany: He discovered that government and consortia funding for European research in design automation is accelerating rapidly, and the U.S. monopoly in EDA is at risk.
Is the American Century in technology leadership coming to a close? Not quite. As Craig Barrett once told me, "Intel will become a Silicon Valley company in name only," noting that the chip maker was well on its way to becoming globally integrated.
But Intel is the exception, not the rule, when it comes to the profile of the average American electronics or semiconductor company. In a research study last year of small- to medium-sized U.S. electronics makers, EE Times found a woeful lack of planning and action aimed at global integration.
The risks of integrated globalization are many--but the rewards are much more: access to local knowledge, to trained and motivated work forces and, most important, to new markets and, potentially, new partnerships and innovation.
The rest of the world, and now IBM, is rushing headlong into the new age of the "globally integrated enterprise," opening new markets and challenging existing industry structures--and leaders.
The first decade of the 21st century is half over.
Do you know where your future is?