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'Surprise' governance.

For perhaps a decade now, business has been talking about global marketing, global finance, global operations, global strategies, and even global managers in a changing world. I have no quarrel with the word "global." My argument is with the word "changing." We are in a world of surprise. As French poet Paul Valery said: "The trouble with our times is that the future is not what it used to be."

Faced with the unpredictability of almost every aspect of business in today's chaotic world, the average corporate leader might be forgiven an erosion of will, if not a failure of nerve. But there is no substitute for success. Whatever happens, however buffeted by surprise, a company must respond effectively to every event. It is up to the company's leaders to see that it does.

Currency fluctuations, trade statistics, combined inflation and recession (not to mention wars and rumors of wars) all provide object lessons about the interconnections among the great business regions of the world. Only yesterday, it seems, in the modern world's economic powerhouse - the triad of Europe, America, and Japan - every traditional businessman was mumbling to himself that the world had gone crazy. And why not? The new breed of global manager was running rings around traditionalists.

But a funny thing happened on the way to tomorrow. The nontraditional global manager is suddenly looking over his shoulder, too. An even newer breed of manager is turning up. And these new stylists may make monkeys out of last year's lords of the business jungle.

To explain what has happened, perhaps a little potted business history is in order, starting with the United States, where many managerial revolutions begin.

The traditional American businessman was primarily a producer, a product innovator. Leadership in his company consisted of creating a management able to cope with competitors who all played by the same rules. U.S. laws and regulations governed the game. Moreover, it was an American game. And since the gigantic U.S. economy was growing, it was not a zero-sum game. The competition was fierce but knowable. If you played your cards right, you could win a hand.

The European always knew that the deck was full of jokers. He knew he could trust no one - not his government and certainly not his local competitors. He did not subscribe to the idea that a rising tide lifts all boats. Too often, he saw an ebb tide. Cartels were a beloved European business strategy. The fact that they inevitably fell apart through cheating wasn't important. To a European, everything always falls apart. The European was less focused on customers, less market-oriented than the traditional American. He hoped to manage the market, not serve it. And the European was quite willing to make government a partner in his plans rather than merely a policeman. Unaccustomed to a level playing field, the European worked to tilt it his way.

Japan's viewpoint was a picture of crystalline simplicity. The Japanese saw their strength as a vast capacity for slogging hard work. They knew that they could figure out how to make other people's products cheaper than other people could. And they knew that through hard work, they could learn how to satisfy customers better than anybody else. The Japanese conscientiously set out on the classic course of every developing economy: mercantilism - close your own borders while exporting to the rest of the world.

The three kinds of traditional managers played the game, as they saw it, to the hilt. And the world moved on and grew closer, leaving progressively more traditional managers behind. To the American, foreigners broke U.S. rules right and left. To the European, a combination of alliances and trade restraints seemed the best answer. And the traditional Japanese businessman felt betrayed by both the Europeans and Americans, who no longer played by the rules that he had learned to exploit.

The New Breed

Into this vortex strode the new breed of nontraditional businessman: the global manager, with new tactics to play the new game. The new global businessman's experience gave him expertise from two different schools. One is the particular aspects of business based on one country or place; the other is in the overall operations of his kind of business, an aspect that ranges across the globe. The concepts are not national boundaries but, rather, identifiable advantages and disadvantages.

While the internationalist was not automatically a font of knowledge about particular countries, he learned very quickly. He also knew his own operation by hands-on experience - how to make the product; where the raw materials come from; the parts; how they got there; the alternatives and choices; where the funds are raised; and what their changing relative value does to his bottom line. In making decisions for the global company, he searched his armory of plants in various nations for the most cost-effective mix of supplies, components, transport, and funds.

And the global manager was constantly aware that the choices change and have to be made again and again. He had to be comfortable with a high degree of uncertainty, particularly about economic variables. He had to make decisions with maybe only 70% of the facts. So he - and more and more often she - had to be flexible, because mistakes had to be corrected on the run.

Knowing all these things, the best global managers basked in the realization that they were now the lords of the business jungle. But the world kept spinning on and the realization slowly came to them that things weren't working so well for them, either.

A Restless World

The world was getting restless. A new concept of stakeholders arose, meaning that companies are just as accountable to neighbors and communities, customers and suppliers, and workers and retirees as they are to shareholders. Customers grew ever more fickle. Investors demanded instant and constant gratification, usually at the cost of long term goals. The dark side of industrial civilization, the external costs to society or the environment which in the past had always been shared with society in general, now fell on business with a vengeance.

So much for history. Here we are today, in a world where business forecasts are likely to be obsolete before the ink it took to print them has dried. Where a basic aspect of every company's strategies must be to take part in environmental improvement. Where your most damaging new competitor rarely comes from your own industry at all - but instead is the inventor of a substitute for your entire industry's range of products. Where information technology expands your mental reach so widely that you'll never get your brain to grasp all the important facts - and only them - amidst a welter of data. What is happening, right now, in global business is both worrisome and exhilarating.

Today, one new management axiom is that the most powerful threats and opportunities for a company do not come from within normal business but from outside - as complete surprises. By definition, the businessman cannot plan for surprises. A surprise foreseen is an oxymoron. So, being unable to know what may occur, the businessman or businesswoman must try and make the company ready to meet whatever comes. The solution is not to make changes in the company but to completely transform the company to make it able to constantly change.

This transformation covers the entire range of corporate activity: mission, values, structure, process, and human behavior. In short, its culture. The anchor for this effort begins by articulating a brief statement of mission and values that is compelling to people within the company. This task must be led from the very top. The management cadre and work force must validate the mission if it is to be credible. So, they must debate that mission and values statement, polish and amend it to their satisfaction, and sign on. The mission and values then become the new foundation on which everything else in the company is rebuilt. The goal is constantly growing productivity.

The Crucial Question

The crucial question is how to manage a company for maximum productivity while constantly seeking improvement. Rigid organizational structures give way to networks and shifting, ad hoc relationships for particular purposes. Business processes, decision pathways must be pruned ruthlessly to reduce bureaucracy and friction. Managements must be delayered to take out unnecessary roadblocks and levels of redundant authority. Top managers must delegate far more decisionmaking power than they have ever done before. Junior managers must learn how to make better decisions, more quickly, using all relevant information and judgments. The result is that middle managers are in some danger of losing their jobs.

Surviving in this new world requires a newer kind of behavior than what has been the norm for nearly any manager, traditional or global. We are what we learn to be; and across the world, business has been a hierarchy - a meritocracy, by and large, yet a pyramid. All this is passing away. Pyramids are being replaced by networks. So, not only must today's company make new decisions about who should decide what; today's manager must learn to decide some things, delegate others, and create consensus for others still. The art of management always was getting things done through other people. Now the art of management must be getting everything done well by everybody - with no time for constant supervision.

When you never know how your company is going to be surprised from day to day, the great need is to meet each surprise with more knowledge and creativity. One thing about surprises is that rarely do you get to repeat a previous solution. Moreover, no company can ever draw up sufficient policies governing what might have to be done on the spur of the moment. Individuals must be quick to see connections and grasp the implications of events. And they must be given the power to respond without bogging down.

So, in today's business world, the people in place must learn to meet surprise with flexibility and grace, and there is no recourse for people at the top but to develop more faith in their colleagues. Fortunately for modern business, all of these behaviors can be learned. The prime value is shifting from respecting experience to treasuring understanding. Beyond all the other attributes out of business history, today's global manager must learn new traits of flexibility, collegiality, openness, and trust.
COPYRIGHT 1992 Directors and Boards
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Chairman's Agenda: Governing for Shareholder Prosperity; threats and opportunities for businesses
Author:Horton, Robert B.
Publication:Directors & Boards
Date:Mar 22, 1992
Previous Article:America bashing.
Next Article:The challenge of governing for value.

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