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From 'colonies' to a global whole.

Lessons Dun & Bradstreet learned in making the major transition from an international company to a truly global organization.

Dun & Bradstreet may have an earlier claim to the term "international" than many other companies. We celebrated our 150th anniversary in the U.S. in 1991, and we opened our first overseas office in London in 1857, just 16 years after the company was founded in 1841. Today, our 16 divisions, including such familiar names as Dun & Bradstreet Information Services, A.C. Nielsen, IMS International, Dun & Bradstreet Software, Moody's Investors Service, and Reuben H. Donnelley, operate in more than 60 countries. More than half of our 58,000 associates work outside of the U.S. Non-U.S. operations generate roughly 40% of our total $4.6 billion in annual revenue.

But, there is a major transition required to get from being an international company to becoming a global company. Frankly, at Dun & Bradstreet we are in the midst of that transition.

There are many differences between an international company and one that is truly global. For example:

* An international company manages segregated markets; a global company manages integrated markets.

* An international company consists of colonies managed from the home office; a global company is a federation of equal partners.

* In an international company, ideas, people, and other resources are often isolated behind the nationalistic walls of "not invented here." In a global company, the walls come down and resources have no boundaries.

For many companies, including Dun & Bradstreet, the need to become a global organization is driven by irreversible market forces. Change is everywhere, in every country, every culture, every corporation. There are more demanding customers with a greater choice of suppliers, reduced regulations, new technologies. These and other factors have forged an increasingly integrated global marketplace. It is a marketplace full of both opportunity and risk. And in this environment, adapting to the forces of globalization is no longer an option. The rules of the game have changed, and many organizations must change in order to operate effectively, if not simply survive.

At Dun & Bradstreet, we have underway today many actions to become a truly global organization. At the same time, we view globalization as a continuing, constant, and challenging undertaking - a journey, not a destination. Achieving success on this journey requires a firm commitment to removing the internal barriers to change. Success requires a willingness to think and act creatively an in new ways; to use advanced technology to open new markets and improve internal processes; to invest in different skill sets; to hire develop, and retain the best people; and, in short, to rethink and reorient one's corporate culture.

Kenichi Ohmae, author of the best-seller The Borderless World, has noted that, "If a company wants to operate globally, it has to think and act globally, and that means challenging entrenched systems that work against collaborative efforts."

Breakthrough Thinking

In my opinion, this means you can't have a corporate or operating-unit-headquarters mentality that reinforces outdated organizational structures, attitudes, and behaviors if you're going to be a successful global company. In other words, a company must think and act in ways that break through the legacy of tradition even if that tradition has been one of success. Related to this, barriers to effective communication must be removed. I can tell you from personal experience that this is a challenging endeavor.

For example, we recently developed and communicated throughout the worldwide Dun & Bradstreet organization a "Statement of Values," a straightforward declaration of the values we share regarding ethics, our customers, ourselves, and our shareowners. In the course of introducing the values statement, I made what amounts to a classic error for a manager of an aspiring global enterprise. In a videotape that was shown to all of our people worldwide, I declared that any Dun & Bradstreet associate who did not deal with customers in an ethical way would be "terminated." Well, in the U.K. "terminated" doesn't mean "fired;" it means "killed." I suppose, if nothing else, in the U.K. I certainly got the attention of our people there, and probably in Australia, New Zealand, and a few other countries as well.

Clear communication, not just in terms of language but in terms of making sure that every member of the organization understands the company's objectives and values, is one of the issues that we regard as central to making the transition from an "international" to a "global" company.

To reach the potential inherent in the process of globalization, we must change the attitudes and behaviors of Dun & Bradstreet people at the same time that we change the way we manage our businesses. It is obvious that the two go hand in hand, so obvious that it is easy to take for granted. Business issues are always human issues. But that's only one of the many considerations we've encountered in the globalization process. We began by examining our own businesses, our markets, and, most importantly, our customers. We built on our existing experience by studying other companies, both customers and competitors. We developed a plan of action and took, and continue to take, the necessary steps to ensure results. We have learned a great deal. It is that learning that I will share with you.

To begin with, in assessing the objectives of a globalization process, I would suggest that the most critical issue is this: "If globalization is the answer, what's the question?" In the case of Dun & Bradstreet, the "question," broadly stated, is, "What should we be doing to create information services and systems that help customers make better business decisions?"

The Heart of the Process

This issue is at the heart of our globalization process. While our customers can't provide a tidy, uniform description of their business-information needs, they do share the challenge of rapidly changing markets. Accordingly, they each seek information that will help them perform efficiently and profitably in those markets. They look to Dun & Bradstreet to provide the global infrastructure that will meet their individual needs, however they evolve. Moreover, while we focus on developing global capabilities and competencies, our customers will continue to look to us to serve them one at a time, in their marketplace, in their culture, and in their language.

And so, first and foremost in our view, globalization must be customer-focused. Not surprisingly, customer-focused globalization requires a continual assessment of the current and future needs of customers. And it requires the commitment to constantly recalibrate your business in response to, or in anticipation of, customer needs.

That brings me to my second point: Customer-focused globalization must take a broad view of a marketplace in which there are complex and contradictory forces at work:

* Reduced trading barriers and rapid economic integration are creating new and broadened markets, but national and market-level controls and regulation will remain commonplace.

* Many national markets are highly penetrated, at least in the developed countries, and big companies increasingly are looking across borders for growth. Yet, small, local companies are constantly emerging, capturing share as markets are segmented.

* Consumers today have more product information and product choices. Consumer sights have been raised beyond national borders, with, for example, rapidly growing worldwide demand for American soft drinks, Japanese electronics, and German beer. Nonetheless, for every product that goes "global," there are countless others that depend upon national identity and local tastes for their success.

* Faced with these increasingly complex market dynamics, many companies are decentralizing, putting their resources and management talents as close to the customer as possible. At the same time, other companies are seeking greater standardization and centralization. They are looking at various processes and products to better capture economies of scale and leverage the strength of the brand.

Conflicting Forces

The essential process of globalization, indeed the definition of what globalization really means, lies in taking the steps that are necessary to deal with often-conflicting forces. The well-known phrase "think globally, act locally" hardly does justice to the necessity or the difficulty of the task.

Recently, when we asked some of our top managers worldwide about their views of "think globally, act locally," some agreed with it, most amended it, and some challenged it outright. One manager said that we must "think and act globally" and "think and act locally," according to the demands of the situation. Another said that he at times had to act globally, in designing products, while thinking locally, in considering how they would be sold. A third pointed out that while his customers exerted their best efforts to think globally, they never lost sight of the fact that their customers usually had the option to make purchasing decisions at the local level. These divergent views illustrate the inherent conflicts in satisfying both global and local realities. What this points out is that globalization is an adaptive and, frankly, messy process.

A Clear Starting Point

Nevertheless, as I mentioned earlier, we believe that there is a clear starting point. In determining the right balance between global and local, the focus must be on the reality of the customer, and often the customer's customer. For example, the reality is that customers themselves are often in different stages of globalization. Many customers remain national or local in their operations. Others are in the very early stages of testing multinational waters. Still others have fully committed themselves to globalization, and this category grows larger every day. The overall trend among our customers is clearly to look beyond national boundaries, if not to find new customers then to identify and ward off new competitors.

My third point regarding globalization concerns the process of organizational change. I must admit that the globalization process can be disturbing for our people. In many cases, we are breaking the models that we grew up with, not the least of which is our traditional philosophy of giving local managers the autonomy, freedom, and control of resources to respond quickly to the needs of local customers.

Accordingly, in some of Dun & Bradstreet's businesses, the prevailing culture resists the transition from an international to a global organization, simply due to a long history of local control and success. And indeed, we don't want to change the philosophy that favors decentralization, but we do want to marry it with the philosophy of what we call "one company." We want to use our local strength as the basis for the evolution of Dun & Bradstreet from an amalgamation of loosely connected "colonies" around the world to a global whole. In short, we seek genuinely unified worldwide operations that respond to both the local and the global needs of customers with equal speed and skill. Our goal is to be "One Company" that provides superior service to its customers while constantly reaching out to new markets and new customers, capturing the benefits of scale, synergy, and customer service that can be derived from operating on a global basis.

Distinct Attributes

Finally, no matter what stage of the process of globalization you are in, and, like Dun & Bradstreet, different parts of your business are likely to be at different stages, there are distinct attributes that we believe characterize truly global organizations. These attributes are critical because they make the globalization process tangible; they help move globalization from a soft concept to concrete objectives and improved performance.

The first of these attributes is that successful global companies have the ability to instill and reinforce a shared sense of vision and values. There must be a commonly held set of beliefs and practices that govern and, more important, unite your people worldwide. A true commitment to values can happen only if shared values are held by all associates, at all levels, and in all places.

Internal communication is a second critical attribute for a global company. Successful global companies communicate continually. They communicate their vision and their plans for getting there. People must understand objectives and how they can contribute to the process. And they must be recognized and rewarded for the delivery of performance-based objectives.

Third, we feel strongly that global companies must reinforce a constant focus on the customer. There is a danger that globalization can become an "end in itself," an effort to find a "global lowest common denominator" that may not bear any relationship to customer needs. Thus, the danger is a one-size-fits-all solution, perhaps driven by pressure to lower costs rather than by a real focus on adapting to changing customer realities. But lower cost for a product or service that doesn't serve customer needs accomplishes nothing. Or, as Peter Drucker said, "There is nothing as useless as doing with great efficiency that which should not be done at all." What it all comes down to is that only by putting yourself in the shoes of the customer can the full benefits of globalization be realized.

Fourth, global companies use their resource diversity as a competitive weapon. They look at competition from a geographic perspective and from a capabilities perspective; they understand that new market conditions might encourage new competitive entry; and they know which potential competitors have (or can easily acquire) entry capabilities. Exploiting the competitive value of a business's diversity requires managers to look at their organizations differently - to focus on synergies and on scale and skills rather than on specific products resident in narrowly defined business units.

|Outside the Box'

Fifth, successful global companies build processes that support cultural change. They work outside of traditional geographic borders to serve customers whose own market and product needs no longer match traditional definitions. Changing environments require new processes and new methods - in short, the requirement to think "outside the box."

Corporate headquarters can help facilitate and encourage such thinking and provide incentives to encourage risk-taking and change. Compensation, performance management, and human resources development plans should all reflect personal and team accountability for cross-border management and results. At the same time, performance accountability must be extended to the level closest to the customer, with incentives to resolve issues quickly at the business-unit level rather than looking for corporate approval or consensus.

Sixth, global companies share capabilities across divisions and countries and track product success or failure on a global basis. In particular, to successfully deliver services across a wider multinational market, global product managers must be teamed up with local managers who are knowledgeable about specific customer needs. This kind of team approach can leverage resources to optimize the delivery of high value to the customer within a rapid time frame and with reasonable costs. Such leverage also can provide a seventh critical attribute of a global company: its position as the low-cost provider. Global companies achieve low-cost positions through the intelligent use of technology, by finding and utilizing the synergies among their businesses, by capturing economies of scale, and by leveraging best-demonstrated practices wherever they exist. This would encompass identifying the most cost-efficient location for a particular function or task. Global companies constantly seek to simplify and streamline their organizational structure, and, through product and customer cost analyses, look for ways to achieve much higher levels of revenue and productivity.

And, last on my list of global attributes: The best global companies are good local citizens. This involves having a sense of local issues and an awareness of the role that business is expected to play in a particular region or country. Successful global companies are an asset to their communities.

Finally, a Paradox

Let me conclude by commenting on one additional lesson we've learned. In many ways, people are the single most important component in the value of our product, in terms of analysis, synthesis, and integration of information, and in terms of their relationship with individual customers.

So, we have a paradox. As we become more global, we become more reliant on an essentially local resource - people - to be the distribution channel for our global capabilities. We must recognize that the old adage about "people being our most important asset" is absolutely central to the process of globalization and the process of change. Thus, globalization requires new and higher standards for the selection, retention, and motivation of human resources. Globalization puts a particular emphasis on the cross-border movement of people who are agents of change. And because creating constructive change is how a business grows, we don't regard globalization as a wearisome yet unavoidable task. For most of us, the potential benefits of globalization for our shareowners, customers, and associates are clear and highly motivating.

More than anything, we are finding that customer-focused globalization changes the mind-set of an organization from internal to external. This critically important benefit infuses the organization with energy as the journey is undertaken. It is, and will be, an exciting trip.

Charles W. Moritz is Chairman and Chief Executive Officer of The Dun & Bradsheet Corp. He began his business career in 1960 as an account executive in the marketing division of Reuben H. Donnelley, acquired by Dun & Bradstreet in 1961. This article is adapted from his remarks at a conference on Managing the Global Enterprise, sponsored by The Conference Board and Booz-Allen & Hamilton.
COPYRIGHT 1993 Directors and Boards
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Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Dun and Bradstreet Corp.'s transition to a global company
Author:Moritz, Charles W.
Publication:Directors & Boards
Date:Jan 1, 1993
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