Dear Prof.Ghemawat,

For better or worse, globalization is a reality that cannot be wished away. Organizations that are agile and adaptive are likely to succeed more than those that are rigid and full of inertia. The challenge could well be one of minimizing the risk profile. As an example, if an organization were to have a presence in conventional as well as alternate sources of energy, the outcomes would probably be better than if it were to focus on just one. This is another way saying that organizations should not put all their eggs in one basket (your thesis on prior strategic commitments) or that they need to avoid marketing myopia.

A second challenge could be to concentrate on capabilities instead of on resources. This could also be an answer to the make or buy decision. Resource-based competencies can be outsourced while capability-based competencies are probably best carried out in-house.

A third challenge may be to overcome stereo-typed mindsets. A few years back, the EU imposed anti-dumping duties on Indian makers of Denim. The worst-hit was the market leader on whom the duty was 48%. Most companies in a situation like this might have folded up. The company shifted its manufacturing base to Mauritius - an Associate Member of the EU and therefore not subject to anti-dumping duties. Moreover, the country also enjoyed the privilege of not having to pay even the normal duties for its exports to the EU. Thus, what could have been a fatal blow was converted into a great opportunity. Much of this can be attributed to a mindset that is ever willing to overcome obstacles. Organizations need this flexibility in everything that one can think of - location, technology, logistics, service - to succeed in a world where the environment appears to change faster than the speed of thought.

I wish you a 2008 full of happiness and peace, and look forward to more insights on globalization.

Warm regards

Hello:

I think the continuing globalization and the increased rate of economic change in general will mean organizations that can adapt quickly to change will be the most successful.

To adapt quickly, strategy formation must mutate - it can't be all top down anymore. People at the front lines must have immediate direct input. The organization must have the ability to quickly experiment to determine what works now and then implement it.

I think these means much more delayering in organizations and the creation of new channels of direct communication between the CEO and customer facing staff.

Thanks,

Dan McAran

In addition to your suggestions, perhaps these can also be added to survival strategies for 2008...and beyond:

1. Look for ways to buck the trend: If the market seems to be moving in a particular direction, instead of instinctively following the herd, one should look for opportunities left behind by those running away. In other words, even in the worst tsunamis, look for the salvagable goodies left behind once the waves have receeded.

2. Be the cause of turbulence and not its victim: Instead of reacting to the ups and downs of the market, cause ripples in the market by doing things differently. Introducing "back to basics" products and services with innovative marketing, after sales service and financing would not only surprise the competition but also wow the customers.

3. Be prepared to jump ship...when you see land: Instead of clinging to the company's pet products, services and traditional ways of operating, it is far better to let go of them and take a chance when the opportunity shows itself. Acting like a virus, it makes more sense for a company to mutate with the market environment than to maintain one's "pure breed" philosophy of doing business.

Raj Bose
Faculty University of Phoenix

Thank you for your insightful book, which I am reading with great interest. It stands in contrast with both The World is Flat and In Spite of the Gods, which I have also read.

As a lawyer interested in internaitonal businesses, espcially in India, I find refreshing the realism with which your book approaches the practical realities faced by businesses and countries as they approach new interactions spawned by the many changes we have seen in my lifetime (since 1950).

I wish that all our national candidates would also read your book.

Chris

I agree that globalization is here to stay. Increasing globalization is the norm with the manufacturers I work with. You've identified some of the strategic imperatives of surviving in this world, there are also operational imperatives.

Manufacturers today are dealing with increasing volatility. This is driven by increasing global competition and demanding customers -- all leading to volatile demand. The need to compete through innovation has placed pressure on product lifecycles, shortening them along the way. And, as you noted, globalization is a key to geographic reach and cost advantages, but comes with added complexity.

To win, more and more companies are trying to become increasingly customer, rather than internally, focused. They key is to do so in a way that balances customer requirements with company requirements for profitability. The first thing companies realize on the way to becoming more customer focused is the reality that you can't plan the customer. This makes responsiveness a core requirement for companies to thrive in today's globalized markets.

Of course, one of the biggest internal challenges companies face is the inability to see this. For years, everything has been about planning and execution. This model works great when you have an "inside out" mentality - a push model where you build things and push them out the door. But as soon as you move to an "outside in", or pull, model, it's not enough. You now need to empower people with the tools for risk tradeoff and response to manage the daily exceptions that are now at the hear of your ability to compete.

Manufacturing is in the final throes of a massive shift from a production-centric to customer-centric strategic business model. We have transformed from the “any color you want as long as it is black” model of four wall focused long production run efficiency to new a world of strategic supply chains, global outsourcing, time-to-market, mass customization and delight the customer. How fast you react and how well you act will increasingly define business success. Companies need to ask themselves what their strategic solution is for driving response? If your like most businesses, you have a cobbled together web of tactical, people-intensive solutions. The future will be won by those with the best strategic solution for Response Management – because you can’t plan the customer.

Hi

It is very interesting to follow the debate on global strategy and globalisation/flat world.

Works of Prof Ghemawat and Prof Rugman provide a kind of balance to the popular sentiments on globalisation/flat world/global strategy.

It is more philisophical than practical to think of a complete global world/flat world.

The concept of Entropy in Physics provides an interesting support to this.The forces shaping global business (eg culture)are moving more towards disorder than order.

Looking forward to more interesting ideas on the subject.

Regards
Rajesh

Rajesh K Pillania

Hi

Interesting debate and useful.
However, I think that we need to understand that the increasing uncertainty arising around us is at least partially due to our own actions and from engineering the law of unintended consequences. The most serious one is the effect on the planet and its ecosystems. Uncertainty has always been with us, what we need to understand and accept is that we need to be flexible and creative to deal with the unexpected and unplanned.

We don't like this as humans and so fight it. Thsi is what our educators need to change, just like we do in our bsuinesses, that is, increase the readiness for change.

2008 onwards is uncertain, sub prime, climate change, fuel crisis, water crisis, war and so on. Kahneman and Traveski (sp) sometime in the 1990's put forward some interesting thoughts on this as I did with a work entitled 'Decision making under conditions of uncertainty' - the kind of question leads to a specific solution / answer. Are we asking all the questions or only those to which we like the answer? This I think is the real uncertainty.