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SURVIVING GLOBALIZATION

by Rene T. Domingo (email comments to rtd@aim.edu)

The stowaway who made it big --- the success story of Guam's brown tree snake

Within a couple of decades, the brown tree snake has wiped out to extinction a dozen native species of birds in the island of Guam. This nocturnal invader was accidentally brought into the island in the 1960's by ships from its faraway habitat in the northern Pacific islands. The stowaway specie continues to threaten more wildlife in the tiny 209 sq. mile island as it multiplies into millions, unhindered by the lack of natural predators. Small native mammals, their offspring and eggs, having no natural protection against this uninvited guest, serve as easy prey and meal. Even man, the most vicious and successful predator to all other animals, seems helpless, as these aggressive snakes outgrow and outnumber the 130,000 Guamanians who have learned to live with them. Desperately, authorities at the airport and docks, use trained dogs to prevent the snakes from leaving the island and causing similar ecological disasters elsewhere.

The story of the brown tree snake serves as a warning to businesses comfortably coasting in the unchartered waters of the new millennium. Globalization and trade liberalization will accelerate an unstoppable rate. Very soon, no corner of the world, no matter how remote, how backward, and how pristine, can remain as an isolated economic island. As economic, social, and political barriers and boundaries come down, the playing field will be further opened and leveled by powerful technologies that have become more available, accessible, affordable, installable, portable and cloneable.

Unleashed by this new open environment will be organizations of different size and shapes - cash rich multinationals, global banks, avant-garde airlines, hi-technology firms, megastore chains, lean manufacturers- with superior business design and configuration, that can now freely migrate to other industries, markets, and countries. These marauding category killers will sideswipe the incumbent leaders not by playing the game better, but by changing the rules of the game or the game itself by reinventing the industry they plan to conquer. Like the tree snakes, they would have no natural predators or competitors. The unwary local players will have no natural protection against them. But unlike the tree snakes, these global players will not be stowaways. States and governments will be openly inviting and enticing them to set up shops in the spirit of globalization. Established players, local trend setters, pace setters, price leaders and others playing the mainstream game will be easy prey to these invited guests, with their left field, right brained, unconventional business designs and strategies. Business failures and extinction may become the rule rather than the exception. There would precious little time to proact, reconfigure, and develop defenses before these lean and mean intruders are unleashed by globalization.

Preparing to surf the coming tsunamis

During the last quarter of the 20th century, trends in globalization, population growth, technological breakthroughs, and environmentalism have drastically changed the landscape where business have to operate. These long term trends will pick up speed and turn into tsunamis in the new millennium. Surfing these will become more interesting:

Under a borderless global economy, it will be a lot harder to know who your real competitors and customers are. Like modern jet fighters which can fire their missiles and flee without ever physically seeing their targets and the targets seeing them, the new competitors may be invisible or unrecognizable as they invade and gnaw at your markets. Markets and industries will be fuzzily defined and we may suddenly have customers we may not be wary of.

Things will move faster with mobile capital, mobile investors, mobile workers, and mobile customers. This awesome mobility of resources and stakeholders will be accompanied by the scarcity of time and space like prime real estate. There will be tremendous pressure to be faster and smaller in both products and processes. We will see unprecedented migration of capital, products, processes, people, practices, and total business designs across industries, markets, nations.

As technology, particularly IT and telecommunications, wires and shrinks our planet, local and regional markets will converge into one contiguous world market. We will react in real-time to good news and bad news, wrongly or rightly. In a net-connected and cable TV- hooked world, we can virtually smell toxic garbage illegally dumped thousands of miles away and protest instantaneously. The armchair economist's dream will finally come true: buyers and sellers of goods, services, and capital will transact with equal access to near perfect information. Window shopping will no longer be done on foot but with fingers surfing the web.

Technology will make distance and volumes irrelevant and businesses time sensitive. Break even points will be expressed not in volume of sales, but in speed in processing customer orders. Quality or what is customer wants will be redefined daily, perhaps online. Because of much lower switching costs, customer loyalty will measured not in years, but in hours and minutes.

Everything will become not only speedier, but also smaller and smarter - products, workforce, machines, and businesses. Success will no longer be the monopoly of big established businesses. . The Godzilla principle will no longer work Size will no longer matter. Speed will. Value will replace volume. Knowledge will supplant know how. Time will displace distance.

Care and concern for the environment will become an unavoidable cost of doing business - any business. Environmental costs will become as certain as death, taxes, and unpaid household bills. Every product made or service rendered will explicitly say that it used environmentally friendly materials or processes.

The new management ideology

As the new millennium ushers in the reconfiguration of markets, industries, and business designs, most of the conventional management thinking and concepts with which we have run our businesses successfully for the last several decades will be challenged. As the business landscape changes with globalization and technology, management ideology and the rules of survival are being rewritten. In spite of a few application of modern techniques here and there, most businesses are still mired comfortably in the classical school of management thinking which is based on a stationary, disconnected and three dimensional world.

Management gurus and practitioners have prescribed new paradigms to cope with the new order. In the hope of inspiring the fledgling many, management theorist and authors have recounted anecdotes of excellence - tales of a handful of company that have turned around with creative survival strategies. Books have been written about benchmarking and best practices by these enviable but hard to imitate successful companies. They tell us about organizations which imaginatively and profitably survive from the onslaught of the changes.

With the bewildering prescription of paradigms, paragons, and practices, the student and practitioner of management is confused not only with what is really useful, but also with what's really going on. After the dust from this whirlwind has settled, we would like to know which management tenets have been challenged, debunked, or have survived the onslaught. What is clear is that to survive the new business environment, management thinking must shift from a internally driven, functional approach to well-defined mass markets behaving with imperfect information, to an externally driven, holistic approach to finely fragmented, fuzzily defined, but net-connected markets operating with perfect information.

Surely many classical management principles taught in business schools and invoked in boardrooms are still valid and useful. But why delay the future by dragging the past? There is a need to re-examine for continuing relevance the time-honored management principles. The legions of business school alumni running the world's top corporations were educated from the 60' to the 80's under the classical school of management. There is therefore a real need to re-educate managers, b-school graduate or not, in preparation for the harsh realities of the next millennium. Unless many core but untenable management concepts are redefined or purged from the business school curricula and boardroom decision criteria, many companies, by sheer inertia or force of habit, may be managed uncompetitively and inefficiently in the unchartered waters of the next millennium.


 

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