IMD: Leading people globally
Part 1: Professor Martha Maznevski of IMD looks at some the complexity of globalisation and how this makes management and leadership difficult.
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Hello. I'm Martha Maznevski. I am a professor here at IMD in beautiful Lausanne, Switzerland. And this week, we're going to be talking about leading people globally.
A few years ago, when some colleagues and I were working on a book on leading people globally, we started to examine the experience of managers and what their challenges were in globalisation. Just at that time, 9/11 happened and then Enron happened. We interviewed a lot of managers about what it was like to lead globally.
And we found that for managers, the experience is quite different than we thought. Whereas for economists, for trade specialists, for marketers, for operation supply chain people, globalisation is the number of countries you're operating in, we've found that for managers, globalisation really meant the overwhelming feeling of complexity. There's just so much going on.
So we went into this feeling of complexity, and we found that there are basically four aspects of the complexity that affect how managers need to lead today. The first one is ambiguity. Ambiguity is a sense that we have a lot of information, but we don't necessarily know what it means, especially with respect to cause effect relationships.
One of the classic ones is the relationship between customer satisfaction and sales data. Do satisfied customers buy more, or do customers that buy more become satisfied? We don't really know, and both answers are partly true.
So we have a lot of data. We have financial reports. We have accounting data that means different things in different countries. We have analyst reports. We have a lot of information, but we don't necessarily know what it means. That's ambiguity. And leading through ambiguity is complex.
As if that weren't enough, we also have interdependence. Interdependence means that everything is connected to everything. So for example, if Enron happens in the United States, it has effects on stock markets and on accounting principles throughout the rest of the world, and small effects, like currency shocks, or even marketing events or political or economic events in one part of the world affect everywhere else. So this is also difficult to manage through and to lead people through. When everything is related to everything else, how do you know what decisions to make?
The third aspect of complexity is diversity. When I say that, people usually think I mean diversity in the workforce, so having people from different cultures, different countries, different functions as the workforce. But there's also diversity in the customer base, and we see a lot of companies using mass customisation strategies to address this diversity in the customer base.
There are also different diversity in competitor strategies. If you look at the airline industry right now, you'll see a lot of different strategies, different ways to compete. There are different strategies that suppliers have. So there's a lot of diversity also in the infrastructure, the legal infrastructure, when you're working across the world. So diversity not just in the workforce, but in different aspects of competing all around the world.
In addition to the ambiguity, the interdependence, and the diversity, there's also fast flux or unpredictable fast change. So what this means is that even if you figure out what the information means today, even if you figure out the aspects of interdependence today, even if you have some handle on the diversity that you face today, tomorrow it will all be different, and the relationship between all of those things will be different.
So managing when you have ambiguity, diversity, interdependence, and fast flux is very different. It means that things are unpredictable, and it's extremely overwhelming to say what do I do, how do I work with this. The response that most companies have to this level of complexity is to increase the complexity inside the organisation. The result of this though, and I'm sure you've felt this yourself, is that the complexity inside becomes so great that it's difficult to manage itself, and it starts to take up all the attention. Eventually, organisations can just implode under their own weight using this much complexity inside.
The path that we've seen that's much more important is to use complexity, but a different source of complexity. Think about the most complex thing in your organisation. It's not the budgeting procedure. It's not the organisation structure. It's not the innovation processes. It's none of the procedures.
It's, in fact, the people themselves. The human brain and the network of relationships between people is the most complex thing in your organisation. The way to manage complexity effectively, the way to manage globalisation, is to manage and lead people, so that they can manage the complexity themselves. Humans have incredible capacity to do this, but they have to be led in a particular way to allow this.
Over the next four sessions, we're going to be looking at different ways to lead people in this globally complex world. We'll be focusing on skills like collaboration, networking, working across differences, working across distances, working across cultures, and so on. And we'll be doing it in the context of this more complex global world.