The Next Global Stage: Challenges and Opportunities in Our Borderless World - Hardcover

Ohmae, Kenichi

Hardcover

ISBN 10: 013147944X ISBN 13: 9780131479449

Publisher: Wharton School Pub, 2005

Synopsis

Globalization is a fact. You can't stop it; it has already happened; it is here to stay. And we are moving into a new global stage.

A radically new world is taking shape from the ashes of yesterday's nation-based economic world. To succeed, you must act on the global stage, leveraging radically new drivers of economic power and growth. Legendary business strategist Kenichi Ohmae–who in The Borderless World, published in 1990, predicted the rise and success of globalization, coining the very word–synthesizes today's emerging trends into the first coherent view of tomorrow's global economy–and its implications for politics, business, and personal success.

Ohmae explores the dynamics of the new "region state," tomorrow's most potent economic institution, and demonstrates how China is rapidly becoming the exemplar of this new economic paradigm. The Next Global Stage offers a practical blueprint for businesses, governments, and individuals who intend to thrive in this new environment. Ohmae concludes with a detailed look at strategy in an era where it's tougher to define competitors, companies, and customers than ever before.

As important as Huntington's The Clash of Civilizations, as fascinating as Friedman's The Lexus and the Olive Tree, this book doesn't just explain what's already happened: It offers a roadmap for action in the world that's beginning to emerge.

• New economics for a borderless world
  Why Keynes' and Milton Friedman's economics are history–and what might replace them

• Leveraging today's most powerful platforms for growth
  From Windows to English to your global brand

• Technology: driving business death–and rebirth
  Anticipating technological obsolescence–and jumping ahead of it

• Government in the post-national era
  What government can do when nation-states don't matter

• Leadership and strategy on the global stage
  Honing your global vision and global leadership skills

About this title

About the Author:

Kenichi Ohmae, one of world's leading business and corporate strategists, has written over 100 books, including The Mind of the Strategist, The Borderless World, The End of the Nation State, and The Invisible Continent. After earning a doctorate in nuclear engineering from MIT and working as a senior design engineer for Hitachi, he joined McKinsey & Company, rising to senior partner where he led the firm's Japan and Asia Pacific operations. Ohmae currently manages a number of companies that he founded, including Business Breakthrough (a distance learning platform for management education), EveryD.com (a click-and-mortar grocery delivery platform), and Dalian Neusoft Information Services (a BPO platform for data entry in double-bite languages). He is Chancellor's Professor of Public Policy at UCLA, Distinguished Visiting Professor of Korea University and Professor Emeritus at Ewha Women's University in Korea, Trustee and Adjunct Professor of Bond University in Australia, as well as Dean of Kenichi Ohmae Graduate School of Management of BBT University in Japan. In September 2002, he was named the advisor of Liaoning Province and Tianjin City in China.

Excerpt. © Reprinted by permission. All rights reserved.:

The Global Stage

Introduction

Ideas do not emerge perfectly formed. They are awkward amalgams of experience, insight, hopes, and inspiration. They arrive on stage, blinking under the bright lights, hesitant, unsure as to the audience's likely reaction. They evolve and develop, alert to changing reactions and circumstances.

I have been rehearsing the arguments that form the backbone of The Global Stage for over two decades. My previous books, including The Borderless World and The Invisible Continent, examined many of the issues I am still exploring. Ideas, as I say, do not emerge in a state of perfection.

In its genesis, The Global Stage has been shaped by two forces.

First, bearing witness to changing circumstances. Over the last two decades, the world has changed substantially. The economic, political, social, corporate, and personal rules that now apply bear scant relation to those applicable two decades ago. Different times require a new script.

The trouble is that far too often we find ourselves reading from much the same tired script. With the expansion of the global economy has come a more unified view of the business world. It is seen as a totality in itself, not constricted by national barriers. This view has been acquired, not by the traditional cognitive route of reading textbooks or learned articles. Instead, it has come directly, through exposure to the world, frequent travel, and mixing with the world's business people. Paradoxically, perhaps, this breeds a similarity of outlook. Opinions and perspectives are shared; the type of developments in the political and economic worlds that are held to be important are shared too. With shared outlooks come shared solutions. But a common view of the world will not produce the unorthodox solutions and responses required by the global stage.

Over the last 30 years, I have traveled to 60 countries as a consultant, speaker, and vacationer. Some countries, like the United States, I have visited over 600 times; Korea and Taiwan, 200 times each; and Malaysia, 100 times. Recently, I have been averaging six visits a year to China and have started a company in Dalian, as well as producing 18 hours of television programs seeking to explain what is really happening there in business and politics. I also spend a lot of time on the Gold Coast in Australia and in Whistler, Canada. Of course, as a Japanese national, I live in Tokyo and travel extensively within Japan.

As you can see, I believe that nothing is more important than actually visiting the place, meeting with companies, and talking to CEOs, employees, and consumers. That is how you develop a feel for what is going on. For some of my visits, I have taken groups of 40-60 Japanese executives so they can witness first hand regions that are attracting money from the rest of the world. I have taken groups to Ireland to see how cross-border Business Process Outsourcing is reshaping its economy. I have taken them to see Italy's small towns that are thriving on the global stage. We have also visited Scandinavian countries to find out why they have emerged as the world's most competitive nations and Eastern Europe to see how they may be positioned in the extended 25-member European Union. The group has also visited China and the United States twice, as well as India, Vietnam, Malaysia, Singapore, the Philippines, Korea, and Australia.

The executives who join me on these trips change their views of the world. Even in the days of the Internet and global cable news, walking around, listening, looking, and asking a question is still the best way to learn. Seeing what is happening in the world first hand changes perspectives. Having witnessed the global stage, executives then begin to read newspapers and watch television with different eyes. Gradually, their views broaden and they feel comfortable in their roles as actors on the global stage. It does not necessarily come easily. New skills are required.

The second defining force behind The Global Stage is that, over the last 20 years, I have witnessed some of the pioneers of the global economy first hand.

One of the first business leaders to be sympathetic to the notion of the truly global economy was the former CEO of Smith Kline Beecham, Henry Wendt. He saw cross-border alliances as a potential savior for the American pharmaceuticals industry and recognized that internationally based strategic alliances would become important, if not vital.

Henry realized that there were three dominant markets in the world – the US, Japan and the Far East, and Europe. No single company could deal with and service all these markets effectively, no matter how powerful and dominant it might feel. No corporation could hope to cover a market of 700 million people that had a per capita GNP income in excess of $10,000.

Companies traditionally used a marketing strategy that depended on a sequential penetration of each market, whether it was a region or a country. Once you established yourself and your product in market A, then (and only then) you moved on to market B. But Henry Wendt proposed that when you have a good product you have to adopt a sprinkler model, penetrating various markets simultaneously. One way to achieve this is through strategic, cross-border alliances.1

Henry Wendt entered into negotiations with Beecham, a company with a particularly high reputation in R&D, and a strong presence in Europe, and in time these negotiations led to a merger. Not only did he opt to go down the merger path, but also, with powerful symbolism, he moved the company's corporate headquarters from Pittsburgh to London.

Henry Wendt had foresight and vision. His notion of cross border alliances was truly innovative. In those days, such alliances and mergers were difficult since each large company was embedded in its domestic markets. These companies were also under the thumb of their respective domestic governments, with which they were closely linked and with which they closely identified. It is very difficult to abandon your home turf. (Witness the more recent outcry about outsourcing.) For one thing, there may be government resistance (as we have seen in merger talks across Germany and France). There are also media commentators, like mammoths or dinosaurs stuck in a freezing swamp, who describe such moves as unpatriotic and unprincipled. They tend to report on one or other side "winning" in any merger – witness Daimler Chrysler.

In a world where borders were weakening, cross-border alliances were the only way for a company to survive and prosper. In the pharmaceuticals world, drugs were becoming more standardized. The important and potentially profitable compounds and formulas became less distinct. This was accompanied by an astronomical rise in the cost of R&D. New regulations piled on both costs and delays. Yet the amount of money invested in R&D only had an indirect link to the level of success that could be achieved. A company could build up the best-equipped laboratories, staffed with the optimal mixture of experience and youthful brilliance. This never guaranteed success. There was still an element of chance whether the right leads would be pursued and the breakthroughs realized.

The dilemma is that when the R&D is successful and a super drug is born, you may not have adequate sales forces in the key markets of the world. So, the amortization of R&D money is less and, at the same time, you may have to keep expensive people in the field even when you don't have drugs to sell. This is the problem with industries like pharmaceuticals where high fixed costs demand size to justify them. That is why you need to seek strategic alliances and, sometimes, to go one step further to total cross-border mergers. In the mid-1980s, examples were few and far between. But now we see examples of cross border alliances and M&As almost daily in banking, airlines, retailing, power generation, automobiles, consumer and business electronics, machinery, and semi-conductors.

Size and capitalization did play a part. A medium-sized pharmaceuticals company might well spend $1 billion in R&D and have no results, but a larger company might be able to sink $3 billion, maybe more, into R&D. It could afford to miss the target more often and still remain profitable. Cross border alliances allowed more companies to do this. It was only possible, though, once they saw beyond their home markets. Today, the concept of cross border alliances is no longer a novelty. Henry's path breaking role deserves recognition.

Another early pioneer of the global economy was Walter Wriston, former chairman of Citibank. He saw globalization as an imperative, not because of management or business theories, but because of technological breakthroughs. He prophesized that competition between banks would no longer be based on banking services, but on acquiring better technology. Effectively, the company able to make decisions quicker, often in the fraction of a nanosecond, would be the winner.

Walter Wriston understood the future shape of banking – and of the global economy. It was to be based in a world without borders; it would float around decisions made in a split second, maybe sometimes by non-humans. Technology was to be the key to success in banking, and so the person at the helm of Citibank had to be technology savvy. But his vision left him in a minority. Twenty years ago, most top bankers were traditionalists. They saw relationships of trust and confidentiality forged among business and governmental hierarchies as the key to success, rather than technology. Technology was all very well, but it was for whiz kids, not bankers.

John Reid, Wriston's handpicked successor as head of Citibank in 1984, was not a product of the traditional east-coast banking establishment. Reid was a technologist. An MIT graduate, he had been working in Ci...

About this edition

• Publisher: Wharton School Pub
• Publication date: 2005
• ISBN 10: 013147944X
• ISBN 13: 9780131479449
• Binding: Hardcover
• Edition number: 1
• Number of pages: 282