Monday, April 02, 2007

What is Globally Integrated Enterprise?

Globally Integrated Enterprise (GIE) is a relatively NEW terminology coined and introduced by my big boss in Foreign Affairs. This article received lot of press and has been much debated and discussed. The idea of a GIE is built on the premise that the world is flat and in a flat world all things are possible.

Now that the world is flat (Is it really?), organizations across the spectrum are moving to further integrate and consolidate its position across the geographies. The winners in the 21st century will make the next billions from BRIC (Brazil, Russia, India & China) countries so it is important for large global brands to further integrate their business across artificial geographical boundaries.

But what does it mean to globally integrate? What does it exactly mean? It is much more than having presence across the world and it definitely much more than having manufacturing base
in China and ITES out of India. It is about considering the entire world as one vast market place for sourcing and selling. Of course, we know that it is easier said than done. But the barriers to Global Village is entirely human made and thus in theory can be removed.

Global Sourcing: This is not a politically correct (PC) term for labor arbitrage but a true global sourcing of ideas, raw material and labor. In a flat world the next Google or Youtube could come from any part of the world and not just from Silicon Valley. The actual challenge is not about concept or the opportunities but the operational aspects. The people, process and assimilation of ideas and realizing them is where the challenges exist. And to the extent organizations can make it truly happen have pots of gold is waiting them. But no one has really gotten to those pots of gold yet.

Global Production: Ability produce where it is optimal

Global Market place: Ability to view the entire world as a single marketplace and sell wherever there is market.

Global responsibility: Having the same environmental and labor standards across the world. For GM, it is to have same pollution control standards in California and Cambodia. For Toyota, it is to have same labor welfare laws in Tokyo and Tashkent.

what's your take on Globally Integrated Enterprise?

Here is Sam Palmisano's take in Foreign Affairs.

While the globally integrated enterprise is still an emergent idea, the outlines of major attributes that will characterize the winners are becoming clear. Think of an enterprise that:

  • Shifts its focus from what it makes to how it makes it. In other words, it attacks economics – new challenges to productivity and growth – by honing in on opportunities only recently made possible to change where and how work gets done.
  • Understands that economies of expertise will flourish everywhere. In a world where the means of production and distribution are available to everyone, the globally integrated enterprise recognizes that the only way to differentiate is on skills. Or to put it another way, it's as much about the global sourcing of ideas as labor.
  • Believes that open always wins. Globally integrated enterprises embrace shared business and technology standards that let businesses plug into global systems of production – from sourcing to design and manufacturing to distribution. And above all else, they recognize that "open" is the new leveler – stimulating the free flow of ideas and new levels of collaboration.