Suggested read: "Global Prices and Earnings"

Since 1970 UBS publishes comparisons of global prices and wages. The report is based on surveys in more than 70 cities and includes rankings of purchasing power, living standards, wages, and many more. E.g. Oslo, Zurich, and Tokyo are the most expensive cities, Delhi is the one with the lowest living costs. The purchasing power is demonstrated with practical examples, e.g. in Oslo an average wage-earner has to work 36 hours to buy an iPhone, in Delhi 370 hours.

The report facilitates the selection of the right place to establish centralized hubs in multinational companies. The current issue covers the year 2012 and is definitively a recommended read for global decision makers.

Link: UBS Prices and Earnings

Keep hubs independent (part 2)

This article is a follow up to: Keep hubs independent

A reader is curious about my statement “Never let local forces spoil your global organization.” He asked, “sounds nice, but how should I avoid that local forces manipulate and direct the hub on their site?”

Take care already at the very beginning, during hub setup:

1. Let a local manager setup the hub; i.e. a manager with long term working experience on the local site. He has a large local network and knows which team members and stakeholders to bring on board to make the hub successful and accepted by the local site. Do the setup with the local manager as project leader; don’t establish a line organization for the hub yet.
2. Once the setup project is over, integrate the hub into the company’s line organization and put a headquarters manager at the helm for a while (e. g. 12 months). With his global background he will convince the team and the local stakeholders to support the global processes. Make sure the headquarters manager is physically delegated to the local site.
3. Finally a local manager can take the leadership of the hub. Meanwhile the global processes are established and not questioned anymore; the local stakeholders will follow the global processes.

Once the hub has reached this stage, the hub’s manager will – and should – also take requirements of the local stakeholders into account. Now it’s no threat for your global organization anymore.

Note: the whole process takes about 12~24 months.

Best global brands 2011

On annual basis Interbrand publishes a list of the most valuable brands of the world. There are three key aspects that contribute to the list ranking: the financial performance, the role of the brand in the purchase decision process and the global strength of the brand. As a further inclusion criteria the brand must be truly global and has successfully transcended geographic and cultural differences.

2011 Rankings (brand value in million US$):

1 Coca-Cola (70.8 $m)
2 IBM (69.9 $m)
3 Microsoft (59.0 $m)
4 Google (55.3 $m)
5 GE (42.8 $m)
6 McDonald's (35.5 $m)
7 Intel (35.2 $m)
8 Apple (33.4 $m)
9 Disney (29.0 $m)
10 Hewlett-Packard (28.4 $m)

View all top 100 brands.

Suggested read: The World Factbook

The World Factbook provides information on the people, government, economy, geography, and many more for 266 world entities. It's published by the Central Intelligence Agency (CIA) of the United States and updated on average every two weeks. Countries can be compared with a wide variety of fields like population, birth rate, live expectancy, GDP, unemployment rate, and so on. The facts are an interesting read for globally oriented people, e.g. did you know that Zimbabwe has an unemployment rate of 95% or the country with the highest life expectancy is Monaco with 89 years?

Link: https://www.cia.gov/library/publications/the-world-factbook

Which is the world's most expensive city?

Another cost of living report for 2010 has been released by Mercer. Based on over 200 goods and services, the report brings you factual price information from more than 290 cities around the world. The top of the list covers the well known players, Tokyo, Moscow, Geneva, and so forth. However, the - quite unexpected - number one is Luanda in Angola. More than the half of Luanda's population lives in poverty. Even standard services as safe drinking water are in short supply, this makes Luanda the most expensive city for expatriates.

Further reads:
http://finfacts.ie/costofliving.htm
http://www.guardian.co.uk/news/datablog/2010/jun/30/city-costs-living
http://www.mercer.com/costoflivingservices

What would happen if all countries dismiss their immigration restrictions?

Gallup released its Potential Net Migration Index (PNMI) for 2010. The index considers the estimated number of adults who would like to move permanently out of a country subtracted from the estimated number who would like to move into it, as a proportion of the total population. The index is a result out of 350,000 surveys conducted between 2007 and 2010 and reflects how much the population would increase if countries dismiss their immigration restrictions. The index finds Singapore, New Zealand, Saudi Arabia at the top, and Sierra Leone, Haiti, Zimbabwe at the bottom.

Read the whole story at: http://www.gallup.com/poll/142364/Migration-Triple-Populations-Wealthy-Nations.aspx

Keep hubs independent

Local sites are thousands of miles away from the company’s headquarters and hesitate to follow global processes. They have their own mode of operation and don’t see the need to align already established processes with harmonized global standards. These global standards are set by subject matter experts consolidated in centralized departments, called hubs.

MNC’s usually locate centralized hubs in the headquarters location of the company. This is a widely accepted approach with proven success in many companies. However, I strongly suggest to build hubs also at branch locations. E.g. Microsoft’s headquarters is in Redmond (WA) but their hubs for search technology are in Munich and Shanghai. The major benefit of this approach is that local hubs increase the acceptance of global standards within the whole company.

Local sites rather follow global processes set by a hub physically located on their site compared to a headquarters hub. Furthermore, once a local hub is established, other branches will follow this approach. They try to harmonize companywide processes and build a hub on their own location.

The good thing is that the acceptance of global harmonization is severely increased in companies implementing headquarters and site hubs. However, global managers have to take care for one important thing in the whole story: The local sites will try to influence “their” hub; means prioritizing their own site requests ahead of other sites or standardization driven by headquarters. If the rest of the company realizes that the “centralized” hub is influenced by local factors, the hub’s acceptance will decrease dramatically.

Never let local forces spoil your global organization.

Challenge India (for western cultures) Part1

No doubt, the evaluation of outsourcing and offshoring locations brings you in touch with India. Mumbai, Chennai, or Bangalore are emerging cities offering services for any kind of business processes. Low labour costs, strong technical expertise, and good English skills are the pulling factors making India an attractive place. However, dealing with the Indian subcontinent can be a challenging task especially for people from a western culture. Here are the 3 most challenging issues when doing projects with Indian contractors:

Feedback
In India weaknesses and failures are not admitted in public; it might result in losing face. So before someone admits a failure he tries to cloud it with vague statements. Therefore the client can’t expect an early warning if a milestone is not achieved. Western cultures treat a deadline as given, so 5th of September means 5th of September and not 6th, 7th or 15th. From Indian perspective time is stretchable; they see a few days delay still as delivery in time. Together with the Indian "optimistic" style of planning this brings projects into trouble.

Specifications
Projects start with user requirements usually written down in a specification document. If the specification is written on abstract level, people don't know exactly what to do. Without demanding further information they start to work according their own interpretation. If it's written too detailed, people follow each instruction without reconsidering if things make sense or not. The first presentation of an interim deliverable (and I hope you have interim deliverables in your project) ends up with an unpleasant surprise for the client.

Contracts and agreements
In western cultures contracts are final after signed by both parties. An agreed fixed price is a fixed price. In India a fixed price is often treated as guideline, a point of reference. It is considered normal to renegotiate or to charge extra cost during the contract period of validity. The major issue is that during contract negotiation, the Indian party fully agrees to the fixed terms without mentioning the possibility of extra charges. On the other hand, the western counterpart does not even think on upcoming extra charges after signing; they take the approval of the Indian counterpart as fixed agreement. And as soon the Indian party starts the first attempt to renegotiate the price, the clash is inevitable.

Feedback, specifications, and contracts; 3 Indian challenges. In the next “Challenge India” articles I will advise how to deal with these challenges and make projects with Indian contractors a success story.

Benefits of global organizations

My blog might give you the impression that I advocate global organizations. Hmmm..., I think you are right ;) I am writing about global teams, the challenges they face, and share proposals to improve their effectiveness. “But why?” you might ask. Here are the 3 most important benefits of global organizations:

Quality improvement
Standardized processes are easier to monitor, quality issues can be identified on the spot. Team members use best practice sharing to ensure all sites have the same know-how. Once processes are harmonized and know-how is spread, Operations can be setup as 24h / “follow the sun” support without additional labour costs.

Costs reduction
The processes on all locations are harmonized; duplicate structures are identified and eliminated. This generates synergies and reduces costs. Furthermore companies gain transparency with a global chart of accounts. All departments in a global organization are posted with the same accounting rules.

Speed increase
In fast-paced environments processes change on regular basis. A harmonized process needs to be changed once, with immediate effect on the whole company. Furthermore MNC’s save time in re-use of documents, software applications, and other project deliverables.

If you think “sounds nice, but in my company it’s not possible,...”, then please remember, the benefits are due in EFFECTIVE global organizations only. If your organization is not yet that effective, I suggest to follow the blog, take some of my advices, and share your experience with me. I’m sure my blog is an interesting read for professionals and managers working in a global environment.

And a final word: changing to a global setup doesn’t pay back in 6 or 12 months. Usually it takes at least 2 years until global organizations are effective.

What are global organizations?

The marketing team is located in Singapore, the IT in Bangalore, and headquarter is based in London. Call it global organization? Sure, you can. This is one type of global organization; the departments are acting from different continents, but the functional responsibility is clearly assigned to one site. The challenges for a team lead, project manager, or business analyst are the interfaces between the different departments. This type of global organization has external interfaces which are cross functional and cross cultural.

However, there is another type of global organization. For example, an IT department responsible for the company accounting software. The project is managed in London, the database software developed in Mumbai, and the user interface configured in Hong Kong. Additionally the accounting rules are adapted according regulatory rules by the local operation teams in each country. All functions are needed to generate one product, the global accounting software, and all functions are reconciled in one IT department. So you still have the external interfaces to Finance, Accounting, Sales, and every other department using the software, but additionally you have internal interfaces within the department. E.g. the database developer in Mumbai needs support from an interface programmer in Hong Kong and vice versa. As this kind of global organization has internal and external interfaces, it is much more difficult to manage compared to organizations with external interfaces only.

When I write about global organizations, I reference to organizations with

• internal and external interfaces
• cross functional and cross cultural interfaces

The biggest challenges in my career were the alignment of internal interfaces; to make worldwide teams with different backgrounds, interests and goals, pulling in the same direction.

Welcome to Michael's blog

Organizations in multinational companies pretend to be global. In reality they are not aligned, losing performance, and do not cooperate. This blog supports you in working with global organizations and how to make them more effective. It focuses on the cooperation between South East Asian and European cultures.

Global organizations and intercultural management, two subjects tied together and are most important in today’s business life. I managed international projects in Asia and Europe, projects which further developed the global position of the company I am working with. Cultural diversity was the most essential factor in all projects. Team members from Singapore, Taiwan, India, China, Germany, Portugal... joined my challenge. I saw projects succeeding, I saw projects failing, and most important, I saw projects turning around.

• What does it take to make projects turn around?
• How to keep the team’s performance on high level?
• Whom to involve to successfully achieving milestones?

With this blog I want to share my experience and give you pointers which are helpful in your daily work with global teams. Even more I am interested in your view on the articles and on the subject. Please share your experience with me and leave a comment or send an email.

Happy reading!