At the end of last year, Samuel J. Palmisano, IBM’s Chairman and Chief Executive Officer gave a speech at INSEAD, France. He elaborated on the evolution of the enterprise through three distinct models.
1] In the 19th century the “International model” emerged. Most operations where centred in the home country complemented with overseas sales and distribution subsidiaries.
2] The 20th century was characterised by the “Multinational model“. In order to gain access to local markets the Multinational created smaller versions of the parent company in multiple countries around the world.
3] What once looked like efficiency is now coming to look like redundancy. Therefore all businesses that operate globally around the world are moving to the next model the “globally integrated enterprise“. This enterprise shapes its strategy, management, and operations in a truly global way. It locates operations and functions anywhere in the world based on the right cost, right skills, and the right business environment. And it integrates those operations horizontally and globally.
The idea of this third 21st century model “the globally integrated enterprise” is similar to the transnational model defined by Barlett & Ghosal (2003).
According to Palmisano, in this sphere, the dynamic flow of work across the global platform is driven by three forces: Economics, Expertise, and Openness. This sphere requires two main challenges stated Palmisano, a new model of leadership and the vital issue of trust. The global integrated company will have to be led by a new generation of leaders, with different skills, experiences, and acumen.
The issue of the new skill set required is widely discussed by academics and industry leaders. Up till now there isn’t made any consensus but being cross-cultural minded in all your actions seems like a requisite.
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