Building the Globally Integrated Organization
Many of our client organizations are going through the transformation to becoming more integrated global organizations. Most of them have been global for decades, some for over a century, so what has changed?
The difference is that they are becoming ever more connected and integrated in the way they work. They are not just everywhere but much more internally connected.
In the past, a global organization could operate independent business units, regions or countries, with a decentralized functional organization supporting them. In many cases, integration was largely conducted at head office level or at a very senior level within the functions.
However, the need for synergy and efficiency, coupled with the enabling effect of technology is making it clear that most value creation happens in business processes that cut horizontally across the global business.
The need to serve local customers, operate global supply chains and run integrated business functions means that there is an unprecedented amount of cooperation and information flow pulling the organization together.
At the same time, we need the functions to build capability and expertise, and we need geography because of local differences and regulations and the fact that many, if not most, of our customers and employees are still local.
We have a range of integrating mechanisms we can use to connect the organization together. Most large organizations are spending tens, even hundreds of millions of dollars and many years on SAP, Oracle or Microsoft ERP implementations. The systems implementations are a necessary element of running a joined up business, but they are not enough in themselves.
We also need to change the way we manage people and cooperate in this more integrated way of working. Teams and organizations have to work successfully across distance, national and functional cultures, time zones, technology and in complex organization structures such as the matrix.
Building new capabilities and changing ways of working
These more integrated ways of working fundamentally change the rules in leadership and collaboration. Multiple bosses, accountability without control and influence without authority become the norm. In teams, multiple team membership, competing goals and virtual working become an everyday reality for our managerial and professional people.
Changing to a globally integrated way of working is much, much harder than just introducing common systems. Tens of thousands of companies have successfully implemented ERP systems. It is hard and expensive, but they do work.
If we look at the key challenges in creating a really integrated organization, they are usually about our ways of working. We experience a lack of clarity on accountabilities, too many meetings or an increase in bureaucracy. People often struggle with maintaining speed of decision-making and finding the right level of control in making these complex organizations work.
The solution to all of these lies in developing skills and changing our ways of working. We need to give people the skills to operate in this more integrated connected way and at the same time we need a sustained change in our collective ways of working – the habits, practices and routines that supported the old-fashioned siloed way of working.
To give just one example, creating a more integrated global business can lead initially to an increase in travel costs. Many of our clients are spending tens or even hundreds of millions of dollars on travel costs every year. Many organizations try temporary travel freezes, but once the pressure is off the level of travel tends to bounce back. To make a sustained change in this cost base we need to introduce new underlying ways of working that require less travel.
- We need to give people the skills to lead and cooperate when they are not face-to-face.
- We need to enable them with alternative technologies for communication and collaboration
- We need to change the habits and routines of meetings, governance and communication that drive our expectations of travel.
And we also need to change what we recognize and celebrate. In many organizations the hero leader is the one that jumps on an airplane and flies around the world to solve a crisis in a high-profile way. Instead we need to recognize and celebrate the individuals who empower their people locally, set up robust processes and don’t have a crisis in the first place. Over time, we tend to get the behaviors we reward.
Only when we change our systematic way of working can we really expect a sustained reduction in travel costs. The same logic applies to reducing the cost of meetings and speeding up decision-making – other challenges we work on in creating more integrated global organizations.
If you’d like to find out more about how we help organizations become both more integrated and more effective, by building skills and transforming their ways of working, please get in touch and speak to one of our specialists.