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A good read fwiw: The Next Global Stage: The Challenges and Opportunities in Our Borderless World
by Kenichi Ohmae

http://www.amazon.com/exec/obidos/tg/detail/-/013147944X/qid=1106634741/sr=1-1/ref=sr_1_1/103-289317...

I wish I had more time for reading...anwyay, got to get back to work, have a good weekend, and thanks lesnshawn and others for the morning food...it helps keep my Neural synapses stimulated and healthy)

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 Citibank on ATM applications and other electronic banking projects. At the time of his appointment, he was virtually unknown within the corporation. Some even greeted his appointment with the question: "John Who?"

Walter Wriston defended his decision by saying that it was very hard to teach technology to an established banker, but relatively easy to teach banking to a technology specialist. As for relationships, these would develop over time. Under Reid's stewardship Citibank became the largest bank in the world. Along the way, he astutely led Citibank through the Latin American financial crisis.

Yet another business leader who was ahead of his time was Akio Morita, co-founder of Sony. The original business was called Tokyo Tsushin Kogyo or Totsuko – TTK. This name, even in its abbreviated form, was too difficult for western markets. So Morita came up with the four-letter "Sony" to represent the quality of sound from his transistor radios. For Morita, the world was one big market with few or no barriers. He thought big, but was no megalomaniac. He famously advised companies to Think Globally, Act Locally. This philosophy was christened "glocal" by the Japanese magazine, Nikkei Business, and led to the coining of a new word, glocalization.

These visionaries shared many of my views about the then emerging global economy – explained in such books as Triad Power and The Borderless World. I was fortunate enough to exchange views with all three of them and many others in the mid-1980s and beyond. However, discussions on the importance of the region state proved more elusive and troublesome. I had to wait until the developments within China post-1998 to gain any sort of useful practical perspective on this issue.

Some Stage Directions
In The Global Stage, with these intellectual antecedents in mind, I begin by looking at the state of the world and how we make sense of it. Part One looks at some of the areas of explosive growth (The World Tour) and identifies some of the characteristics of the global economy. It then looks back at the birth point of this new era (Opening Night). The section ends with an examination of the failure of traditional economics – and economists – to make sense of the global economy (The End of Economics).

In Part Two, I examine the major trends emerging on the global stage. In the opening section (Play Makers) I explore the development of the nation state and the dynamics of what I call the region state, the most useful and potent means of economic organization in the global economy. I go on (in Platforms for Progress) to introduce the idea of platforms, such as the use of English, Windows, branding, and the U.S. dollar, as global means of communication, understanding, and commerce. Finally, I explore what parts of business have to change in line with the emerging economy. These include business systems and processes (Out and About: BPO); and products, people, logistics (Breaking the Chains).

In Part Three, I provide analysis of how these changes and trends will impact on governments (Reinventing Government), corporations, and individuals (The Futures Market). I look at some of the regions which might be the economic dynamos shaping the world beyond the global stage (The Next Stage). In the final section, I re-visit my book, The Mind of the Strategist, and think through the need for changes in the frameworks we use in developing corporate strategy on the global stage.

The Global Stage makes sense of the world as I see it. Twenty years ago, globalization was a term, a theoretical concept. Now it is a reality. The Global Stage is part of a process of understanding the new rules that apply in this new world – and often there aren't rules to adequately explain what we now experience on a daily basis. It is not an end-point, nor is it a beginning, but I hope it is an important step forward for companies and individuals, as well as regional and national leaders.

Kenichi Ohmae
Tokyo
September 2004

1 I explored this theme in Triad Power – The Coming Shape of Global Competition (1985).