Santiago Iniguez, Dean of Instituto de Empresa Business School.
Last Monday, Mr. Samuel Palmisano (bio), Chairman and CEO of International Business Machines (IBM), took the opportunity of the influential Financial Times’ “Comment” pages to make a statement about the concept and attitude that his company and other corporations with worldwide presence should adopt, given the increasingly global and complex environment where they operate. The article is actually a synopsis of a larger contribution in the latest issue of Foreign Affairs.
Basically, he sustains that major corporations today need to evolve from the classical multinational model, where “companies built local production capacity within key markets, while performing other tasks on a global basis”, to a new kind of organisation called “globally integrated enterprise”, which “fashions its strategy, management and operations to integrate production –and deliver value to its clients- worldwide”.
In order to implement this model, companies may face many challenges, but Mr. Palmisano refers to what he considers the main two. First, the need of high value skills: “nations and companies must invest in educational and training programmes”, he adds. Second, companies need to hold to high standards of governance, transparency, privacy, security and quality wherever it operates.
As a management educator, I would like to thank Mr. Palmisano for his timely and sound contribution. I agree with him that major corporations need to adapt to new philosophies and forms of organisation in a world where progress towards market freedom, convergence and integration is questioned today from some quarters and anti-globalisation activists blame multinationals for many of the world injustices. Indeed, in this new brave world, leaders of large transnational corporations need to have a solid preparation not only in management but also in international affairs and politics, amidst other social disciplines. And certainly business schools should address these educational needs.
In the opening session of my course on Business Strategy, when dealing with the sort of task that CEOs face, I use a fictitious job announcement precisely for the position of CEO at IBM that the Financial Times published in its edition of 29/3/93 at times when the blue company was facing serious troubles and was looking for a new CEO who could reverse the situation. This fictitious announcement said:
“Executive willing to take on the most challenging management job in the World. Must be a natural leader, able to make tough decisions, boost the morale of 300,000 employees and win the confidence of millions of shareholders and customers worldwide.
Knowledge of “computer-speak” helpful. Salary high and negotiable. Benefits include worldwide instant recognition. Wearers of white shirts need not apply”. (For those interested ,the book Who says Elephants can't Dance tells Gerstner's story, the man who led one of the biggest changes of any company).
Whenever I read this piece, I emphasise to my audience that the job of the multinational CEO has indeed more of a political nature than a technical one, something on which participants agree.
Contributions like Mr. Palmisano’s mentioned article should be very welcome. Management students need ideas and philosophical references from the very protagonists of business. And management leaders should also assume their responsibility as generators of opinion.
IBM Chairman, President and CEO Sam Palmisano (left) and former IBM Chairman and CEO Lou Gerstner