Transforming Giants
The Idea in Brief
To compete in the global economy, multinational companies must respond quickly and innovatively to opportunities and challenges wherever they arise. But many big businesses are saddled with vast bureaucracies that stifle their agility.
It doesn't have to be this way, says Kanter. Some global giants (including IBM, CEMEX, and Procter & Gamble) have achieved remarkable flexibility and creativity--despite their heft.
They've done it by crafting the right guidance system and communicating it widely to their workforces.
Strong guidance systems enable employees around the globe to take effective action promptly and autonomously. The crucial elements of a guidance system? Shared values stressing social good that inflame employees' passion for making the world a better place.
Your guidance system not only unifies geographically and culturally diverse people so they can make decisions consistent with your company's goals. It also inspires intense creativity that sparks beneficial and profitable innovations.
The Idea in Practice
Benefits of a Good Guidance System
A well-understood guidance system gives your company important advantages. For instance:
Procter & Gamble's core values include putting people's safety first. This value helped managers at P&G's Near East unit act decisively, without official permission from headquarters, when Lebanon was bombed in 2006. They added office locations in Lebanon to reduce travel distance to work. They also offered Lebanese-based employees evacuation to Egypt, where housing was provided for them and their families. The company evacuated employee families faster than some countries moved diplomatic personnel.
IBM is strongly committed to supporting national cultural projects throughout the world. This value enabled an international collaboration to digitize an Egyptian museum's contents and ancient structures, including the pyramids. To achieve this, leaders of IBM Egypt exchanged ideas with leaders of a similar cultural preservation project in Russia, IBM engineers in the United States, and IBM researchers in Israel (despite political hostilities between Egypt and Israel). The completed project won wide acclaim and led to a commercial contract to digitize the Library of Alexandria's contents.
Developing Your Guidance System
A strong guidance system has two components:
Standardized systems. Standardization saves time that employees can channel toward innovation. For instance, in all CEMEX's cement manufacturing plants, pipes carrying natural gas are painted the same color; those containing air, another uniform color. Transferred employees and visiting managers don't have to waste time figuring out the plants' setup.
Shared values stressing social good. For many employees, such values inspire more creativity than a pay increase. And the resulting innovations enhance your company's positive impact and reputation around the globe.
P&G's purpose is to "improve the lives of the world's consumers" with high-quality products that represent good value. Informed by this goal, P&G's Brazilian marketing group developed a superior feminine hygiene product that would be affordable to low-income consumers. They accomplished this by incorporating innovative technology that made the product perform well but omitting features that added cost beyond their value to the target consumers. The product's sales revenues exceeded projections and inspired other offerings for low-income consumers worldwide.
Copyright 2007 Harvard Business School Publishing Corporation. All rights reserved.
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Further Reading
Articles
Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility
Harvard Business Review
December 2006 by Michael E. Porter and Mark R. Kramer
The authors underscore Kantor's view that positive social values can generate opportunity, innovation, and competitive advantage for corporations. To do good while doing well: 1) Identify how your company and society affect each other. For example, do you provide safe working conditions? Do countries where you operate supply talented workers? 2) Address social issues in ways that create shared value. For instance, by addressing AIDS in Africa, a mining company could improve both standard of living and labor productivity there. 3) Mount initiatives that generate benefits for society and your company. By supporting dairy farmers in India with education and infrastructure, for example, Nestlé helped them increase revenues and gained a reliable milk supply for entering the Indian market.
Disruptive Innovation for Social Change
Harvard Business Review
December 2006
by Clayton M. Christensen, Heiner Baumann, Rudy Ruggles, and Thomas M. Sadtler
This article also explores strategies for innovating in service of the greater social good. To drive real social change that also generates profits, invest in organizations creating simple, low-cost, and useful services for people whom traditional social sector organizations ignore. These services can transform fields as diverse as health care, education, and economic development. For example, Bangladesh's Grameen Bank makes small loans to would-be entrepreneurs who otherwise have little or no access to capital. By late 2005, it had 4.6 million borrowers. Since its inception in 1976, it has lent over $5.2 billion, with a recovery rate of more than 98%. And it has generated a profit for its owners in every year but three.