Customer Reviews

From Global to Metanational: How Companies Win in the Knowledge Economy

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What does a large company need to concentrate on for sustained success in a globalized world? Doz and his colleagues claim that it is to become metanational and to become good at innovating from a platform of bringing together knowledge from many different parts of the world. Metanationals differ from globalized companies in that they recognise that new ideas, products or directions may originate somewhere other than the corporate centre.

The focus of the authors is on innovation and they argue that this requires that the organization becomes good at :
* identifying where good ideas and special competencies are;
* mobilizing the often scattered capabilities and opportunities (they use the term 'becoming a magnet' for such capabilities); and
* optimising the size and configuration of operations for efficiency, flexibility and financial discipline.

This is a book that makes an important point about success in a globalized world, but presents one factor in success as if it was the whole. As with a number of books, I had an uncomfortable feeling that the content of a very good article was expanded into an only moderately good book.

The core message is important and useful. Organizations that operate on a global scale need to move beyond the extension of a unitary culture into new localities and recognise that new knowledge is found in unlikely places. They need to become excellent at recognising that knowledge, becoming an attractor for it, mobilizing it to provide a superior stream of innovations and operationalizing production, distribution and marketing into diverse markets.

The weakness is that the book is written at a fairly high conceptual level - for all the detailed example - that fails to get to grips with how to manage multiple cultures or the detail of innovation, or the issues of governance across countries. It also has surprisingly little on the major changes that are occurring in world consumer markets.

The book also falls into the 'one size fits all' trap. Issues of being effective globally are very different for a consumer fashion business, a high tech product or service industry and a major commodity business, but this is not recognised explicitly in the book.

This is one of the most refreshing books about managing multinationals that I have read. It goes one step beyond the idea of a transnational, proposing a new model of how a company can succeed by prospecting the world for new knowledge about technologies and customer behaviour and using this to innovate. It won't be easy to implement, but the last three chapters provide a good starting point about how to make it happen. I was convinced that if we didn't try and build a metanational we would simply be left behind.

The authors key point is that multinationals must learn to harness knowledge from around the world to remain competitive. The author based their description and recommendations on case study interviews with a handful of companies. There is nothing wrong with this approach as interesting new phenomena can surface. I accept the authors point that knowledge need to be harnessed. However, it is an empirical matter how much a multinational should spend on it and how harnessing is best accomplished. The book doesn't really enter into such a detailed discussion.

There is enough content for a good (ie five star) HBR article in this book. However, the material is a bit weak for a book length treatment. A more thoughtful recent book about the multinational is Ghemawat's Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter, which actually misses the knowledge harnessing point. However, that book is a managerial version of several different pieces of work so there is enough material for a book length treatment.

The world has changed and not just for business...However, business is the focus of the book and it a good read. Also, the best book I have read on this 'new way' on needing to look at our economy. Ron

Their point is: the one that could identify this invisible thing called culture will win the consumer. As all great ideas, it sounds too obvious, but it is not...

Great insights of 4 common errors multinationals do:

Error 1: Globalization

Is a fallacy. There is no 'global society'. Only because people could buy the same things doesn't mean they will do. People still dresses different, eat different and buy different, according to their environment culture.

Error 2: Multinationals are installed where:

- they bornt

- the customers are

- the suppliers are (sometimes)

... so, if one place have good ideas, but do not have any of these is like it doesn't exist. But the inspiration are there, waiting to be discovered and generate innovation. Simple example: if Italy do not have any of these characteristics, chances are your company will not be there. But there is a lot of design there that could be used. Ah ! I know what are you thinking: 'we can emulate the italian design here.'. Sorry, not that easy. Why ? Because Globalization is a fallacy. Each cultural environment is unique.

Error 3: Technology resolves the problem

- it will not work for 2 reasons: the obvious is that your competitors also have internet; the non obvious is that we cannot put a culture in a box and send it throught Fedex or Email. Well, actualy we can, but that 'things' will not necesseraly have the same meaning on other culture. Personal example: In the new year everybody in Italy dresses black. In Brazil everybody must use white. So even if you send teams of real people from one country to another in the new year, they will not understand the context.

Error 4: Voice equal weight

- Even Socrates knew that, it called in filosofy 'argumentum ad hominem'. But we always do the same mistakes. We (including myself) listen ideas and think: 'this guy arriving from nowhere, probably have nothing usefull to say'. Personal example: I created a technological solution in Brazil for a japonese company. But you know, Brazil is not exactaly technology creator, so the company closed the project and later implanted the same idea in Japan. After that re-implanted in Brazil as a japonese idea. I received my check the same way, but this posture delayed in years a good idea.

You ar probably asking your self: 'Hey ! So obvious, someone should knew that' We have a real example showing that is not that easy. And we have great examples of sucessfull companies with this aproach.

STMicroelectronics, a semiconductor company, is a firm that is at home in the world. Its headquarters are scattered across Europe, split between Geneva, Paris, Milan, and Amsterdam. STM's units and subsidiaries carry the name of town or cities in which their are located, not of countries or continents. Indeed, there are no national subsidiaries, and national flags are conspicuously absent. When the CEO was asked by the authors where his company's home base was, he hesitated for a moment then replied, half-jokingly, "Perhaps the world?" Nation-states and their capitals are rather irrelevant when what the company needs to access are pockets of knowledge clustered around localities like Grenoble, Silicon Valley, or Bangalore.

Companies like STMicroelectronics see the world as a set of three interconnected planes. Imagine at the top level a map dotted with pockets of technology, market intelligence, and operational know-how, like bright spots representing cities as seen from a satellite at night. This is the map of the knowledge infrastructure that the company needs to access. The bottom plane is the map of operations representing production sites, logistics chains, and distribution channels, like the hubs and spokes between airports as viewed by an airline company. This map will be familiar to traditional multinationals, which have become proficient in managing a global network of production, distribution, and sales.

Connecting these two maps is an intermediary plane, where devices described as "magnets" translate new knowledge into innovative products or specific market opportunities. Magnets can take different forms and importance, and they do not necessarily have a physical locus. They are teams of experts built around selected lead customers, global platforms, or global activities, and their mission is to bring together specialist knowledge accessed around the world and to "meld" this knowledge into innovative products or services.

These three planes--the bright spots of knowledge, the hubs and spokes of operations, and the magnets connecting them--in turn describe three capabilities--sensing, mobilizing, operating--that a company needs to develop in order to compete in the global knowledge economy. The stakes involved in managing these three planes go beyond the traditional tension between global integration and local responsiveness. They require new forms of organizational structure and strategy, a new breed of multinational firm that the authors describe under the term "metanational". Indeed, exploring this new universe requires a new vocabulary different from the standard terms used in strategic management. Along with "magnets", readers will discover a world of "knowledge hotspots" and "sensing units", where knowledge can be "sticky" and needs to be "melded" into innovative products or services.

When I first read this book, I didn't pay it much attention. I thought that the metanational model that was heralded by the authors as the next frontier for multinational firms was nothing but a theoretical construct, or a kind of anomaly as it sometimes happens in the evolution of species. The business cases that were presented had very little in common, and each story could be interpreted as the result of specific constraints or idiosyncrasies: the Japanese cosmetics company struggling to expand out of its domestic market, the Nordic telecom firm conquering the world starting from an improbable location, the "global startup" pioneering a technology on a worldwide scale without time for regional consolidation or, in the case of STMicroelectronics, a European champion trying to break from its origins as the result of the merger of two state-owned, loss-making companies.

But I now think that Yves Doz and his coauthors were really up to something when they came with this new model, and that recent developments have confirmed their claims. Convergence between industries has increased the complexity of technologies needed for new product development. The knowledge base that a global company needs to absorb is becoming increasingly dispersed around the world. Places in India or China that were unknown a decade ago are now major sources of innovation and market knowledge. R&D is no longer concentrated near headquarters and is now managed on a global scale. New global firms have entered the world stage starting from peripheral or disadvantaged locations. Multinational firms need to relinquish their goal of projecting a homegrown formula and instead seek to build advantage by learning from the world. From Global to Metanational offers them a blueprint toward that goal.

I was delighted to grab a better understanding on global competitiveness and the new productive opportunities provided by the Metanationals.

You don't know about it yet?? God, your business is under great danger...

The first two chapters tell you the picture and that is it. The kernel is summarized in a table at page 83 (end of chapter 3). Make a copy of this page, file it for later reference, and you are done. At best, this book reviews the vaunted wisdom of globalization, which many companies have been living at and dealing for years. At worst, it recites the squabbles between the global platform (the standardization) and regional initiatives (the deviations and the sensing ends). No specific solution or action is advised for the first & most obvious problem - how to transcend the intracompany transaction, which more than often bogs down companies attempting to quickly profit from the global learning.