18 of 18 people found the following review helpful:
2.0 out of 5 stars
yet another mediocre business book on globalism, April 19, 2001
This review is from: Race for the World: Strategies to Build a Great Global Firm (Hardcover)
Business books tend to gravitate toward one of two poles: the must-reads - those that involve fundamental rethinking of traditional business models - and the no-reads. Regardless of whether a must-read turns out to be right, this category of book establishes a vocabulary and logic of action that people will discuss and attempt to implement for years to come, as did "The Fifth Discipline" and "Reengineering the Corporation." In contrast, the no-read books, which are far too numerous to count, serve principally as resume builders or as crude promotional plugs for consulting firms. As cynical public relations gestures, the no-reads are entirely derivative, repackaging someone else's ideas while implying that you need to hire the authors to gain deeper insights. Indeed, what they have to offer can be summarised easily on the book flap, beyond which only captive student audiences or gullible clients would ever venture.
"Race for the World," another in the series of books by McKinsey & Co. consultants on how to operate in the global economy, straddles the great grey area in between these two poles. The book starts off with a strong analysis of the "transition" economy, in which geographic barriers are rapidly falling before the globalist wave: world's financial markets converging and digital technologies are lowering communication costs; national governments are "under market pressure" to remove the old legal and regulatory barriers to global competition; consumers are gaining unprecedented power, both to find the best prices through some convenient dot.com company and to vote via their investment dollars. This ongoing race (or "midgame") will determine which corporations can position themselves to become the "shapers" of the next century.
The midgame, the authors assert, offers extraordinary, though rapidly vanishing, opportunities around which to build new corporate strategies. With their new-found access to foreign markets, corporations can create "virtuous cycles of geographic expansion," simultaneously increasing their scale of operation, lowering their costs, and using new incoming profits to continue to invest elsewhere. Finally, by setting up their own networks of information, corporations can take advantage of cross-arbitrage opportunities, that is, buy goods and services from whatever country offers them cheapest.
So far so good. While none of this is particularly new or original, it is in the formulation of strategies that the book will stand or fall. According to the authors, global firms must invest in a variety of intangible capital, including intellectual property, talented managers, networks of able partners, and brand image. If a corporation can integrate these intangible assets into a system that operates as of a piece, the authors maintain, then it will have established "a compelling global value proposition": while single elements in the system may be replicable, imitating it as a whole is far more difficult for competitors. Furthermore, the authors argue, global firms should "control, [though] not own" the value chain, which represents a reversal from the practices once praised in large, vertically integrated firms. Sensible advice.
Unfortunately, at this point the authors cross the line that separates lack of originality from banality. Firms must, the authors solemnly inform us, approach potential deals with the appropriate risk assessment techniques, many of which were developed for investment bankers. These techniques include: 1) "disaggregating" the many risks involved in large business decisions, that is, breaking them down to examine who bears what risks and for what, etc.; 2) focusing on those risks for which the firm enjoys "familiarity advantages"; 3) portfolio theory, i.e. diversification spreads risks; 4) options theory, or the ability to acquire a firm at a specified date in the future for a known price. These techniques, the authors conclude, will allow firms to "overcom[e] confusion (lack of necessary knowledge), complexity (unknown interdependencies), and uncertainty (unknowable future events)." While top executives are perhaps too busy to reflect on these strategies systematically, it is difficult to imagine that they haven't thought about these things already.
However, there are deeper flaws at the core of the book. For starters, the seductive rhetoric of globalism is accepted as a given and fails to realistically anticipate any other contingencies, which is a disservice to business readers. The authors' insistence on proper risk analysis techniques cannot capture these complexities. Instead, the authors treat us to a simple extrapolation of current economic conditions. It remains unclear whether the current boom represents a structural trend (a "new economy") or another speculative financial bubble. Confusing the two can lead to terrible mistakes. Unfortunately, though its purpose is to devise better strategies for managers overwhelmed by global change, "Race for the Future" offers no useful guidance in this regard.
Even worse, evidence that contradicts their vision is ignored. The authors naively assume that globalisation is an unalloyed good, that consumers will prefer cheaper, more uniform goods to traditional indigenous varieties.
Many of these shortcomings can be explained by the poorly hidden agenda of the book. How, one wonders, could four intelligent co-authors ever agree on a detailed analytic framework? The answer is simple: the book is part of the McKinsey & Co. publicity machine. It promotes a company methodology, the conclusions of which come straight from McKinsey "research," a kind of parallel universe of jargon, anecdotes, and fierce internal competition for attention between young "associates" fresh out of university. I suspect that, under the steady hand of good ghost writers, "Race for the World" was cobbled together from disparate articles from the McKinsey Quarterly with over-confidence and little critical regard. As a result, the book's "authors," imbued with the company's mystique, fail to recognise the mediocrity of their ideas and advice.
Nonetheless, "Race for the World" is no no-read. As long as the reader is aware of its limitations, it offers a solid introduction to gung-ho globalism. While the book contains more than could be written on a book flap, its ideas could have been resumed in, say, one article in the McKinsey Quarterly.
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13 of 13 people found the following review helpful:
3.0 out of 5 stars
A sharp, narrow focus on a few elements of strategy, June 8, 2000
This review is from: Race for the World: Strategies to Build a Great Global Firm (Hardcover)
This is another McKinsey book on strategy , which looks at strategies for market dominance in the context of globalisation. It covers an important subject well, but it is not in the same class as the earlier book from the Mckinsey stable Baghai et al. The Alchemy of Growth. It is concerned with financial, market segment, and arbitrage (taking advantage of geographic differences in productivity and factor cost) strategies to achieve dominance on a global basis within a preferred field. There is no doubt that these are important, but it is equally clear that they do not provide a full basis for a successful strategy. There is very little sense of concern with customer satisfaction or customer intimacy and surprisingly little concern with attracting and building skills other than to say it is important. Further, little attention is given to strategic partnering - alliances between equals - which is currently the focus of a great deal of strategic attention.
My overall impression is that this is another example of a very good extended article that has been expanded into a 300 page book. It also suffers from a lack of summarisation of the main points. The overall impression is of a sharp but rather narrow focus on a few key elements in a successful global strategy, representing itself as the whole.
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8 of 8 people found the following review helpful:
3.0 out of 5 stars
Global Business Economics 101 for Freshmen, May 23, 2000
This review is from: Race for the World: Strategies to Build a Great Global Firm (Hardcover)
This book is a good survey of some of the factors involved in globalization. It also provides some useful perspectives for thinking about your firm's choices. The book's key weakness is in taking a strategy perspective from about 50,000 feet in the air. Most executives will not be quite sure what to do with the principles that the authors outline, as a result.
This book is essentially built around one concept: That cross-boundary competition for goods and services will go from 20 percent of world GDP now to 80 percent in 30 years. Naturally, this assumption is pretty critical. Chances are that not all industries will follow this model exactly. Some business areas will stay much more local than others, something this book doesn't talk much about. If globalization slows down or speeds up very much, business plans will quickly get out-of-kilter. Although the authors emphasize not under or overestimating globalization, they do not provide much insight into how one should think about how fast to go.
Of the other irresistible forces in the global economy (like increasingly rapid technology changes, currency fluctuations, changing customer needs, homogenized culture, shifts in government regulation) little more than passing references are made except to assume that the cost of capital for big firms will go down and stay there (based on the trend of the last few years).
I found that putting globalization at the center for your strategy is a doubtful thing to do. Other factors could easily be more important. How to decide how important globalization is for your company was not well addressed.
I also suspect that the authors are somewhat inexperienced in best practice research, which makes me nervous about their conclusions. For example, they were surprised to find that 25 successful global firms relied on different strategies to succeed. Anyone who has done best practice benchmarking knows that best practices are scattered around among firms, not cloned in total into each leading organization. It may also be the case that globalization was only one factor in the selection of these practices. Without normalizing for the influence of the other factors, how do we know what the globalization best practices really are? This book is so qualitative that I doubt if any serious quantitative analysis was done in this area. If it was, I didn't see much sign of it in the text.
I think that readers would have benefited from more detailed case histories. I happen to know a lot about how the companies (used as examples in the book) operate. If I had not had that knowledge, I think I could easily have drawn the wrong conclusions from the sketchy information that the authors provide. For example, the development of how Enron enters new business areas is worth a book all by itself. AES is another interesting example, around a somewhat different model, but was surprisingly left out by the authors.
If you are an undergraduate business student, you will probably find this book provocative and interesting. If nothing else, you will have a better sense for what kind of executives will be in short supply in the future. As I mentioned earlier, if you are a business executive, you may be fascinated in places, but probably won't find much actionable in it. My 3 star grade is an average of 5 stars for the business student and 1 star for usefulness to the executive.
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