IBM sent me a report this morning called “Get global. Get specialized. Or get out. Unexpected lessons in global financial markets.”
The report’s theme is that the financial markets will enjoy dramatic growth except that financial firms do not have strategies to capitalize on this growth because they lack global integration.
The study was performed in partnership with the Economist Intelligence Unit (EIU) and spoke to almost 1,000 business leaders: 800 senior financial market executives and over 100 of their corporate clients.
The headline results are:
- Worldwide investments are expected to double by 2015 to nearly US$300 trillion and to quintuple by 2025 to nearly US$700 trillion
- 60% of this future growth is coming from emerging markets, more than twice that from mature markets
- Chinese investors today have 17% of their savings in bank deposit accounts, while in 2025 over 38% will be invested in securities
- China will be tied with Japan in second place in terms of such investments, with the US maintaining its position in first place
- Financial markets firms are not in a position to capitalize on this as 93% of the executives interviewed acknowledge that their firms are not operating in a globally integrated fashion
- When asked to assess their proficiency with globally oriented organizational and operational practices, two-thirds of the respondents rated the performance of their firms as poor to moderate
- Executives rated specialist financial firms as being more capable than universas banks on some critically important global capabilities
- The barriers to becoming globally integrated are mostly related to culture and associated intangible assets
For example, I’ve spent most of my career being employed by American firms who continually strive to be global, but are usually just international.
The reason is that these firms employ key executives who never leave their
American head office. By way of example, one of my previous employers had a Global Head of Human Resources based in the USA … who didn’t have a passport! Supposedly, only 8% of Americans have actually travelled outside of America, so it’s not surprising that "global" is baloney for those organisations.
Meantime, the same can be said of European nations. For example, I recently heard a management guru advising Siemens to be more global in outlook.
The Siemens CEO said, "but we are global".
The guru retorted, "How many executive team members do you have who are not German?"
The CEO admantly said, "We have one."
"And where is he from?" asked the guru.
What about Asia?
Well, Asian firms work hard at consensual management techniques, where everyone has a vote and everything is done in a very specific hierarchical style.
For example, I remember signing a deal with the central bank of Singapore for their RTGS system some years ago.
As we pitched up for the signing ceremony, there were three of us: my boss, me and the country manager for Singapore. The Monetary Authority for Singapore (MAS) meantime had arranged for around thirty people to be at the ceremony. When they heard who had arrived, they cleared the room of 27 people to ensure it was just me, my boss and the country manager and our equivalents with the MAS.
That is Asian style.
And these are the cultural learnings that do make globalisation incredibly difficult.
It is the people things.
To really get a grip on those people things, I can highly recommend the book by Richard Lewis called "When Cultures Collide: Leading, Teamworking and Managing Across the Globe".
The book provides you with all you need to know when dealing with different nations, and explains that Germans can be funny, Americans can be diplomatic and Japanese can be charistmatic. It even implies that the English can be sober, but I’m not so sure about that one …