Tough at the top for multinationals
THINKING of going multinational? Then make sure to develop strong leadership within the company.
That's the conclusion of a study of 35 multinationals by Chicago-based multinational AT Kearney, which found that the most successful - especially in hard-to-reach emerging markets such as China and India - were those with strong leaders.
'Even McDonald's, which runs on a franchise system, ensures its franchisees follow the same delivery systems and have strict quality control,' Stephen Fisher, AT Kearney vice-president and managing director for the Asia-Pacific region, said.
Chief executives interviewed from the 35 companies told AT Kearney that unless they improved their 'nurturing of global management talent' significantly in the next five years, they would not be able to stay in business.
This was because, the group discovered, marketing and commercialising a group's product was more important than the actual product when it came to overseas success.
'The most successful companies are those successful in transferring their critical ability,' Mr Fisher said. 'A patent, for example, is not a critical ability, but the ability to commercialise it is.' Successful leaders not only had language and negotiation skills, they also had international experience and a family that could adapt to new surroundings, whether in terms of finding a new job for the spouse or fulfilling the children's educational needs.
AT Kearney found the successful multinationals created their leaders in three ways, with all the successful international companies having managers possessing international experience at the fore.
First off, there are companies like Unilever and Coca-Cola, which adhere to the executive leadership model. These multinationals mainly invest in their upper-level management and training is centralised and standardised.
Second, there is the 'high-potential' or 'fast-track' model. 'These are companies like General Electric and Citibank, which take employees identified as high-potential within each level and develop them,' Mr Fisher said.
Finally, there are multinationals such as Procter & Gamble and Hewlett-Packard, which follow the company-wide leadership model.
'They consider every employee to be high potential, and usually hire within the company rather than recruiting from outside,' Mr Fisher said. 'It's a more expensive process, but these companies are big enough, so they can afford it.'