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INSIDE THIS ISSUE
Diverse opinions
EU Commissioner
Janez Potocnikcelebrates Europesdifferences
Flat refusal
Strategy guru
Pankaj Ghemawatsays the world isstill a rough place
CLIP art
Martine Plompen
reports on whythe CLIP processis working well
Antai success
Chinas Antai College
of Economics andManagement winsEQUIS accreditation
Now its personal
David Lamond opts
for individual, notcorporate, socialresponsibility
Stay-at-home OZ?
Gerry Grifn and
David Cox on makingAustralian studentsmore international
EFMD
www.efmd.org Volume 02 | Issue 03 2008
No Cambridge bluesWhy Judges Dean Arnoud De Meyer likesbeing an
integral part of a top university
http://www.efmd.org/http://www.efmd.org/http://www.efmd.org/
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Volume 02 | Issue 03 2008
In focus
In focus... EFMD Global Focus | Volume 02 | Issue 03 2008
How should a business school be governed? What are the key
elements in its
relationship with society and the wider academic community?
These are some
of the key questions posed in this issue of Global Focus.
For example, after 23 years at INSEAD in France, Arnoud De Meyer
is now Dean of
the Judge Business School at the University of Cambridge in
Britain. In a wide-ranging
interview (page 8) he makes the key point that, unlike INSEAD,
Judge is an integral part
of a famous university.
This, he believes, has given him an opportunity to build a
different type of businessschool. One that has the ambition of
being in the top group but with a different strategy
to INSEAD or London Business School and others, a strategy of
being very integrated
into the university, not a stand-alone autonomous unit.
In the nal part of his extensive review of the state of
management education in Europe,
Eric Cornuel, Director General and CEO of EFMD, also argues for
a fundamental
reassessment of its role and direction.
While on page 52, Julie Davies of Britains Association of
Business Schools reveals
research that shows the qualities needed by business school
deans at a time when
a quarter of British schools are looking for new leaders.
Other articles look more at the role of the corporate
sector.
In an interview on page 24, for example, strategy guru Pankaj
Ghemawat, arch
opponent of the idea that the world is at, argues instead that
what we have today
is semiglobalisation, large and distinctive differences across
national and regional
borders that corporate strategy has to accept and adjust to.
On page 44, academic David Lamond takes issue with the idea of
corporate social
responsibility when in reality the dubious ethical practices
that corporations sometimes
become involved in are the responsibility of individuals within
an organisation and
not of some corporate legal entity.
Finally, in an edited version of a presentation to the EURAM
2008 conference earlier
this year (page 14) Janez Potocnik, European Commissioner for
Science and Research,
makes a detailed argument for the European Union to celebrate
its diversity and,
indeed, see this as the engine for growth it is.
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Global Focus
The EFMD Business Magazine
Executive Editor
Matthew [email protected]
Advisory Board
Eric Cornuel,Jim Herbo lich ,Howard Thomas
Consultant EditorGeorge Bickerstaffebicke rsta ffe@b tinte rnet.
com
Contributing Editors
Eric Cornuel, David Cox, Julie Davies, GerryGriffin, Bruce
Jenks, Antoine Kissenpfennig,Jonath an L agoe , Davi d L amond , Ma
rtin ePlompen, Janez Potocnik, Ronald Sibert
Design & Art Direction
Jeben s De signwww.jebens des ign.c o.uk
Photographs & IllustrationsJeben s D esig n Lt d /
EFMDunless otherwise stated
Editorial & Advertising
Matthew [email protected]: +32 2 629 0810
EFMD aisblRue Gachard 88 Box 31050 Brussels, Belgium
www.efmd.org /glo balf ocus
EFMD
1 In focus
4 Talking Shop
CLIP and London Business SchoolFirst EQUIS accreditation seminar
in ChinaAdvisory S ervices SeminarsGMAC professional development
event in London
8 No Cambridge bluesArnoud De Meyer, Director of Judge Bus iness
Sc hool in Bri tain, expl ainsto George Bickerstaffe that the
schools close integration with the Universityof Cambridge could be
a model for business schools in the future
14 Diversity as an engine of growth
Janez Potoc nik, Europ ean Commissio ner for S cience and Resear
ch, setsout how Europe is learning to profit from its diversity
20 The road ahead for European management education
Eric Cornuel, Director General and CEO of EFMD, concludes a
two-part
series on management education in Europe with some thoughts on
howthe sector might be restructured and revitalised
24 Because the world is round it turns on strategy
The world economy is not truly integrated and is unlikely to be
so fordecades, if ever. Pankaj Ghemawat, arch-proponent of
semiglobalisationas the real challenge for international corporate
strategy, talks to GeorgeBickerstaffe
28 Quality improvement in corporate learning organisations
Martine Plompen on a new report that emphasises the gains
offered by theEFMD CLIP accreditation process for companies
learning organisations
32 Doing business with the poor
Bruce Jenks, Assistant Secretary General and Director,
Partnership Bureau,at the UNDP, shows how by engaging the poor as
clients, customers andproducers, the private sector can succeed in
the simultaneous pursuit ofwealth creation and social impact
Volume 02 | Issue 03 2008
Contents
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14
38 Joining forces to promote quality and performance
Ronald Sibert, Director, Strategic Alliances, Graduate
ManagementAdmission Co uncil, des cribes h ow growing collabora
tion betwee nEFMD and GMAC is providing new insights into the
global graduatemanagement education market
42 EQUIS and the future of Chinese business schools
This summer Antai College of Economics and Management,
Shanghai,
China, gained EQUIS accreditation. Dean Wang Fanghua assesses
theimplications for the school. Interview by George
Bickerstaffe
44 Self-interest, cultural relativism and ethics in the
globalmarketplace
David Lamond argues that responsibility for ethical behaviour
cannotsimply be attached to a l egal entity. Ultimately it must
belong to individuals
48 The best of both worlds
Antoine Kissenpfennig and Jonathan Lagoe describe how a close
partnershipbetween a client organisation and a management
development provider
can lead to powerful results in leadership training
52 What does it take to be a business school dean?
Nearly a quarter of British business schools have changed or ar
e changingtheir deans. Julie Davies, Head of Research and
Development at theAssociation of Business Schools, reports on ABS
research that showswhat deans themselves think is needed for the
job
56 Mobility: a small step in a long journey
Australia ns are r eluctant to travel internationa lly during
their stu dies atuniversity. Gerry Griffin and David Cox of the
University of South Australiaoutline some initiatives that overcome
this and add to the overall well-roundedness employers say they are
looking for
20
8
By engaging the poor as clients, customers and producers,the
private sector can succeed in the simultaneous pursuitof wealth
creation and social impact page 32
Contents EFMD Global Focus | Volume 02 | Issue 03 2008
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CLIP and London Business SchoolLondon Business Schools Executive
Education Forum Learning
Solutions Business Impact in July featured an EFMD presentation
by
Shlomo Ben-Hur, Vice-President Leadership Development &
Learning,
BP International, and Richard Straub, Director of Development
and Corporate Learning
Improvement Process (CLIP) at EFMD on the value of the CLIP
programme.
The Forum was attended by some 60 human resource development
managers and
executives and also featured presentations by leading academic
including Nirmalya
Kumar, Lynda Gratton and Costas Markides.
The EFMD presentation emphasised, from both an EFMD and
corporate perspective,
that CLIP is not just another quality programme but a way of
advancing the strategic
importance of corporate learning via an in-depth
peer-review-based process.
Rory Simpson, Associate Dean of Executive Education at LBS,
comments that the
presentation greatly enriched the programme and LBS is proud of
its association
with EFMD and CLIP and is delighted that the interaction over
this event was
mutually rewarding.
See page 28 for more details on CLIP and the latest report on
the key factors that
determine quality in the design and functioning of Corporate
Learning Organisations.
www.efmd.org/clip
News and events in brief from the business world
Talking shop
First EQUIS accreditationseminar to be held in China
EQUIS will hold its rst accreditation seminar
in China during the Shanghai Management
Development week, which includes the 2008
EFMD CEIBS Conference: Chinese Companies Going Global
- Managerial Challenges and Aspirations.
The seminar, led by Julio Urgel, Director, EFMD Quality
Servicesand EQUIS, will take place on 6 November. The programme
is:
14:15 - 15:30
Welcome and introduction to the EQUIS Process
15:45 - 16:45
Understanding the EQUIS Standards and Criteria
17:00 - 18:00
Research, Internationalisation and Corporate Connections:
the EQUIS expectation
The objectives are:
Practical application of the 10 EQUIS Standards and Criteria
Understanding the key stages of the EQUIS Accreditation
Process: application, eligibility, self-assessment, peer
review
and continuous improvement
Making the most of the Self-Assessment process and
preparing an effective Self-Assessment Report
Deciding whether you are ready for EQUIS Accreditation:
gap analysis
Exploring alternatives: would EPAS Accreditation be
a better option?The seminar is targeted at both EQUIS-accredited
schools
that want to get a better understanding of the EQUIS
standards
and criteria and those considering EQUIS accreditation for
the rst time.
It will be relevant for Deans and Directors, Directors of
External
Relations and those responsible for accreditation within the
school as well as experienced EQUIS Peer Reviewers. (For
peer reviewers and members of the EQUIS Committee and
Awarding Body, the fee is waived.)
For more information visitwww.efmd.org/equisto register
or [email protected]
EFMD
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Register now for the remainingEFMD Advisory Services Seminarsin
2008 Business Diplomacy and Reputational Capital November 12
Curricula Development for Business Schools:
Incorporating Public Affairs -November 14
Attracting Quality International Students to Programmes
November 20
Emerging Technologies for Management Education
December 9
For more information visitwww.efmd.org/conferences
GMAC professional developmentevent in London
The Graduate Management Admissions
Council (GMAC) will host an interactive
meeting to explore ways to mind the
communications gap in London in October.
Designed for marketing and admissions professionals with
decision-making and direction-setting responsibilities,
participants will join technology and new media experts to
identify and explore ways to leverage new and emerging
technologies in marketing and admissions to help attract the
best students to their schools.
Mind the Communication Gap: Using Communications
Technology in Marketing and Admissions will take place
on 23 - 24 October, Imagination Gallery, London.
For more information visitwww.gmac.comor contact
Simon White at [email protected]
LBS is prou d of it s as so ci at io n wi th EF MD and CL IP
andis delighted that the interaction over the Executive
EducationForu m ev en t was mutual ly rewardi ng
Rory Simpson, Associate Dean of Executive Education, LBS
Talking shop EFMD Global Focus | Volume 02 | Issue 03 2008
Third Annual Meeting of the Global BusinessSchool Network
The third annual meeting of the Global Business School
Network (GBSN) was held on 9-10 July, in Nairobi, Kenya.
The purpose of the meeting was to bring together representatives
of the network
along with other interested and relevant parties to continue
exploring best practicesin business education, discuss new ways of
forming benecial partnerships and to
foster stronger ties among partner schools.
The theme this year was promoting local business schools as an
innovative tool for
national development. Representatives from business schools,
foundations, civil
society, government and companies from around the world came
together to
discuss the importance of management education in implementing
successful
growth and development strategies.
Eighteen representatives of GBSN member schools from seven
countries were
present, while 60 representatives from an additional 22 business
schools participated.
The meeting was also well attended by members of the private
sector and several
NGOs and development organisations sent participants.During the
two-day meeting a number of sessions were held on various
topics
surrounding the central theme. These included: Importance of
Management Education;
Strategic Advantage of Business Schools; Project Showcase; CEO
Roundtable; Health
Management; Tourism Management; NGO Management; Entrepreneurship
and
Micronance; Technology in Business; and Management Education
Best Practices.
Throughout the discussions, the importance of management
education for national
development was frequently highlighted. The message from the
private sector
was clear business schools must be more relevant. Schools were
challenged by
the CEO Roundtable to produce graduates who could navigate the
challenges
of local environments while negotiating the complexities of a
global economy.
For more information on the MERC network
visitwww.mercnetwork.org
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News and events in brief from the business world
Talking shop
2008 EFMD and AACSB Global
Collaboration Conference hosted byIESE Business School, 16-18
November2008, Barcelona, SpainFostering key partnerships through
international collaboration and strategic
alliances is critical to the missions of the worlds leading
business schools
and to help them understand trends that shape management
education.
Presented jointly by AACSB and EFMD, this conference explores
how global
networks give business schools a competitive advantage in a
world that
becomes smaller and more complex each day.
For more information contact [email protected] or visit
www.efmd.org/conferences
Global Forum for ResponsibleManagement Education
4 5 December 2008United Nations, New York City, US
Participate in a global event where business schools and
management-
related academic institutions will for the rst time discuss
their involvement
in the global agenda.Take part in a rst-ever event of the
academic world at the United Nations
in New York, which will add global visibility and value to
participants in
the Principles for Responsible Management Education.
Learn from peers and committed experts about how your business
school
can provide real-world learning opportunities to create globally
responsible
business leaders who make the world a better place.
Who should attend?
Deans, Administrators, Directors of Centres and Program
Directors
from academic institutions that are already participating in the
Principles
for Responsible Management Education (PRME) initiative. In
this
event, their ideas, actions and experiences, which are being
discussednow in ve PRME Working Groups, will be presented to all
participants.
Deans, Administrators, Directors of Centres and Program
Directors
interested in sharing views and experiences concerning PRME
issues:
sustainability, corporate citizenship and corporate social
responsibility
in the curriculum, research and learning methodologies of
management
education.
In six break-out sessions, deans and experts, chaired by
high-level
representatives of the PRME co-convening organisations, will
discuss
with participants the main ndings of the PRME Working Groups
on:
How to get started with the PRME
How to progress in curriculum change
New challenges and perspectives in management research
Perspectives on new learning methodologies
How to report on progress in the PRME initiative
Business schools as a space for dialogue and partnerships
The Global Forum will also include a plenary session on the
future
governance of the initiative, an ofcial reception with a
presentation by
the Mayor of New York (TBC) on sustainability and the city, as
well as a
nal plenary session for which UN Secretary-General Ban Ki-Moon
has
been invited to address participants.
For more information visitwww.unprme.org
International Deans Programme (IDP)in association with EFMD and
ABSThe role of a business school dean has become increasingly
pressurised
and challenging in todays highly competitive global environment.
The
new International Deans Programme (IDP), beginning in
December
2008, is targeted at recently appointed deans/directors of
business
schools that are members of the Association of Business Schools
(ABS)
and/or EFMD.It is a tremendous networking opportunity offering
the chance to
increase international collaboration. IDP e nables a group of up
to 20
deans from around the world to visit business schools in three
countries.
They will gain a unique overview of strategy, operations,
structures and
future markets in business and management education.
In the rst programme the three compulsory modules comprise
study
visits to:
Rio de Janeiro, 3-5 December 2008
Petrobras University
Madrid, 1-2 April 2009
IE Instituto de Empresa Business School
Bled, 22-23 June 2009
IEDC Bled School of Management
Only ve places remain on the programme.
Contact Virginie Heredia-Rosa,virginie.heredia-rosa@e
fmd.org
to reserve a place.
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The Business in Society GatewayEuropes most comprehensive online
resource centre
for corporate responsibility and management development
directory resources spotlight events about contact
As part of the ongoing strategic alliance between EFMD &
EABIS, both organisations are
delighted to announce the launch of the Business in Society
Gateway web site.
The Gateway is a world-leading online resource centre on the
integration of business in
society issues into mainstream education and research. Featuring
a unique, state-of-the-art
Directory profling business school innovation and leadership
around the world, it aims to
become the key reference point for any stakeholder interested in
these subjects.
www.businessinsociety.eu
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No Cambridge blues
Arnoud De Meyer has spent a quarter of a century in the
management education industry mostly at the top level
and 23 of those years at one institution, INSEAD in France,
the rst truly international European business school.Today he
sits in a modest ofce (which he jokes about having redecorated) on
the sixth
oor of the colourful post-modernist pile that is Judge Business
School at the University
of Cambridge in Britain as its Director (Dean) and Professor of
Management Studies.
Arriving there has been a long and eventful journey.
Professor De Meyer, a Belgian, is an engineer by training and
specialises in the
management of technology innovation. His initial ambition was to
work in
industry but after taking his PhD he was encouraged to visit
INSEAD and was
offered a faculty job teaching operations management. He was, he
says, attracted
by its ambitions to be a top business school and its
international atmosphere,
a little unusual in the early 1980s.
What was initially an intention to stay for a year or two and
then move back to the
business world eventually became a 23-year stint in
Fontainebleau.
During that time he served as Dean of the MBA Programme, Dean of
Executive
Education, Director of the Euro Asia Centre, Dean of External
Relations and
Administration, and Deputy Dean.
However, he regards setting up and acting as the rst Dean of the
INSEAD campus
in Singapore as one of the most signicant achievements of his
career ( so far, he
says) and certainly one of the most enjoyable periods of his
life.
Things changed with the retirement as Dean of INSEAD of Gabriel
Hawawini in
2006. Although a candidate, Professor De Meyer thought it
unlikely he would be
made Dean. INSEAD had set its mind on an outsider (a decision he
approves of)to take over from Dean Hawawini. In 2006 J Frank Brown,
an American from
PricewaterhouseCoopers, and well connected with INSEAD, took
over and Prof
De Meyer was to some extent in play.
(For a profile of Dean Brown see Global Focus Volume 1, Number
1, Winter 2007.)
Arnoud De Meyer, Director of Judge Business School inBritain,
explains to George Bickerstaffethat the schoolsclose integration
with the University of Cambridge couldbe a model for business
schools in the future
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No Cambridge blues: Arnoud De Meyer interview by George
Bickerstaffe EFMD Global Focus | Volume 02 | Issue 03 2008
Lord Browne and the Vice-Chancellor
of Cambridge University told De Meyer
that if Cambridge wanted to retain
its status as a top university over thenext ten or 15 years then
it needed
a top business school
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For a while he resisted all blandishments but admitted he
perhaps hesitated half a second too long when the University
of Cambridge came calling.
Meetings with Lord Browne, Chairman of Judge Business
Schools Advisory Board and former chief executive of BP,
and the Vice- Chancellor of Cambridge University followed.
They told him that if Cambridge wanted to retain its status
as a top university over the next ten or 15 years then it
needed
a top business school.
Soon it was a done deal.
Judge Business School reminded me a bit of what INSEAD
was like in the 1980s, he says. There was an ambition to
make
it a top business school. In addition, there was full
support
from the top of the university and a clear message that this
business school was at the heart of the university.
Thats a key point. The accepted theory is that most business
schools like to be free-standing, as far-removed as possible
from any parent university (which they often feel doesnt
understand the point of a business school or, worse, regards
them as academically second class).
Professor De Meyer says in his two years at Cambridge he
hasnt experienced much of that. And in any case, he says,
I felt there was an opportunity to build a different type of
business school. One that has the ambition of being in the
top group but with a different strategy to INSEAD or London
Business School and others, a strategy of being very
integrated
into the university, not a stand-alone autonomous unit.
This, he thinks, could be a model for the future. The school
is
closely involved with other university departments,
including
engineering, nance, medicine, law and technology. It seems,
says Professor De Meyer, to work well.Having held virtually
every administrative post short of the
deanship at INSEAD he says he was at the logical end of a
cycle
when the approach from Cambridge came. Though he looks back
at his time at INSEAD with warmth, esteem and friendship;
after
so many years you do feel that you want to do something new.
He was also in his early 50s and felt it was the right time to
think
about what he wanted to do with the remaining years of his
professional career.
His rst 25 years have been marked by an intense and early
involvement in Asia, fuelled by his interest in
manufacturing
technology at a time when (the 1980s) the West was transxedby
Japanese manufacturing prowess.
But, inspired by an early mentor at INSEAD, Henri-Claude de
Bettignies, who in the 1970s started and developed INSEADs
activities in Japan and was instrumental in creating INSEADs
Euro-Asia Centre in 1980, he was also convinced that Asia
was more than just Japan and that China, and indeed India,
would eventually be major players. (He rst visited Shanghai
in 1986.)
And he believes that just as Japan has provided many lessonsfor
the West, so have China and India.
We shouldnt forget that quite a few of the insights in Japan
came out of the environmental conditions there, he says. The
whole Just-in-Time system, for example, developed from the
fact that they could not nance the working capital to invest
in inventory.
Similar lessons can come from Chinas social and cultural
experiences, he says, such as the importance of networks and
the fact that low-cost production can be achieved as a
result
of exibility and not just economies of scale.
India, too, has shown that, contrary to mainstream
economictheory, a developed economy can be built on the service
7thJudge Business School is ranked seventh
globally in the Economist Intelligence Units
2007 list and tenth in the world in the Financial
Times 2008 ranking
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Students coming to business schools today, De Meyer
says, are smarter, better educated and know a lot more
about management than they did in the past and schools
will have to react
IMAGESCOURTESY:JU
DGEBUSINESSSCHOOL
No Cambridge blues: Arnoud De Meyer interview by George
Bickerstaffe EFMD Global Focus | Volume 02 | Issue 03 2008
sector (software, for example) rather than manufacturing. In
India, in fact, the manufacturing sector largely arose after
the
service sector had become established.
The impact of Asia is just one of the trends now affecting
management education that Professor De Meyer believes
will inuence how Judge Business School develops.
As well as Asia he sees an inuence from the wider issues
of globalisation and internationalism generally; a need fora
more tailored curriculum, particularly at the MBA level;
the adjustment to the Bologna process in Europe; the need
to integrate the company into wider society; and the effects
of information overload.
He thinks that Judge Business School is well-positioned
to respond to globalisation. The School is ranked tenth in
the world in theFinancial Times2008 ranking and seventh
globally in the Economist Intelligence Units 2007 list.
The 2007 MBA class of 150 students included 47 different
nationalities, with 90% coming from outside Britain.
The plan is to increase student numbers at Judge BusinessSchool
across all programmes and Professor De Meyer says
that the Bologna Agreement to integrate higher education
across Europe will help stimulate this, arguing that it will
offer a lot of opportunities to British schools, which have
a long tradition of bachelors and masters programmes.
But that is no cause for complacency. Students coming to
business schools today, he says, are smarter, better
educated
and know a lot more about management than they did in the
past and schools will have to react.When they arrive here many
students from a variety of
disciplines have already had several courses in management
and I dont think we in the management education business
have responded to that. We need to provide more tailored
solutions. I think we need to offer more opportunities to
opt
out, for example, particularly from the traditional core
courses.
Schools will also have to prove themselves more adept at
managing the information overload resulting from modern
technology and helping students to handle it correctly.
While Professor De Meyer says his generation was trained
in an era of information shortage, going to the library
andwaiting for books to be returned and ghting over the latest
Left:
Arnoud De Meyer
Far left , left centre, below:
Judge Buiness School
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journals, today, he says, young people live in a world where all
information is instantly
available.
But that means they may need help. Wikipedia, for example, is a
tremendous rst
source of information but it has to be checked and not accepted
at face value.
He also wants to see business schools helping to integrate
companies and the business
community into wider society.
It is now wrong, he argues, to describe a company as simply a
mechanism for making
money for shareholders. Society is demanding more. For example,
he points out
that companies now effectively face a closed supply chain loop
where people expect
them not just to put products on the market but also to collect
and dispose of them
when their useful life is over.
We [business schools] have to grow beyond just teaching what a
company is and
how you manage it and put these problems in the context of
society, a complex
integrated world where companies are an important element that
cannot be isolated,
he says.
One key way of getting this message over to students, he
believes, is to bring many
more practitioners into the classroom, not so much as teachers
but as experienced
managers who can communicate the realities of business.
Professor De Meyer accepts the vital importance of the Cambridge
brand to Judge
Business School in developing the school. However, he does not
subscribe to thetraditional rivalry that has marked the
relationship of the universities of Cambridge
and Oxford for hundreds of years at least not in terms of their
respective business
schools anyway.
Judge Business School, he says, has many similarities with Said
Business School at
Oxford and, uniquely, the two universities even share a type of
co-branding through
the term Oxbridge.
He believes this benets both, particularly as Oxford tends to be
stronger as a brand
in North America, while Cambridge is stronger in Asia.
We are in the same market as Said because we offer a very
similar programme, he
says. But while we may compete at the margin for a few students
we actually benet
from each other in the world market as Oxbridge.
The two schools already collaborate in research and the only
thing that prevents
more of this, he says, is the appalling transport links between
them, which usually
means travelling a roundabout route via London.
Still, being close to London less than an hour by train does
mean that Professor
De Meyer can easily indulge his passion for opera and ballet.
And since his interest
in these is well known, he does, he smiles, get lots of
invitations.
His third, and perhaps even greater, love skiing is proving a
bit more difcult
in the notoriously at Cambridgeshire countryside. But he has a
small apartment
in the French Alps and says that if Im really organised I can
leave Cambridge at
4.30 on a Friday afternoon, be on the ski slopes early on
Saturday and back herefor Monday morning.
Judge Business School has many
similarities with Said Business School
at Oxford and, uniquely, the two
universities even share at type of co-
branding through the term Oxbridge
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Janez Potocnik, right, explains how Europeis learning to profit
from its diversity
The author Milan Kundera got it
right when he said that Europe
is the maximum of diversity within
the minimum of space
Europe is not the largest of continentsbut it
is a rich continent. This is true, on average,
if you measure our GDP per head, television
sets per household or the number of foreign holidays
taken in a year.
But quite apart f rom these conventional and perhaps
materialistic measures of wealth, Europe is rich in its
diversity.
Whether you refer to peoples, languages, cultures or
experiences,
variety is one of our dening characteristics. The author
Milan
Kundera got it right when he said that Europe is the maximum
of diversity within the minimum of space.
The sense that our different perspectives, traditions and
talents
are a positive asset for the continent is reected in the
very
motto of the European Union: Unity in D iversity. These
words reect the values that serve the deepening and widening
integration of European countries: principles such as
openness,
equality, plurality and solidarity and ideals like tolerance and
the
protection of individuals and their identities. Its the
promotion
of these values that helps dene the EU and we must never
forget this.
That is one reason we chose to name 2008 the European Year
of Intercultural Dialogue: to honour our cultural diversity.
I myself had the pleasure to launch this event at the start
ofthis year in Ljubljana, Slovenia.
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In keeping with these values are the ve freedoms we have
created in our common space. And yes, I said ve freedoms.
Alongside the freedom of movement of capital, goods,
services and labour, we are creating a fth freedom: the
freedom of knowledge. This encapsulates the notion that
ideas, technologies, innovations and knowledge-workers
should be exchanged and ow and spread throughout the
EU, boosting our ability to compete globally and to develop
in a sustainable and equitable manner.
This concept was endorsed by the Heads of State and
Government of the EU earlier this year. It is an exciting
and
important new development that will bear real f ruits in the
decades to come.
But my point is that as we enjoy and make greater use of
these
freedoms, we encounter more often the differences between
us. As we exercise our mobility, dealing with diversity
becomes a daily reality for more and more Europeans. From
a business perspective, companies are dealing with
increasing
diversity at all levels of their operations be it customers,
business partners, employees or investors.
Due to cultural and language differences between countries
and regions, operating on a European scale clearly means
facing greater diversity. European companies, as they
develop
and expand, have not only to cope with intra-European
diversity,
but even more importantly in the face of globalisation they
are
confronted by it on the international scene.
Many enterprises are important players in our globalising
economy with long experience of this phenomenon.
Described like this, diversity can seem to be mainly a
challenge. But it takes no great imagination to realise that
in fact it is a great opportunity.
On the one hand, a common culture and a common language
are likely to allow individuals to interact more easily.
Moreover,
cultural diversity can often lead to cultural shocks and
conicts,
thus creating difculties and imposing certain costs to the
economy and social cohesion.
On the other hand, skills and knowledge are often culture-
specic; individuals with different cultural backgrounds have
different skills, expertise and experiences. Thus, cultural
diversity creates an environment where the combination of
resources produces important gains that can be transferred,
through innovation, into improved economic performancevia two
different channels.
First, economic theory stipulates that the knowledge of one
individual spills over into other individuals and improves
other peoples productivity. These knowledge spillovers
contribute to innovation. I like to use the following
metaphor.
If you have two people who each have one apple which they
decide to exchange, then each one still ends up with only
one apple. However, if each of them has one idea and they
exchange them, they will both now own two ideas.
This is freedom of knowledge at work.
Second, research suggests that in a culturally diverse
environment people are more creative and creativity is one
of the main sources of innovation. Consequently, to the
extent
that diversity positively affects innovation, it can serve as
an
engine of growth. In this sense, it brings considerable
benets
to the economy.
I would go further and add that we are living in a time when
the exchange of knowledge and ideas is not a luxury but
anecessity. And in a culturally diverse environment there is
a greater variety of knowledge, so knowledge spillovers are
greater. So we are indeed on fertile ground.
European enterprises are waking up to this opportunity.
In recent years they have joined in ever-larger numbers the
movement to promote diversity in the work place. Many have
signed up to charters of diversity while voluntary
initiatives
have sprung up in a number of EU countries.
However, we still have a long way to go. It is clear, for
example,
when you consider that the share of women on the corporate
boards of European companies is still in single gures. It is
alsoa fact that the proportion of women in senior management
With the rise of the emerging economies, the ageing
of the European population and the coming shrinkageof our labour
force, we would be foolish to sit still
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positions in China and India exceeds that found in EU states
such as Germany, the Netherlands and Portugal. And that is
only looking at the gender issue...
With the rise of the emerging economies, the ageing of
theEuropean population and the coming shrinkage of our labour
force, we would be foolish to sit still. Europe cannot afford
to
ignore the talents of its women, its ethnic, racial and
religious
minorities or those with disabilities.
I am very much concerned with how we develop our ability
to succeed, confronted with the challenges and opportunities
of globalisation. That means developing the role of
education,
research and innovation in Europe:
as drivers of growth
as enhancers of competitiveness
as means to tackle our environmental and social problems.
In pursuit of the EUs Lisbon Strategy for Growth and Jobs,
I work to establish the European Research Area. In this
space
the freedom of knowledge reigns and an environment is
produced that stimulates knowledge-based, innovation-
driven entrepreneurship.
Given this context, how we take the most advantage of the
diversity within Europe and the diversity that comes with
the global expansion of European enterprises is of great
importance.
Issues of diversity and diversity management have beenaddressed
by the Framework Programmes for Research for
over ten years within the socio-economic sciences and
humanities research programme. The issue of diversity, its
contribution to growth and competitiveness, and issues of
diversity management and management and organisational
studies have been given considerable attention.
To quote some gures: over the course of the 4th to the 6th
Framework Programmes over 21 million was invested in
research related to different aspects of diversity. A further
13
million was allocated to projects related to management and
organisational studies. Thus, over a 10-year period 34
million
was contributed to over 20 research teams around Europe.
The studies conducted can be divided into two main themes:
investigating diversity as a phenomenon in itself,
describing
its characteristics and consequences; and linking diversity
with economic performance and management and
organisational studies.
The number of projects around the problems of diversity
increased dramatically in the 6th Framework Programme,
with the consequence that many are still ongoing.
Currently, the problem of diversity is looked at from a
truly
multidimensional perspective.
First, ensuring proper communication is the prerequisite
of effective diversity management. With the emergence
of knowledge-based societies, it is important to identify
the conditions under which Europes linguistic and cultural
diversity can be an asset rather than a drawback.Research
suggests that different modes of thought, argument
734mThe amount over a ten-year period that was
contributed by the Framework Programmes for
Research to over 20 research teams around Europe
Diversity as an engine of growth by Janez Potocnik EFMD Global
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and action, which are linked to different
languages, have an inuence in the developmentand transmission of
knowledge. Thus, they play
a role in problem solving and decision making.
Second, it is important to identify the societal,
political, regulatory and institutional conditions
under which diversity can be a source of
competitive advantage in knowledge-intensive
activities.
One of the most important contributions at
the EU level in the area of management and
organisation studies (linked indirectly with
diversity management) comes from researchon corporate social
responsibility.
Responsible business, in which the EU is the
world leader, should serve as a driver of the
promotion and transfer of common European
values to both developed and developing
countries.
Another example is an in-depth analysis of
common problems in relations with
stakeholders. This is of key importance in
avoiding conicts and the resulting economic
damage in a number of industrial sectors.
Research suggests that constant dialogue is
the key to effective stakeholder management
as it allows learning to take place about mutual
expectations, concerns and constraints.
In recent years a dialogue facilitated by the
European Commission has been launched
between academia, businesses and stakeholders
in order to better understand societal expectations
towards business but also the constraints on
companies.
From among the many interesting results of
this exercise Id like to pick up just one: a call
for reforming managerial education to create
business leaders who can better anticipatefuture developments
and who better understand
the importance of integrating responsibility into
the core of their business strategy.
To give a nal example of the recent fruits of
research, an important phenomenon observed
in recent years is the process of global value
chain restructuring.
If you restructure your value chain, as often
happens for operations in multiple markets,
this is usually associated with increasing
diversity. This process implies signicant changesin work
organisation that have tremendous
implications for the use of knowledge and skills,
for organisational exibility and for the quality
of life of workers. It is important that enterprises
experiencing such changes take into account and
properly adjust to the growing multiplicity that
goes along with them.
Ultimately, the trick is to use this diversity for
the maximum benet.
Let me turn to the present and future opportunities
that will build on these discoveries.
The current 7th Framework Programme
capitalises on past results at both European and
national level. During the rst two years, research
funding has been concentrated on the important
areas of knowledge development and innovation
as drivers of growth in the European economy.
The selected projects will also take a look at the
role of investments in intangible assets as the
basis for innovation.
Additionally, developments in the service sector
will be analysed plus opportunities for business
development provided by the different sectors
of the nancial system. The projects funded will
also give further important insights into cultural
interactions in an international perspective,
including ethnic and religious diversity.
Starting in 2009, future actions are expected to
contribute further to the areas I have touched
upon. In particular, we expect to fund studies
to investigate new education needs in the
developing knowledge society and changing
labour markets.
In the area of management studies, additional
opportunities will exist to delve into the area of
responsible business. This time, the emphasis
will be on its impact at various levels, including
company performance, as well as links with
innovation development.
Also interesting from the business point of
view will be the exploration of changes in
consumption and consumer markets, including
new products and services, which take into
consideration the effects of cultural diversity.
Everything Ive highlighted is, of course, only
a fraction of the richness of the outputs of our
research programmes. Still, I hope Ive been
able to convey the importance I attach to EU
research into the notion of diversity, its implications
and its management.
The future development of our continent is of
interest to us all. What matters is the building
of a knowledge-based economy that grows
through innovation. Whats vital is the creationof a Union that
can provide health, prosperity,
a sound environment and a fair society for its
people. If we choose to use it, then our diversity
is our strength.
So lets take pride in our Unity in Diversity.
FURTHER INFORMATION
This is an edited version of a speech given by JanezPotocnik to
the EURAM 2008 conference in Ljubljana,Slovenia, in May 2008
For the full text please see
http://ec.europa.eu/commission_barroso/potocnik/news/docs/20080516_speech_diversity.pdf
ABOUT THE AUTHOR
Janez Potocnik is European Commi ssioner for Scie nceand
Research.
He was formerly Minister Councilor in the Slovenian
PrimeMinisters Cabinet 20012002 and Minister for European
Affairs 20022004 and headed th e negotiating team for the
Accession of Slovenia to the European Union betwee n 1998and
2004.
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Eric Cornuelconcludes a two-part series on managementeducation
in Europe with some thoughts on how the sectormight be restructured
and revitalised
The road aheadfor Europeanmanagementeducation
If we agree that there is a need formanagement science to
changeparadigms, there must also be changesin the way we train
teacher-researchers
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EFMD Global Focus | Volume 02 | Issue 03 2008
Institutional autonomy is a fundamental issue
for any management education institution
positioning itself in terms of the strategicchoices outlined in
Part 1 (See Global Focus Volume
02 Issue 02 P24.). At a global level questions should
be raised about the corpus of concepts and values
conveyed in management teaching. As mentioned
before, the discipline has been criticised for its
standardised approach with teaching in a given
discipline being delivered in a given classroom
at a given time without any leeway.
Professors can clearly be highly competent but may not
integrate their research sufciently into their modules.
The transmission of knowledge should not cease at theend of a
class or on graduation.
There have been many praiseworthy efforts, particularly
in Europe, to integrate more transversality, and elements
of research action, into curricula. The necessary
adaptations
have turned out to be fundamentally deeper and more
revolutionary.
Our environment has changed markedly, notably in the
exponential technological progress that now allows us to
analyse, choose and communicate anywhere at any time.
The iPod, iPhone, Blackberry, Skype and even Google are
all enablers along these lines.Consumers are also becoming
increasingly versatile
and difcult to categorise. Their values, orientations and
expectations (ethical, for example) have undergone profound
changes, witnessed, for example, by the latest on-demand,
or commitment marketing models.
This is a change that affects all suppliers, from bakers to
schools
and universities. Does it mean that management teaching
should
line up with a new paradigm? In a new approach, the main
focus
would be on individualised learning based on multiple
sources
that could potentially be delivered anywhere and at any
time.
Such a learning process would be highly interactive, co-produced
by professors and learners, modular in nature
and strongly oriented towards training needs.
Learning sessions of this sort would establish virtual or
actual
links between participants from across the world, with
professors acting as coaches and facilitators, transferring
their research ndings, mainly in a heuristic, or
self-learning,
dimension, to everyone in a comprehensible manner. The
transmission (and construction) of knowledge in such a
scheme would be necessarily transversal and
multidisciplinary.
Management research, as a tool for the exploration and
creation of knowledge, will always be paramount. Butforgetting
that it must also be heuristic and communicable
could lead management science into the same blind alley
as the one economics has gone down.
Peter Lorange, outgoing President of Lausanne-based business
school IMD (see Global FocusVolume 01 Issue 03) has detailed
the need for more minimalist research, a variant that is
more
multidisciplinary and is disseminated and potentially
enriched
through interactions with students and participant
companies.
In an article published posthumously, management academic
Sumantra Goshal asked leading institutions such as The
Academy of Management to create new research paths
to legitimise new intellectual orientations.
In short, management research needs less Popper and more
Feyerabend. Europe must regain control.
Problems at this level are both quantitative and
qualitative.
As made clear in Part 1, the numerical shortfall of
management
professors is likely to have a lasting impact on European
institutions ability to serve their customers.
It is high time to encourage young people to enter academia.
The question of 100% funding for doctoral studies needs to
be resolved once and for all, allowing successful candidates
to
focus fully on their studies. It is no longer acceptable for
academic
wages in Europe to be so uncompetitive in global terms.
With nearly 70% of the European workforce operating in
the service sector, often in high value-added industries,
our political, economic and social space has a great need
for capable and creative managers, adaptable and sensitive
to other cultures and well trained for their current and
future
responsibilities. If Europe does not want to be reduced to
an imitative economy, it must redirect, at all levels,
signicant
resources towards higher education in general and towards
management education in particular.
If we agree that there is a need for management science to
change paradigms, there must also be changes in the way we
train teacher-researchers. This means a reform of doctoral
programmes, which must become more multidisciplinary,
interactive and closer to companies and the whole of
society.
Since vocations can come along at any stage of life, a
system
of pathways should be set up to enable highly skilled
professionals
to reorient towards teaching and research. In the US, AACSB
and a number of universities have already started thinking
about the possible creation of Executive PhD programmes.
Europe has tried to blaze a trail with its Lisbon strategy
(now in its second round). It is now time for it to esh out
the details of the urgent measures that need to be taken in
the
interest of our political, economic and social progress.Why
not encourage institutional consolidation at a national and
even transnational level? An initiative by France and
Germanyconcerning the creation of European academic groups (a
sort
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of academic Airbus) was interesting since this could allow not
only for
the critical mass required to cope with international
competitive pressures
but also for the development of multicultural and European
academic
awareness.
The creation at a European level of something similar to the US
NationalScience Foundation (founded as far back as 1946) would also
be
desirable. Such a body could be endowed with important
resources
and responsibility for orienting and subsidising institutions
research
efforts along with their organisational, teaching and social
innovations.
Like its American counterpart which focuses 65% of all the
grants
it awards to 1% of its member institutions it could invest its
resources
in a limited number of institutions, who would then be required
to
disseminate whatever knowledge and innovations they produce.
The
creation of the ERC (European Research Council) goes in the
right
direction, but it is still not enough.
Why not immediately enlarge the European Union to 28 members?The
new participant would not be a state as such but a virtual and
transnational body encompassing all of the exceptional measures
and
conditions aimed at bolstering teaching and research. If this is
overly
utopian, why not imagine a Common Education and Research
Policy
along the lines of the Common Agricultural Policy?
Of course, it is up to the Member States to decide these things,
since
education remains largely governed by the principle of
subsidiarity. It is
at the state level that a certain number of measures with direct
or indirect
institutional effects should be adopted. Direct measures would
include
reinvesting massively in academic institutions and training
future
teacher-researchers. Indirect ones would involve stimulating the
funding
of these same organisations via private sources enjoying tax
exemptions
that could be set at 100% or even more to rapidly create a
virtuous circle.
Companies clearly have a key role to play and their ties to
institutions
must also be reinforced and rethought. Europe may already have
more
than its fair share of consultations but it is clear that we
have a considerable
need to talk about dening strategic objectives, developing
shared
infrastructure, and producing competencies and dialogue.
What
is required is better mutual understanding of timeframes, as
well
as an acknowledgement of the necessities of basic research
and
the way this must connect to the productive economy.
At a time when people at least say that corporate social (and
societal)
responsibility has become increasingly topical, one main
priority for
businesses should be to fund their sources of future
competitiveness
via an educational system producing the best managers in the
world.
Nothing can be done without commitment from academic
institutions
and communities themselves, who need to rethink deeply their
different
roles and contributions to society. Not paying attention to
broaderdemands in an era of globalisation would be downright
suicidal.
Companies (and organisations in the broadest sense of the
term)
must be much more integrated into professors teaching and
research
concerns, and not only as elds of investigation. This is a
pre-requisite if
we ever hope to see companies become important actors in
institutional
funding and governance.
Europe and its further progress must also be at the centre of
institutions
vision and communications. Along these lines, note that a 2006
EFMD
survey showed that nearly half of 10,000 students in management
and
economics know very little about the Bologna reforms.
Last but not least, institutions, as opinion makers and centres
of thinking,must also contribute to certain societal debates, with
corporate social
and societal responsibility clearly being a key theme for
institutions of
management learning and research. In this context, the
initiative that
EFMD launched in 2002 under the name of the Global
Responsibility
Initiative and which has brought together a great many
academic
institutions and companies under the aegis of the United Nations
has
played a catalysts role. The future creation of a foundation The
Globally
Responsible Leadership Foundation (GRLF), seeking to
coordinate
efforts in this eld, attests to this projects importance and
success.
Today, management education in Europe already presents an
excellent
return on investment in all of its dimensions. Despite this,
adaptations willbecome increasingly necessary, especially since a
homogeneous European
higher education system will certainly attract new
competitors.
To face these challenges, our institutions must demonstrate
sufcient
creativity and inventiveness to evolve towards a new paradigm,
one that
is more in sync with the realities of todays and tomorrows
global competitive
dynamics. To achieve this, they should be able to count on the
unbridled
support of institutions that are at least as interested as they
are in their
future success: Europe, its Member States and of course its
companies.
Companies clearly have a key role toplay and their ties to
institutions mustalso be reinforced and rethought
ABOUT THE AUTHORProf. Eric Cornuel is the D irector General and
CEO of EFMD.
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EFMD Global Focus | Volume 02 | Issue 03 2008
LINK Cycle
Begins 6 November 00
Registration open now: www.efmd.org/link
LINK
The Programme for Professionals in Management Development and
Organisational Development
LINK has four degrees of focus:
1 Factors in the business environment that are or will be
impacting on corporate strategy
2 How organisations are or should be responding to these
factors
3 The implications for executives and the learning function
4 How the learning professional can and should contribute as a
change agent
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Though he says the ideas in it were 20 years in gestation, it
is
likely most people read Pankaj Ghemawats latest (2007) book,
Redening Global Strategy: Crossing Borders in a World Where
Differences Still Matter, as a more-or-less deliberate and
conscious
rebuttal of the best-selling The World Is Flat: A Brief History
of the
Twenty-First Century by New York Times columnist Thomas
Friedman.
Professor Ghemawat, a professor of global strategy at IESE
business school in
Spain, in fact does not mention The World Is Flat and Mr
Friedman receives only
two passing references in his book. But certainly, the two
approach the issue of
globalisation f rom opposing perspectives.
Mr Friedman argues that since around 2000 a series of
technological and social
changes have levelled competitive differences between developed
and emerging
economies, negating the effects of national boundaries and
making the world
effectively a huge single market.
Globalisation of the world economy is the ineluctable future and
companies will
be operating effectively in a single-country market with no need
for diversied
strategies. Globalisation does indeed win but the need to be
global disappears.
Professor Ghemawat argues that this analysis is simplistic,
lacking in empirical
data to support it (and as an economist he puts a lot of
emphasis on data and has
convincing and copious amounts of it to back up his case) and
even potentially
dangerous, feeding resistance to globalisation and fuelling
protectionist tendencies.
Brought up in both India and America, he has a PhD in Business
Economics from
Harvard University and in 1991 was appointed the youngest-ever
full professor at
Harvard Business School and has been on the IESE faculty since
2006. Perhaps as
a result of this cosmopolitan life, his world view is more
nuanced and alert to culture
and context than what is sometimes called globalony.
Rather than a at world inviting a one size ts all approach, he
argues that what
we have today is semiglobalisation, large and distinctive
differences across
national and regional borders that corporate strategy has to
accept and adjust to.
Semiglobalisation and its implications for business is Professor
Ghemawats big
message. In the opening chapter of his book he writes:
...the intermediate levels of cross-border integration inherent
in semiglobalizationare what open up, over a very broad domain, the
possibility of global strategy having
Because the worldis round it turns onstrategy*
The world economy is not truly integrated and is unlikely to be
so for decades,if ever. Pankaj Ghemawat, arch-proponent of
semiglobalisation as the realchallenge for international corporate
strategy, talks to George Bickerstaffe
*Apologies to Lennon/McCartney
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What we have today issemiglobalisation, large
and distinctive differences
across national and
regional borders that
corporate strategy has
to accept and adjust to
Professor Pankaj Ghemawat:
not one size ts all
content distinct from single-country strategy...
Semiglobalization
is what enables the development of a distinctively global
approach to strategy.
Professor Ghemawat is also heavily engaged in issues
concerning the globalisation of business education, including
a
casebook on global strategy with Jordan Siegel (to be
published
in 2009 by Harvard Business School Press) and broader
efforts
at curricular analysis and development that are summarised
in his 2008 article in theJournal of Management Development,
The Globalization of Business Education. He is also a member
of an AACSB taskforce focused on this topic that will report
in spring 2009. He will be speaking at the joint
AACSB/EFMDconference in Barcelona in November on this issue.
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Why isnt the world at?
To an academic the remarkable thing is that
there is a huge consensus among internationaleconomists that the
whole proposition that
borders dont matter is ludicrous. The problem
with a Friedman-like view of the world is that
an 80% - 90% level of internationalisation, which
is what it implies, grossly overstates actual levels
of internationalisation along a broad range of
measures, which cluster much closer to 10%.
For example, if you ask people to estimate what
percentage of all the investment that happens
in the world is accounted for by foreign direct
investment then the answer is usually of the orderof 20% to 40%.
In fact the answer is about 10%.
And its relatively hard to reconcile that gure with
a conception of a world in which the sources
of capital dont matter for where it is deployed
one would expect a much higher gure.
There are other things you can look at like
people ows; rst-generation immigrants are
still just 3% of the worlds population, lower
than they were in 1910. Or information ows;
my best estimate is that less than 20% of the
bytes that get transmitted over the Internet
actually cross national borders.
So borders matter. But simply saying that things
happen at borders doesnt tell you why they
happen or what to do.
Ive gone through the hundreds of studies on
the factors that tend to choke off cross-border
activity relative to domestic activity and tried
to pull them together into a framework. What
Im saying is that one really has to think about
multiple kinds of distances that companies
have to acknowledge and react to in developing
their international strategies.
Could you describe that?
Ive called the framework CAGE. Distances in
this sense relate to four main areas: Cultural,which includes
language, customs, religion;
Administrative laws, trading blocs, currency;
Geographic, which includes physical distance,
time zones and things like that; and Economic,
which is income levels, natural resources, nancial
resources, human resources, infrastructure and
so on.
You have to take a broad view of these distances,
work out which most affect your industry or
company but also see them not just as obstacles
but also as potential sources of value creation.
This is important from a business perspective
because one sees so many examples of companies
that get seduced by one kind of distance and
forget completely about the others.
A good example is Star TV, a satellite television
broadcaster bought by Rupert Murdochs News
Corporation in the 1990s that was planning to
broadcast English-language programming tomost of Asia.
It was launched on the premise that satellite
television was going to obliterate geographic
distance, which is true. But it got into massiveproblems because
it forgot about the other
distances.
It forgot about cultural distance the fact that
people prefer broadcasting in local languages;
it forgot about administrative distance, ignoring
that the Chinese government might be sensitive
to a speech by Mr Murdoch declaring satellite
television a threat to totalitarian regimes
everywhere; and it forgot about economic
distance many of the countries targeted had
no infrastructure to measure how many people
were watching a TV show, which made it very
hard to sell advertising.
Another example is Cemex, a Mexican cement
company. Obviously languages dont matter
so much in the cement business as they
do in satellite television. The big difference is
that geographic distances domatter. What is
interesting is that Cemex, the most successful
global competitor the most Professoritable,
anyway has effectively retrenched to trying
to build up a geographic fortress in Central
America and North America because itrecognises that in its
business geography
is really what matters.
Is this just a snapshot of where we
are now: the world isnt at at the
moment but it may become at?
I cant see the world becoming at, at least in
my lifetime.
There are a couple of ways at looking at that. One
is to point out that not all the trends are positive.
If you look at overall estimates of capital mobility
they are actually lower now than they were back
10%The estimated percentage of
all the investment that happens
in the world accounted for by
foreign direct investment isusually of the order of 20%
to 40%.In fact it is about 10%
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Pankaj Ghemawat interview by George Bickerstaffe EFMD Global
Focus | Volume 02 | Issue 03 2008
at the end of the 19th century when the world
was on the gold standard and empires helped
to promote trade and investment.
Second, of the things that are trending upwards,
like trade for example, its going to be a long
time given that the worlds exports-to-GDP
ratio is about 27% now and was about 20% 20
years ago. Extrapolate that, which is probably
an aggressive assumption, and what do you get?
You get something that is higher than it is today
but far short of perfect integration.
Even in the European Union you nd that
countries trade within their own boundaries
between three and ten times more than theydo with their EU
partners and thats after
50 years of attempted integration.
So those data points all raise questions. If
you believe that culture is going to continue
to matter, if you believe that politics are going
to continue to matter then its a little bit hard
to imagine atness in our time.
Given your analysis, what should a
company that is considering entering
an overseas market be thinking about?
Well the rst thing that any company consideringgoing overseas
should ask itself is why? The
usual answer is were going overseas because
there are lots of people overseas or there is a lot
of demand overseas.
You see this very frequently right now with many
companies Indian or Chinese strategies. If your
strategy for India or China is based on the notion
that there are lots of Indians or Chinese then
thats not exactly a proprietary insight.
I think theres a tremendous amount of growth
mania still in international strategy and one ofthe things I
stress to companies is, OK, if you
cant articulate any reason as to why youre
going overseas beyond theres lots of demand
out there then thats unlikely to work out well.So that would be
point number one be clear
about why youre going overseas.
Point number two is to think hard about what
kind of distances matter in your business. For
Star TV it was a range of things; for Cemex it
was just one thing. But unless you give these
distances their due you are going to be biased
towards a model that looks very much like the
model at home because it works at home and
what could be simpler than just transplanting it?
And third, recognising that there is a range of waysof dealing
with differences is critical. Even when
companies recognise differences, quite often they
fall back on having just one tool in their toolkit for
dealing with it, just saying OK, well decentralise
these decisions to the country manager.
Thats just one example of an adaptation strategy;
there are many more levers for adaptation,
in addition to which adaptation is far from
the only strategy for dealing with differences.
So in my book I talk about two other broad
classes of strategies for dealing with differences:aggregation
and arbitrage. Together with
adaptation they make up what I call an AAA
strategy.
Aggregation is the notion that while things
are different they are not equally different and
there may be ways of grouping things so that
within these groups you get homogeneity.
Maybe you can group countries in different
parts of the world differently. If countries
within a region are relatively similar then maybe
by setting up a regional headquarters you may
be able to tap some cross-border economies.
And the third strategy is arbitrage, the notion
that differences are not just a constraint to be
adjusted to or overcome but can sometimesbe enormous sources of
value and creation in their
own right.
And so part of what Im trying to do is to get
companies beyond the simple scale-up
conception of what going global means just
doing more of the same stuff overseas that you do
at home and thinking harder about more diverse
ways of creating value by crossing borders.
What is the best example of a company
that has gone international successfully?
There are a handful of companies that I thinkare exemplars in
this regard. Just to talk about
very large companies I think Proctor & Gamble
is a very interesting example. It doesnt use the
AAA model I was just talking about but the way
they explained it to me their organisational
structure is set up around three kinds of entities
that basically do that. IBM and GE are also good
examples; so is Toyota.
There are a few companies that seem to be doing
things right.
But for the vast majority of companies, whatssurprising to me is
just how much room there
still is in terms of doing things better.
The rst thing that any
company considering going
overseas should ask itself
is why?
FURTHER INFORMATION
For more information about Pankaj Ghemawats thinkingsee
www.ghemawat.org
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www.efmd.org/globalfocus
Companies are under ever-greater pressure to
manage their learning and people development
process strategically. The issues they are facinginclude
attracting and retaining the best talent, nurturing
tomorrows leaders, aligning strategy, competencies
and behaviours, and integrating the learning function
into mainstream human resources processes.
EFMDs Corporate Learning Improvement Process (CLIP) helps
companies to face up to these challenges and has been designed
to
provide an assessment tool for corporate learning organisations.
Internal
self-assessment against a set of rigorous standards drawn up by
leading
members of the corporate learning community is combined with
external review by experienced peers.
A new report,Quality Improvement in Corporate Learning
Organisations,
draws on the experiences, knowledge and practices from 12 CLIP
reviews
and offers an inside view on how to achieve the gold standard in
corporate
learning. The twelve companies covered in this research are:
Alcatel-
Lucent, Allianz, Crdit Suisse, Daimler Chrysler Financial
Services,
Deutsche Bank, Grupo Santander, ERGO, MLP, Novartis, Swiss
Re,
Union Fenosa and Volkswagen Coaching.
A CLIP research team with members drawn from Alcatel-Lucent,
Novartis
and EFMD analysed the CLIP Self-Assessment Reports and Peer
Review
Team Reports for each of the 12 companies. (See box page 31.).
Good
practices in core areas such as strategic positioning,
programmes and
services, external suppliers or innovation and development are
illustratedby over 130 examples. The 12 companies featured also
show distinctive
Quality improvement
in corporate learningorganisations
Martine Plompenon a new report that emphasisesthe gains offered
by the EFMD CLIP accreditationprocess for companies learning
organisations
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Quality improvement in corporrate learning organisations by
Martine Plompen EFMD Global Focus | Volume 02 | Issue 03 2008
12The 12 companies featured in the Quality
Improvement in Corporate Learning
Organisations report show distinctive strengths
in sharing strong values and having motivatedpeople who
passionately enjoy their jobs
strengths in sharing strong values and having motivated people
who
passionately enjoy their jobs.
The constantly evolving contribution of learning to business
requires
a corporate learning organisation that is agile and adaptive.
However,
it is not easy to strike a balance between learning initiatives
to optimise
implementation of current corporate strategy and those needed
to
prepare for tomorrows globalised and hyper-connected world.
Serving
the immediate needs of business units, for example, can
overwhelm
innovative approaches to leadership development.It was also
observed that younger learning organisations often focus
on the launch of a rst series of learning initiatives; however,
the CLIP body
of knowledge clearly indicates the importance of an
institutionalised
governance system for corporate learning organisations. Unied
decision-
making processes and comprehensive reporting systems are the
key
stepping stones.
Ideally, formal mechanisms with internal and external advisory
bodies
should be supported with a clear mandate from the top
management
of a company to strengthen the strategic positioning of the
corporate
learning organisation. Appropriate positioning and design, in
the reality
of todays very diverse world of learning, covers a broad
spectrumof approaches, depending on the overall corporate
context.
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0
www.efmd.org/globalfocus
Not surprisingly, the CLIP report conrms that a corporate
learning
organisation will not achieve much without professional staff
and co-
ownership by senior and line managers in the organisation. An
overall
integrated approach to the companys people management
processes
and human resources comes out as denite good practice; however,
it
does not necessarily clarify the grey areas in the boundaries of
operations
of a corporate learning organisation.
Those boundaries are unavoidably changing in pace with the agile
and
adaptive learning organisation and are affected by wider
organisational
issues or even turf wars.
In the 14 CLIP-accredited companies, learning is handled as an
ongoing
process that affects all layers of the organisation and that
builds on careful
design processes for the entire learning journey. However, nding
waysto satisfactorily provide offerings for top executives means
additional
challenges for the corporate learning team.
Finally, the research team notes that programme monitoring,
evaluation
and review is an area requiring particular attention and
further
development, especially in young corporate learning
organisations.
FURTHER INFORMATION
For more information on CLIP visit www.efmd.org/clip
ABOUT THE AUTHOR
Martine Plompen is Director, EFMD Knowledge Services Unit.If you
would like to receive a copy of this report please email
[email protected]
The CLIP report conrms that a
corporate learning organisation will
not achieve much without professional
staff and co-ownership by senior
and line managers in the organisation
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The CLIP Value PropositionAt the core of the CLIP value
proposition for corporate learning organisations is the
peer community of chief learning ofcers from CLIP-certied
companies. The focus
is on identifying key factors that determine quality in the
design and functioning of
corporate learning organisations. The CLIP Criteria Framework
builds on ve core
areas: context and mission, resources, markets, process quality
and context.
1 Context and missionAssessment criteria in this area are
related to the design model of the corporate
learning organisation, its positioning, alignment and strategy
as well as its
governance and its management structures.
2 ResourcesResources break down into two broad categories. One
is the internal training
resources such as the corporate learning organisations core
staff as well as senior
management and line managers in the company. The second is the
external
suppliers and related issues around selection and relationship
management.
3 MarketsIn the context of the CLIP Criteria Framework, the
market of a corporate learning
organisation is dened as:
participants in the learning interventions
business units and subsidiar ies (the internal market)
customers and supplier s (the external market)
4 Process QualityCLIP criteria related to learning process
quality include portfolio, design, content,
delivery, learning transfer, coaching, monitoring and
evaluation.
5 Learning ContextContext covers the CLIP criteria related to
innovation, physical resources and
international perspective.
The CLIP Self-Assessment ReportThe company drafts a
Self-Assessment Report, involving the broadest possible
spectrum of stakeholders concerned with its Corporate Learning
Organisation.The report, ranging between 25 and 50 pages, describes
the measurement of the
Corporate Learning Organisations performance and the
effectiveness of its processes
and structures. The CLIP Assessment Criteria Framework provides
the external
yardstick for this exercise.
The CLIP Peer Review Team ReportThe CLIP on-site Peer Review
visit lasts two or three days and the Peer Review Team is
composed of four members with deep experience in the
organisation and delivery of
executive education within the corporate environment. After a
constructive dialogue
with the company, the Peer Review Team makes an overall
assessment of the Corporate
Learning Organisation. The Peer Review Team Report formally sets
out the ndings,assessment and recommendations of the team for the
use of the company.
EFMD
Quality improvement in corporrate learning organisations by
Martine Plompen EFMD Global Focus | Volume 02 | Issue 03 2008
So far 14 leading Corporate LearningOrganisations from across
Europe havebeen awarded the Corporate LearningImprovement Process
Quality Label.
Alcatel-Lucent University,Alcatel-Lucent
Allianz Management Institute,Allianz Group
Credit Suisse Business School,Credit Suisse
DaimlerChrysler Financial ServicesAcademy
Deutsche Bank Learning
and DevelopmentEDF Corporate University,EDF Group
El Solaruco - Group SantanderCorporate Learning and
DevelopmentCentre
ERGO Management Akademie,ERGO Versicherungsgruppe
MLP Corporate University, MLP
Finanzdienstleistungen AGNovartis Corporate Learning,Novartis
AG
ST Corporate University,STMicroelectronics
Swiss Re Leadership Academy,Swiss Re
Universidad Corporativa Union Fenosa,Union Fenosa
Volkswagen Coaching GmbH,Volkswagen
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www.efmd.org/globalfocus
Bruce Jenksshows how by engagingthe poor as clients, customers
andproducers, the private sector cansucceed in the simultaneous
pursuitof wealth creation and social impact
Doing business
with the poor
China has the largest agricultural population
in the world with over 900 million farmers,
more than 90% of whom lack access topersonal computers and the
Internet.
A few years ago, Tsinghua Tongfang (THTF), a Beijing-based
microelectronics company, saw an opportunity to expand into
a largely untapped market while helping bridge the digital
divide.
The company noted that even before adding Internet
connection fees, a basic computer cost three months income
for the average farmer. Those farmers who could afford
a computer often did not know how to use one. Thus
most of these farmers were not able to take advantage
of many production-boosting technological advances.
THTFs research showed that what farmers needed was not
just a cheap computer but solutions to daily farming
problems.
We really needed to think how our computers could make
their life easier [for the farmers] rather than simply
trying
to make them buy our computers, says Jun Li, vice-general
manager of THTFs computer department.
So in 2005 the company teamed up with Beijings municipal
government to develop the affordable, low-electricity
Changfeng
computer for rural users.
THTF dealt with limited educational levels by creating and
pre-installing agricultural software that was intuitive to
use,chosen by talking not just to future customers but also to
outside
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Doing business with the poor by Bruce Jenks EFMD Global Focus |
Volume 02 | Issue 03 2008
experts and developing a website for an online community
of open-source coders, farmers and agricultural analysts.
In addition, THTF offered training to rural farmers via a
low-
cost operating system. And the new computers also included
distance-learning software both for primary and
middle-school
education and for minority-language education. The minority-
language online video classes, recorded in middle schools
with
minority students, allow THTFs rural customers to learn in
their own language.
By nding and responding effectively to a large potential
market
the company expanded its market base. It is this type of
tailored
response that has this yea
