The Global Aspirations Of Emerging Giants

The explosion of the growth of the automobile industry is indeed mind boggling. In a recent visit to Asia, I noticed a phenomenol explosion of automobiles on the road. Besides several well known brands, a new wave of asian headquartered automobile players are moving aggressively into the market. Hyundai for example is rolling out far more sophisticated models in the Korean market than those available in the US markets. The Tata's are making huge leaps in the automobile world stradlling from the Nano to buying premium auto brands like the Jaguar & Land Rover. The chinese are working hard to expand their global footprint in the automobile world, though they suffer from a serious image problem.

One chinese manufacturer named Cherry tied up with Chrysler to make cars for western markets. Its interesting to see how this relationship pans out. Ten year old Cherry wants to expand globally on its own. Its CEO explains in this conversation the challenges that lay ahead for it :

Chery has four major challenges :

" -First, we are facing a shortage of qualified people. To deal with our rapid growth in both domestic and overseas markets, Chery’s management and technical specialists all have to take multiple positions, some of which they may not be good at, and that is not sustainable.
- Second, there’s an issue with brands. Chery brands already enjoy good awareness in China for inexpensive, low-end cars. We want to move gradually toward the higher end of the market but still ensure customer loyalty and sustained growth.
- Related to that point is product quality. Chery must improve its product quality along the whole value chain instead of just focusing on the production line. This requires fundamental improvements in important processes such as product development, supplier management, logistics management, production management, and sales and after-sales services.
- Finally, Chery needs to raise huge amounts of money to maintain its growth. The cash flow generated from day-to-day operations would not be sufficient to support our global ambitions, so Chery needs better access to the capital markets, perhaps by being listed on domestic or overseas stock markets or both".

The only thing that has been downplayed here is the supply ecosystem for the automobile industry - in china an ecosystem gets created owing to cheap capital - one will have to see how Cherry could scale up on that on a global basis . Nonetheless, these points are very well said and I liked the sequence in which would think Yin Tangyao, Cherry's CEO has listed the issues : people, brand, quality and capital - in that order would make a huge difference towards global business.

Labels: Global Networks

The Ubiquitous Networks

In the past, "network" referred to a chain of radio stations hooked up by wire-and, long before that, to intersecting roads, canals, railways and telegraph lines. Nowadays the term might refer to viral marketing, a way of finding a job or spouse, the means by which Netflix or Amazon knows which movies you will like, a map of the brain, the sentinel nodes in an epidemic, a grassroots political campaign, the collection of experts who can solve an energy crisis, or a cell of terrorists.
The reality today is that networks are betting more and more powerful. You may not own a cell phone, a BlackBerry, a laptop or even a credit card. But, thanks to your Social Security number and your latest purchase at the drugstore, your information has probably been scooped up into a database with the records of millions of other people who hate technology, too. Connections are a fundamental condition of being human--from our neural and immune systems to families and friendships. Many of these networks thrive, in large part, because of the Internet. Digital technology creates new pathways to link like-minded people once separated by geography, economic status, ethnicity, religion or race.Social networks can help incredible scaleup of communities.
The 28 essays published as part of the Forbes Anniversary Edition may help you see networks you hadn't thought about before or make connections you never thought possible. Music, MySpace, massive multiplayer role-playing games-they are all connected here . Must read

Labels: Emerging Technologies, Emerging Trends, Global Networks, Social Networks

From Vertical Integration To A Globally Distributed Process Network

I wrote a note for the Deep End column @ Sandhill.com on the emerging shifts in global talent distribution and orchestration. I submit that in the flat world, due to the ever changing dynamics of the business world, emerging countries are beginning to be recognized as primary centers for carrying out research and related activities. While views like cost of labor and research aimed at tapping the bottom of the pyramid appeals as the plausible reasons for such investment, in reality, labor costs, the quality of local infrastructure, favorable tax regimes and government incentives all play a role, but skills are the biggest magnet for R&D investment. The labor and cost arbitrage wave is slowly morphing into a talent arbitrage force. The “Well-Designed Global R&D Network” begins to deliver goods when organizations configure their innovation networks for cost and manage them for value. The world is beginning to see a shift from a Vertically Integrated Model to a Globally Distributed Process Network.

Wide spectrum and massive scale are key things for a service oriented business with wide reach and supporting multiple verticals. The reality is that global networks may make these happen faster, better and cheaper. Starting from the fundamentals, it can be seen that a truly lean global innovation network that operates with optimal efficiency across borders and cultures in a seamless way , in real life is an uncommon thing but where one exists, it can be seen as quite beautiful. Setting up these is not rocket science. At its core, it is easy. Most companies have the core factors that can be leveraged already in place Viz : cost-effective node location, well-designed product development platforms, an innovation-friendly global culture, and a well-aligned set of incentives & the urge and passion to make this succeed through best-in-class leadership etc - These are all available to leading companies. In reality, it may be termed an innovation by itself, if companies could pull up such a well running global network – given the challenges, commitment and energy needed to make this happen. We are also beginning to see that across industries and regions, there is a subtle but a potentially massive shift is happening: Leading edge forward looking firms are slowly moving away from pursuing vertically integrated innovation approaches and are moving towards setting up what looks like a globally distributed innovation networks. Such networks are characterized as global partner ecosystems that in alignment with the core business entity engage in activities such as co-developing and co-marketing new products, services, and enable opening up new business models. Needless to say such radical changes executed will bring in significant benefits. Read the full note here.

Francisco D’Souza,the new CEO of Cognizant argues in the op-ed of the same edition that in the future, DNA will increasingly be de-linked from geography and suggests that by extension the future of services is global. In fact, the globalization of services delivery will form the basis for competitive advantage in most industries – and software is no exception. He opines that software vendors that understand the globalization of services and internalize the new set of best practices associated with it will be best positioned for leadership in the coming decades. His recommendation : Services firms must start thinking in terms of “fine slices” and see what makes most sense talent-wise, and then orchestrate it in a way that is seamless and makes sense for its clients. An excellent article - highly recommended for reading and adoption of the ideas stated therein.

Clearly interesting times ahead and the global talent arbitrage and the emergent opportunities would transform the nature of services business in many profound ways and service organizations need to sieze such opportunities to gain and maintain enduring competitive advantage..

Labels: Future Of Services, Global Networks, Innovation, Vertical Integration