There was a way of developing a business: A company captured its local market first and then went abroad. Indeed, we are excluding Trading Companies such as the East India Company, which was set up as an overseas trade monopoly, and restricting ourselves here to more everyday sort of business. While not comparable to the spectacular rise and ignominious fall of the East India Company, many other businesses trading globally were spectacularly successful. The pinnacle of the 20th Century corporation was the Multinational Corporation, which attained unparallelled power, prestige and profits.
But in the Twenty-first century, even this shining example of business success is considered dated. 'Global' took place of 'multinational'. The usual model of building advantages in the home market before venturing abroad fell out of favour and we had born-global start-ups instead. And, a decade into the new millennium, this idea has spread from the domains of purel on line services - such as-Google or Facebook - to everywhere, from Finance to Education, to Dating and Taxi-Hiring. The underlying idea is nations do not exist, regulations are a necessary bureaucratic evil living on borrowed time and there is a thing such as 'global consumer'.
My contention is that this view - withering of national boundaries in business - is not empirically sustainable. Even if one looks at Google, a very global service, one would see the Indians, the Chinese, the Brits and the Americans, all in their splendidly specific preference of searches, but no 'global consumer'. However, we look to create boundariless global flow of capital, and see the illusions of destiny in the formless model of Bitcoin, even Finance and money remained resolutely national. The architecture of Trust remains closely wedded to the tangible and known, education remains culturally driven and defined, work and labour markets vary along the national lines and most of the people, Middle classes more than others, remain staunchly loyal to their national and ethnic roots. Just as a French Royalist once said, that he saw the French, the Italian, the Spanish and even the Persian, but 'no Man', the global market for middle class exists only in the dreams of rootless world of colour-free money.
Pankaj Ghemawat of IESE calls the flat-world illusion many of the Start-ups engage into a 'globalization apocalypse', an ideological position with little semblance of reality, and yet, this is how businesses are thought of today. Everyone, even the multinationals of the previous era, would call themselves 'global', claiming an erasure of national identities just when, as the Daily News will tell us, nationally assertive politics is taking over the world. Worse still are those start-ups, which want to be 'global' in the first place so that they pay no taxes, aim at breaking regulatory structures, which are democratically agreed rules in most countries. They are always disrupting and transforming, with little accountability to anyone except their shareholders, and are blissfully oblivious of the complexities of the cultures and markets, wishing them away as mere inconveniences.
Most of those businesses fail. They may look for reasons elsewhere, but such naiveté is usually the main reason. They insufficiently assess the 'distance' between markets, and have no idea of what Mr Ghemawat would call the CAGE framework (Cultural, Administrative, Geographical and Economic Distance) that should define their choice of and approach to a market. They fill the Board with very similar backgrounds and ideas, and seek to create an open world with a very closed mind. For them, a different culture than their own is merely the lack of enlightenment, and the Indian and the Chinese can only exist until the 'global consumer' in them wakes up. Their investors, often sharing this world view, see the whole world as a spreadsheet, where the profits may magically appear following ratios and multiples, rather than any understanding of preferences or idiosyncrasies.
This apparent self-inflicted mindlessness arise, I shall claim, from two sources.
First, there is a common bias in favour of expertise over local knowledge, which is seen as a subordinate thing. The cultures of companies and its languages promote expert decision making in companies. To be considered an expert, one needs to speak a certain language, usually in meaningless jargon and replete with numbers, and have to do a lot of spreadsheets. On the other hand, the talk of nuances, rather than generalised models, are seen as, variably, pedantic, academic or sentimental. This divide also emphasise Theory over Practise, big ideas over practical details, birds-eye views over hands-on action. This causes disasters: My favourite example is the kind David Halberstam talked about in his 'The Best and The Brightest', the chronicle of Vietnam era decision making. But companies big and small suffer from this blindness on a day to day basis, and it is often fatal when companies venture out of their home market (which has the least CAGE distance) without having a solid operating base.
Second, it is the culture of money, and particularly, of the post-Gold Exchange Standard of money creation. Money possibly had no colours ever, but in the WTO age, it has become simpler to move capital between markets and the politics have been subservient to global money. It is an illusion to think peoples' lives and preferences would be just as amenable to diktats of money as the pliant politicians in different countries are (even that is changing with the over-reach of global capital), but that is indeed the culture privately funded start-ups inherit very quickly. This is paradoxical, as most VCs would invest only in local business and back entrepreneurs who are culturally familiar, and yet they believe that the business can impact people thousands of miles away without any real engagement, commitment or understanding.
My job, the way I see it, is to make sense of the 'global' phenomenon, working at the fault lines and trying to build strategies with a commitment to the practical, rather than just spreadsheet models. It has been a hard job: Often my pleadings for greater local knowledge were taken for a lack of expertise of more esoteric sort, like writing Excel formula. My deeper commitment to understanding markets have boxed me as a 'country expert', giving me lesser leverage on decision making. My orientation to build deep and long-lasting relationships classified me as 'soft', supposedly unfit for the unemotional world of business decision making. Over the last several months, I intentionally grounded myself to think through these issues - indeed reflect where I would have gone wrong - but came up with the understanding as I stated above: There is something fundamentally wrong about the ideas and rhetoric of the global. As I seek to re-engage in the global markets, I am trying to reinvent my work (some part of it is speaking in acronyms, such as the CAGE) and re-advertise my Excel skills (after endless Excel work during my time at NIIT, I got somewhat tired of it). But I hope to bring some sense into the conversation about the 'Global' even when I am playing the game as it is usually played.
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