IMD International

What do you know about The Globalization Capability Gap?

Margaret Cording, Regional Director of IMD SE Asia and Oceania speaks at Securities Commission event in Kuala Lumpur

Go global. That’s something that many corporations aspire to do. But for something so commonly strived after, why do so few companies actually make it? Hence, the birth of a study on The Globalization Capability Gap from IMD Professor Margaret Cording.

At a recent joint event in Kuala Lumpur with the Securities Commission, around 100 IMD alumni and other well informed individuals hungry for more insights, came together to hear analysis from Professor Cording on the subject. The globalization study asked 24 questions to 360 companies. Results of the study indicated clearly that the aspirations of all of the companies outweighed their readiness. While senior executives and their boards spend precious time developing and agreeing on strategies, very few companies successfully follow through with an effective execution. Thus lays the gap between the aspirations and readiness of a company to be truly global.

For the study, the capabilities of companies were broken up into four clusters, including Learning and Agility, Leadership and Governance, Business Capabilities and Organization and Executional Alignment. Of these companies showed to perform the best in Learning and Agility and struggled the most in Organization and Executional Alignment.

Although the theme of Professor Cording’s presentation focused more on the Asian market, every region in the world suffers from the capability gap. The study compared the gap between varying counties. Japan had the largest of gaps, which is not surprising as the country has been struggling with globalization since the 1970’s due to its culture. Companies in emerging Asian markets, on the other hand, have less experience in going global. While some might see this as a challenge, Professor Cording encouraged the audience to think about how this could be used as an opportunity.

The study also presented analysis across industries. Technology, media and telecommunication sectors tend to be more focused on globalization. Other industries, including financial institutions, tend to be less eager to get across borders. Could this be because of the many restrictions that exist according to the logistics of a particular industry?

But despite the industry, as simple as it sounds, many companies struggle to develop their global capability. The study found a consistent gap was between C-Suite individuals and executives who were actually active in the field. If you’re at the top, you tend to assess the problem less seriously than if you were out there fighting the day-to-day – a misalignment within many organizations. And this poses the question that, if companies can’t even get this right within the structure of the company, how are they going to get it right in a completely new country with a whole range of new challenges?

With so much uncertainty in the world, companies should pay greater attention to what they’re doing and especially how they’re doing it in execution. At the end of the day, the performance of a company is very much determined by its fundamental culture. And it is not about getting across borders that counts most; it is about getting there and ensuring that progress is infinite. The only way that this is possible is if the day-to-day within a company is seamless. Strategize your execution, globalize your company.

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