Technically, globalisation has been around for more than 500 years. Practically, it has been around for most executives and managers for less than 20 years. Global business is complex enough that it requires a long career runway to build up adequate speed but most leaders are given global responsibilities with inadequate preparation. Below, J. Stewart Black and Allen J Morrison explain how their research found that there are four key capabilities that are required for global leaders to be successful in an ever globalising business world: Inquisitiveness, Perspective, Savvy, and Character.
Globalisation is hardly a new phenomenon (one could argue that it began in 1522 when Magellan’s surviving crew returned to Spain after circumnavigating the globe), but it wasn’t a daily concern for most executives until 10 to 20 years ago, when its pervasiveness exploded. Our research highlights the causes for the rise in globalisation and what it means for effective leadership.
Though goods have moved around the world for centuries, their movement as measured by exports increased significantly as a percentage of world GDP from 9.6 percent to 16.2 percent between 1960 to 1974, as reductions in tariffs and improvements in technologies such as containerisation gained traction. It continued to rise reaching 49.4 percent in 2013.1 Despite this, for most business leaders focused on exports, 2013 wasn’t much different than 1913 in terms of their global orientation because they were simply taking goods they made at home, the way they made and managed them at home, and sending them abroad for sale. However, when they had to invest in plants, offices, warehouses, etc., in foreign countries and directly manage foreign employees in order to penetrate even deeper into foreign markets than exports could achieve, life changed. This more profound increase in globalisation is reflected in the change in Foreign Direct Investment (FDI) as a percentage of world GDP. Unlike exports which saw an important rise beginning in about 1974, FDI as a percentage of world GDP only took off in the late 1990s when over the next 15 years it tripled to nearly 36 percent of global GDP.2 (see Exhibit 1).