Research quoted in this week’s Economist claims that of CEOs of the 500 largest companies in Europe and the US, a majority in both regions had never worked overseas, throughout their careers. This is part of a wider article, which explored how this lack of foreign experience at the top of globalised organisations can lead to an underappreciation and under-use of the skills that employees develop in overseas placements.
However, there is another very clear implication of this research. While chief executives and other business leaders may spend a lot of time travelling between the various outposts of their organisations, there is a limit to the understanding of international markets that can be gained by short-term visits. When those markets make up a majority of an organisation, limited understanding can have a serious impact on performance.
Some businesses may strive to put together a model that is effective with minimal modifications across markets, but no company can discount the impact of the local business environment upon overall performance. To make the most of the local knowledge and ability that the company has, the leaders of the business must have a very precise understanding of performance at a local level.
That isn’t as easy as it might appear. Traditional management reporting structures and techniques are not ideally suited to a modern global business. Reports prepared by finance from global ERP data may not take account of non-financial, external or market data. Business intelligence applications geared towards ‘data discovery’ or ‘data exploration’ are often unfocussed, and do not offer insight into the drivers of key metrics in the business.
Companies, could, as the Economist article points out, do much more to manage talent with a view to building up experience of overseas operations. But talent management is not an especially rapid means of improving performance and, however much leaders develop understanding of international business units in general, they cannot hope to have extensive first-hand experience of each one.
To maintain international competitiveness amid geopolitical uncertainty and patchy global growth, business leaders need a clear perspective on many different aspects of the business. This calls for a radically different approach to business analysis and reporting – what works at a national level cannot simply be scaled up for an international business. Not only should the approach be focused on the key metrics associated with strategic goals, it must seamlessly integrate the metrics relevant at a global level, and those which measure the achievement of local objectives. In both the global context and the local, it must also have a reliable predictive capability that takes account of the complex interactions between different parts of the business, the competitive marketplace and the wider economy.
It isn’t always easy for an international business to achieve that but, with the right combination of technology and expertise, it is eminently attainable. Once in place, such an arrangement can afford business leaders the insight needed to drive efficient growth in a multinational organisation – whatever their actual experience of managing overseas.