Ivey Business Journal: Why do you think Managing Across Borders has been so successful?
Christopher Bartlett: Part of the reason the book was successful was purely an accident of timing. It did come at a time when companies were in the thrust of globalization (First ed., 1989). Not only were companies expanding overseas from the United States, for example, but they were feeling the onslaught, particularly of competition from the Japanese as they globalized. Some companies were seeing it as a strategy for themselves while others were being defensive about it. There was no question that the world was being pretty radically changed during the 1980s. By the time this book came out in the late 1980s the timing was right for it — how do we defend, and more importantly, how do we manage this thrust. Companies had been expanding internationally for a long time, there’s a long history of it. In fact, the book tracks some of that, and tracks how the Europeans had expanded into their former empires and the way in which they’ve internationalized. Certainly with the Americans, there’s a post-war boom of using their great advantage in marketing and technological expertise as a way to expand and essentially create incremental additional markets to supplement their terrific domestic market. What was happening as we got into the 1980s, and particularly the late 1980s, was that those earlier strategies were running out of steam. So there was a great thirst to understand just what we meant by “globalization.” It had become a bit of a bumper-sticker word. Different people tried to explain it. It was something that people weren’t very clear about, they didn’t have a good handle on what globalization meant. One of the things the book did was to try and capture the different models by which companies were internationalizing, taking their expansion abroad. It did so by tracing history and saying where you are really relies a great deal on where you began. We distinguished between four different models of strategies. We distinguished a multinational strategy from an international strategy from a global strategy from a transnational strategy. I think that definitional differentiation was very helpful to people as they tried to figure out globalization — those things had been mixed together. That’s one piece.
The second most important difference about this book, and the reason it’s been enduring, is that it went a step further and said lots of companies have figured out what they wanted to do. Essentially, companies understood the strategic challenge, and where they were getting tripped up was on the question of how they should organize and manage to implement this. It wasn’t necessarily about defining your strategic intent. It was really about defining your organizational capability to deliver this. The book framed both the strategic and the organizational, and I think that’s another reason it’s endured. You can’t expand globally without understanding both the strategic imperative but also the organizational capability to implement that.
You’re currently completing the sixth edition of Transnational Management: Text, Cases and readings in Cross Border Management. That’s also been very enduring.
That’s the textbook that grew out of Managing Across Borders and it came out of my work experience. I started off working for Alcoa, in Australia, in sales and marketing, and eventually became a product manager. Then, after getting my MBA, I worked with McKinsey, with a number of multinationals on their strategies. Then I became a country subsidiary manager for Baxter Laboratories, the hospital supply health-care company, and ran their French subsidiary. So I’d lived in this, and really saw the need for this kind of understanding, where an academic study could contribute. The philosophy I had through 30 years in academia was that we have to be able to speak to managers, but it had to be relevant. We had to be able to be academically rigorous but managerially relevant.
The second thing was that our role as teachers was to create material that could come into the classroom, that could educate and bring to life these concepts and theories for the next generation of management. There were several cycles of research that I went through, Managing Across Borders was one. The output was certainly academic papers that went to develop the theory and concepts, but also practical articles that were addressed to the managerial audience through Harvard Business Review or California Management Review, and also course materials, particularly case studies that allowed us to capture the richness and bring it into the classroom.
On this third leg of that stool was a book of text cases and readings called Transnational Management. Sumantra Ghoshal, my co-author on the book and I began that soon after Managing Across Borders was published. When he passed away (2004), I invited Paul Beamish (Professor, Ivey) to join me as co-author.
What is unique about the book?
The text derives from two sources. One is the material that framed a course called Management of International Business that I taught at the Harvard Business School. The conceptual supercharger was the concepts that were developed out of Managing Across Borders. The framework of the book is built around this in-depth research of companies, the strategy and organization and management of these companies. It’s not an armchair book or random walk down Wall Street; not compartmentalized, as many of these books are, by marketing or manufacturing. It’s an integrated book that looks at strategy, organization and management from a general manager’s perspective. That’s one unique aspect of it. It takes the manager’s point of view rather than a functional point of view. Most of those books will break down into functions, so you’ll do International Marketing, International Production, International Accounting. They’ll take you down a road that says what’s different about manufacturing abroad, what’s different about marketing in different countries. It’s a very compartmentalized, not very well integrated, view. As a manager, what you’ve got to do is face the world in its integrated wholeness, and understand strategically and organizationally what the challenges are. That’s what this book tries to do.
What would you update in Managing Across Borders?
The world keeps changing, no question. The framework doesn’t rely on context-specific attributes. The framework has held up quite well — in fact, it was predicted. It was saying that the world is moving towards a model that we described as transnational, that no longer could you compete on the basis of a single dominant source of competitive advantage as the Japanese companies had, really by being low-cost globally, or the Europeans had by being very responsive to market differences, or the Americans had by transferring and adapting their technology around the world. Those single-shot games got blown away. What we were saying is that a transnational organizational model is emerging, and you could see the beginnings of it back then, where you had to be globally efficient and nationally responsive and able to develop and diffuse innovation worldwide. Essentially you had to match the Japanese, European and American models cumulatively. That required an organizational capability that we described as a transnational. The good news is that that has continued to evolve.
The reason the book still sells is because the model turned out to be fairly predictive. But obviously the world’s changed, and you see huge shifts, for example, in technology. You just have to look at the Internet and its impact. The infrastructure required is quite different. The diffusion of knowledge has got a supercharger behind it. The context of these things has changed significantly, but the central message hasn’t. Paul Beamish and I have got a very strong commitment to field-based research, and we both believe that you’ve got to get out there and talk to companies and managers to understand how the world is really changing. That’s how Managing Across Borders got written. It was based not on us sitting in a library somewhere reading magazines or accounts or spinning tapes of data, but getting out and wading into the reality of the world and bringing back a sense of the rich understandings of the field. We continue to do that, so a large part of the Transnational Management text is a constant updating of the application of the ideas in the cases. The reason there are six editions of Transnational Management is that the application of the ideas keeps changing. At every edition we replace half of the course materials inside it, but the concepts and ideas remain fairly constant. We update the chapters, but they basically stay quite constant throughout this, and so far have held up.
Managing globally is very complex today. What are some qualities a global manager must have to be effective?
It’s particularly important for an American audience. The one thing I think a lot of American managers have lacked as they’ve managed global operations is a lack of sensitivity and appreciation of cultural and societal differences around the world. That’s changing, but historically there has been a bit of an arrogance. The assumption is that we’re the world’s largest, richest, most technologically developed market; so there’s a lack of sensitivity and appreciation that there’s lots to learn in other markets. The reason why I say that’s probably the most centrally important attribute of an effective transnational manager…as companies go abroad today, it’s not just about accessing incremental markets, which still dominates the thinking of a lot of companies, particularly U.S.-based companies, but generally companies around the world. They’re looking to expand their market access. That’s important, but it’s not the strategic imperative for going overseas.
The strategic imperative is that the scarce resource today is information, knowledge, expertise. As we move into an information-based, knowledge-intensive, service-driven economy, the scarce resource for most companies is ideas and knowledge that can drive innovation. The assumption that all the smartest people in the world happen to live within a 50-mile radius of your corporate headquarters is arrogant. It may be that the most capable technology experts in your particular field may have been trained at Oxford University or may live in Mumbai. Maybe the most capable marketing person grows up in a less-developed country like Australia. People have to look at their worldwide operations and firstly say where is the talent, where’s the skill; secondly, they have to see where the great ideas and initiatives are, because sometimes those experiments need to be structured to happen in different parts of the world. Let me give you an example. Procter & Gamble, for decades, right up until the 1990s…its R&D was very much driven out of Cincinnati. During the 90s and into this decade it started seeing that there was a huge opportunity to innovate if it tapped into the ideas and expertise of its operations overseas, and not just drive products from their centre and adapt them, but really look for innovations that could occur around the world. A large number of the innovations that drive through the company now have been created in laboratories in Japan or Europe or elsewhere, innovations that they capture and leverage around the world. Managers have got to have that ability to see and recognize and acknowledge that the world is a source of that innovation and expertise, that the next CEO may be someone who was born in Italy or Japan.
Starting salaries withstanding, how does a company keep employees engaged and motivated these days?
It is interesting that you said let’s not talk about the starting salary. The assumption in a lot of companies is that retention is driven by financial reward, “So as long as we’re paying them enough they’ll stay engaged.” You see it mostly on Wall Street, where there are bids for talent. Once you get a star trader at Merrill Lynch, Morgan Stanley will want to bid them away and bring with them their golden rolodex and knowledge of the automobile industry or whatever. They’ll say, “You’re only getting $1.5 million at Merrill, come here and we’ll offer you $2 million.” As soon as that happens, what you’ve established is the fact that this person moves to the highest bidder. If you live by the market you’ll die by the market. The next person to offer them $2.5 million, they’ll move on.
There’s a lot of research that says that people are motivated and retained by three critical things. The first and most important is their personal development. The second is social connectiveness. In other words, they really like the people they work with; a great team they’re with; their boss nurtures and supports them and gives them feedback. Third is that they’re recognized, and part of compensation is recognition and reward. But it’s those first two that are critical. If I were giving advice to a company, I’d be promising young people — and delivering on the promise — “Here’s the way we’re going to keep you stretched and engaged, so that by the time you leave here, if you choose to in ten years, you’re going to be an incredibly capable individual. In fact, we hope that after those ten years you’re going to be so engaged in this place that you’re not going to want to leave, as long as we keep providing you with the experiences and challenges and stretch, along with the support that allows you to do that.” A lot of companies are managed as if their financial capital is their scarce resource, and it’s not. The world, despite the economic downturn we’ve just been through, is awash with financial capital. Most companies have more financial capital than they have great ideas to invest in. The scarce resource is intellectual capital. It’s why companies have to buy other companies to get growth. What I think the smaller organizations are learning is how to provide the development, coaching, mentoring and support that allows people to grow and develop to be the best they can be.
The second is the social connectiveness, creating an environment in which people work with other smart people, and that you move out or move aside those who are corrosive to the social environment, who are non-performers; that there’s an active management of your human resource so it creates this productive environment. Those are the sorts of things I’d advise a company to do if you want to attract and motivate and retain the best.
A lot of professors today don’t want to write cases — is that a good thing?
I think it’s a tragedy. Let’s categorize. There are those faculty who believe that people are best educated through lecture, and they come in and dust off their lecture notes and present these are the six most important principles or whatever. Lectures work very well for hard knowledge, for things like economic equations. But even things like accounting, which you would think would be mechanical…accounting isn’t just bookkeeping. Accounting is about understanding and interpreting and getting behind the numbers, and how you use the numbers to really understand the business. Management is all about complexity and diversity and dynamism. Those things can’t be captured in the six most important things to do when making a foreign direct investment. The world is much more complex than that. The philosophy of case teaching, discussion-based learning, is really that by gathering together a group of smart capable people; presenting them with the kinds of challenges that a manager would face once in a year or once in a lifetime; doing that on a regular basis, 2-3 times a day; and getting them to go through the process that managers do — gathering the data and analyzing it, from the analysis drawing conclusions, from the conclusions thinking through contingencies, thinking through action and implementation — and then going into a classroom and convincing others and listening and adapting your viewpoint and making decisions on what choices you’d make. All of those things are a microcosm. They’re replications of the management process. To do that over a couple of years is an incredibly powerful way to leverage the skill sets you’ll need in the management world. That doesn’t replace going out and actually having to practice, but it provides you with a heck of a great start and exposure, both in the content and the process. If you believe in that pedagogy and yet you’re not engaging in case writing, for a start you’re not engaged in the field, not getting out there and seeing what the reality of these things is — you’re living in a closeted world. You’re not contributing to the pool of materials that you’re using — are you just relying on others to do this? The more important thing is that you as a teacher need to be engaged in the field, and if you’re engaged, what do you do with that. You bring it back, and hopefully you capture it and present it to a classroom and engage them in the process of learning. I think it’s profoundly important. By some of the strange metrics that go on in academia, it has sometimes been underestimated and its importance has been downplayed. I think it’s vitally important that we keep it at the top of the radar screen for our next generation of faculty members.
From the perspective of students, has the value of case studies been affirmed?
I think it’s increased because the world is this complex. How do we expose you to the world? We can send you out and go work in assignments in different companies, but you’ll get narrow slices, and a lot of the day you’ll be doing routine mundane activities. Or we can bring you the world in packages, and we can accelerate and concentrate that experience. I think the world is not moving towards the listing of anything. There’s not the three most important things you need to do… it’s not the role of management. That can be then driven by a computer. Those decisions can be programmed into a computer. But anything managers deal with are going to deal with that complexity and diversity and dynamism that really are captured in a case discussion.
What are you up to these days?
It was four years ago that I became Emeritus. It was very clear to me that what I wanted to do was to make a transition in my life. These days, through your 60s and 70s, there are some very different things you can do. I saw this as a very exciting stage of my life in which I wanted to do some different things. Over the past four years I have gradually phased out my teaching. A year ago I said to Harvard that I wouldn’t teach anymore, I was teaching an executive program. I was on three corporate boards and I’ve gradually phased that out. I’ve stepped out of most of my consulting. What I’ve picked up in its place has been work in a lot of non-profit organizations where I’m very engaged. I work with Save the Children. I work on sustainability issues with a local group, Sustainable Woodstock (Vermont). In Australia I am on the board of the Indigenous Enterprise Partnerships. I’m working closely with a Buddhist monk in Cambodia who has got his monks and monastery behind a project called Life & Hope, which is bringing education and support to impoverished families in Cambodia. There’s a range of things that keep me busy, active, engaged and excited on a new learning curve. My wife tells me I failed retirement, just as busy as I ever was. This revision of the textbook keeps my finger involved, and I’ve still got a couple of CEOs that I have an ongoing relationship with, and we’ll meet and talk regularly on the phone. That’s becoming a much smaller part of my life.
Thank you very much for your time.