Are You Giving Globalization the Right Amount of Attention?

Too little — or too much — attention from head office executives can cause problems in a company’s global operations.

HOW MUCH of their attention should a company’s executives give to its international operations? To study the question of executives’ global attention, we interviewed and surveyed senior executives in 135 multinational companies over a five-year period. While subsidiary managers can and often do pay much attention to international events, our research focused on the attention of head office managers — such as CEOs, COOs, senior vice presidents and general managers — who control the levers of global strategy. The companies we studied were all publicly listed, had extensive international operations and were all based in one of six countries that, collectively, account for approximately half of the world’s foreign direct investment expenditures: the United States, Canada, France, Germany, the United Kingdom and Japan.

At an aggregate level, global attention consists of the time and mental effort that a group of senior executives directs to a company’s international activities or its global environment. We measured executives’ global attention by looking at three areas:

1. executives’ efforts to scan the global environment for opportunities and threats;
2. the degree to which the executive group immersed themselves in global issues — as measured by communications with overseas managers, CEO travel and the extent to which senior management meetings were held in other countries;
3. the degree to which the company executives discussed major globalization issues together.

More details about this research can be found in an article we published with Julian Birkinshaw of London Business School in the Journal of International Business Studies, as well as in Cyril Bouquet’s book Building Global Mindsets.

RELATED RESEARCH

C. Bouquet, A. Morrison and J. Birkinshaw, “International Attention and Multinational Enterprise Performance,”Journal of International Business Studies 40, no. 1 (2009): 108-131.

C. Bouquet, Building Global Mindsets: An Attention-Based Perspective (New York: Palgrave Macmillan, 2005).

Through our research, it became clear that the management of executive attention can have a significant impact on the performance of global companies. However, relatively few companies seemed to optimize global attention. Most seemed to either spend too little or too muchtime and mental effort on global issues. And both too little and too much attention to global issues were correlated with lower company performance — a phenomenon we call the “Goldilocks problem.”

The Problem of Too Little Global Attention. Too little attention to foreign markets seems to result in missed opportunities for sales growth, operational inefficiencies and the risk of being blindsided by fast-moving foreign competitors. In companies with large international operations, senior executives who gave too little attention to global issues tended to follow one of two approaches. In the first instance, they forced head office solutions on overseas subsidiaries using a kind of “my way or the highway” mentality. In the second approach, they delegated primary strategic and operating decision-making authority to foreign subsidiary managers, employing a sort of “it’s not my job to worry about these things” mindset.

While both approaches may be efficient from a head office perspective, neither maximizes company performance. Both fail to tap the rich resources of the global company. Both also fail to achieve the learning and best-practice benefits that come through global knowledge-sharing and skill generation.

Too Much Global Attention. On the other hand, an excessive level of attention to opportunities and threats abroad seems to create even bigger problems. It leads senior executives to take their minds off potentially more critical issues at home or interferes with the smooth functioning of foreign operations that don’t need intense scrutiny from head office managers. A related problem we frequently witnessed was mental overload and exhaustion on the part of members of the top management team. Given the complexity of global markets, staying abreast of and interpreting world events is taxing.

Keys to Optimizing Attention

Given the uniqueness of each company’s history, organization and resources, there isn’t a particular global attention level that is advisable for all companies. So, what is optimal for your company? We discovered that three factors determine whether a company’s situation warrants more or less global attention.

1. How Overseas Subsidiaries Are Organized. In some of the companies we studied, international subsidiaries operated with relatively high levels of independence; in others, the activities of overseas subsidiaries were closely integrated through the efforts of strong head offices. The greater the independence of overseas subsidiaries, the higher the performance benefits that came through increasing the global attention of head office managers.

Relatively high levels of subsidiary independence encourage country managers to take actions that maximize their local effectiveness but are much more difficult to track and make sense of by executives at the head office. In such cases, the global attention of people at the top is crucial to identify the pockets of knowledge and expertise that can be shared worldwide. Conversely, when the company is already functioning as a fully integrated operation, high levels of global attention can easily interfere with the smooth functioning of the overall organization.

2. The Dynamism of the Industry. Dynamism refers to the rate of change in the industry. In our research we found that the greater the rate of industry change, the more performance “kick” companies get when their executives focus their attention globally. This is because the factors driving industry dynamism have a large global component that companies ignore at their peril.

3. The International Experience Levels of Executives. We found that the greater the international experience levels of managers, the greater the benefits that come from global attention. Managers with more international experience generally had greater ability not only to make sense of rather complex international stimuli but also to process them quickly and in ways that improved the quality of their decision making. Bottom line: If you want to get the most benefit from global attention, put people in place with lots of international experience.

How to Increase Global Attention Levels in Your Company

Executives are not powerless when it comes to influencing the amount of attention their subordinates place on global issues. What works best if executives want to increase the level of attention that their subordinates give to global issues? We found that three commonly used practices — having a highly global corporate strategy, giving people global job titles and responsibilities and having executives tell people to pay more attention to global issues — had only limited effectiveness. However, our research did identify three important practices that senior executives can influence.

Economic Incentives. We found a significant and positive relationship between the global attention of senior executives and the degree to which their compensation was linked to their company’s global performance. In other words, most companies could raise the global attention levels of their head office executives — if that’s desirable — by tying individual compensation to the company’s global performance.

Global Leadership Development Activities. Our research found that company-specific leadership development programs that focused on developing or strengthening global leadership competencies had a powerful impact on the overall global attention levels of participants. The influence of global leadership development programs was statistically significant and, interestingly, existed even for people who had never attended the program. Apparently, the fact that their company supported such a program provided legitimacy to the globalization topic and encouraged managers to pay more attention to global issues. Nevertheless, the greatest impact of global leadership programs was witnessed in the actual participants of past programs or in those who were enrolled to take part in programs in the future.

The Power of Symbols. One of the most powerful global attention tools we came across was symbolism. It is a subtle, indirect tool that produced surprisingly powerful results. In fact, of all the tools we examined, the effective use of symbols, from how the company rewards and celebrates people, to the specific look and feel of company logos and other visual images, had the most profound impact on global attention levels. Companies often use different types of symbolic tools to engage people’s attention in ways that allow them to more effectively embrace objectives critical to the organization. For example, in the 1990s, British Airways replaced the British flag on its jets with art or writings from around the world to encourage people — the public and employees — to think of BA as a global airline. While BA’s strategy of de-emphasizing its British heritage was short-lived, the company’s artwork was an effective attention-grabbing tool. Other companies are finding great success by using international themes in their office décor or incorporating an international theme into the corporate logo or presentation templates.

Visual images signal important issues to the brain through reminders and reinforcements. In a similar manner, the rules of career advancement in organizations can also reinforce the message that attention to specific strategic themes is a good thing. In organizations with high levels of global attention, we observed very clear signals that paying attention to global issues was career-enhancing over time. Deliberate and publicized promotions of staffers who got global attention right had a profound and lasting impact on the attention levels of others in the office. If you want people to pay attention to global issues, then the single most important thing you can do is to promote employees who have excelled on global projects or initiatives. Give them power and raise their profiles. And make sure everyone else knows why you are doing it.