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Fourth Quarter 2001 / Issue 25 (originally published by Booz & Company)

Best Business Books: Global Management

The Cobra and the Treasure Chest: Four Perspectives on Globalism

As a small boy I remember being vastly impressed by a swashbuckling movie, The Thief of Baghdad. One scene has stayed with me for 60 years or so. There was a treasure chest full of gold coins and sparkling jewels, and curled around it was a giant cobra, moving to and fro in a mesmerizing and threatening sway. There are some similarities between that scene and our attitudes toward globalism — on the one hand, the lure of great wealth; on the other, the fear of a variety of menaces. This dichotomy is reflected in books on globalization: Some writers see just the gold and jewels, others see only the cobra, and a few deal with both the dazzle and the menace — and with the complexities of their interaction.

Mostly Snakes
In The Silent Takeover: Global Capitalism and the Death of Democracy (2001), Noreena Hertz notes that of the world’s 100 largest economies, 51 are now corporations, and only 49 are nation-states. She argues that, silently and stealthily, corporations are taking over world affairs. In her view, the riots in London, Melbourne, Seattle, and elsewhere are desperate attempts by scattered, often disparate, groups to draw our attention to this danger. We ignore them at our peril.

Hertz builds a compelling case that the cobras in globalization are real. And she displays considerable personal courage in exposing them, since her thesis is unlikely to delight the Judge Institute of Management Studies at Cambridge University, with which she is affiliated. Her passion makes her partisan, however, making the reader cautious to trust her judgment.

She writes that it is not simply the politicians who are powerless against world market trends. With wars now effectively banished to the fringes of affluent economic systems, nations rise and fall in world esteem not by carrying out successful military adventures, but by gaining market share and generating growth rates in excess of rival nations. This has reduced politicians to mere referees of the rules of global capitalism and cheerleaders for private enterprise’s initiatives.

Hertz’s strongest case is that there are real dangers in the corporation’s expanding global influence, but she is a polemicist at heart and tends to ignore the cases where corporations have been brought to task. Some of these events are quite significant. Monsanto’s development of genetically modified (GM) crops prompted protests in Europe that have virtually halted the company’s GM tests. Indeed, multinational corporations do not win all these conflicts, but Hertz does not adequately explain why. Although she does not allege a worldwide corporate conspiracy, one is left with the impression of a concerted push by “bad people,” and she is very much on the side of demonstrators, with whom she has mingled and whom she defends on television.

She is also a trifle weak on remedies, on how to challenge and control the corporations. She recommends that the Internet be used to organize critics and boycott the products of those who misbehave. Wal-Mart and Nike have both been gored in this way by the “electronic herd.” She has some faith in ethical investing, but the idea that markets might organize to reward corporations who train employees, promote women, sustain stakeholders, employ minorities, diversify out of tobacco, etc., seems to have passed her by. Yet corporations might be motivated to do much of social and environmental value if they were rewarded in the marketplace for doing so and received credit ratings for their social performance. The problem is, the author is too indignant to contemplate making peace with her corporate enemies.

All Treasure
The Long Boom: A Vision for the Coming Age of Prosperity (1999) is the well-known thesis of Peter Schwartz, founder of the Global Business Network and pioneer of the scenario method of planning. Here he is helped by Peter Leyden, former managing editor of Wired, and Joel Hyatt, of the California Public Utilities Commission.

In his youth, Schwartz was a student radical. His enthusiasm and idealism have metamorphosed into advocating certain key technologies and arguing the following: a) these technologies are responsible for the present and future success of the Long Boom, which we have been enjoying (and which is now a trifle shaky); and b) these key technologies can serve society well only if we apply them with the appropriate values. Together, it is argued, emerging technologies have the power to create global prosperity, save the environment, emancipate women, eradicate want. Even if we do not share the authors’ upbeat assessments, the fine details of their argument are full of gems and gold pieces. Only the cobra is missing.

The authors are inevitably most bullish about the Internet, which they call “The Great Enabler.” When PCs were joined together in a World Wide Web, a “new paradigm,” long emergent, took its most influential form. Schwartz has been an advocate of new paradigms since his early work at SRI International in the late 1970s. Indeed, scenario planning, with its coherent visions of alternative futures in place of the traditional forecast and attempts by corporations to predict and control specific outcomes, is one of the manifestations of the new paradigm.

The Internet is only one form of “benign technology” in which the authors have faith and which they see as leading to a positive aspect of globalization. They predict the fuel cell will, in less than a decade, halve automobile emissions and soon thereafter eliminate them altogether, when the hydrogen-gasoline fusion system gives way to the hydrogen cell. Automobiles will be much lighter and less noisy. Economics will shift to local manufacture in far smaller runs, and customized brands will proliferate.

The fuel cell, already in research laboratories in a dozen advanced economies, is not the only eco-friendly technology the authors acclaim. They have high hopes for nanotechnology. Its tiny engines promise an eco-friendly form of biological wealth and life creation. They have attracted the attention of the Japanese, whose love of miniaturization has deep roots. Indeed, one of the pleasures of this book is its readiness to utilize cultural diversity in a global system. In the authors’ vision, every country specializes in what it loves and makes it available to the world. Such technologies swim in a new ideological infrastructure suspended between left and right wings of the political spectrum and transcend both, through a kind of “ethic of originality” that stems from a common quest for a richer and more diverse globe.

If all this seems too utopian, too like the Age of Aquarius on which several Global Business Network members were weaned, some skepticism is in order. The authors do not consider the spread of lethal technologies or of technologies with predatory values attached to them, although the United States government sponsors these selectively.

The problem with their thesis is that it strengthens the notion that technology will somehow save us from earlier mistakes, from those technologies that spurred global warming and unsustainable economic development and condemned sizable sectors of our global citizenry to employment at very low wages. Nevertheless, very few books tackle the interdependence of values and technology as well as this one, even if values are too often regarded as dependent variables or “enablers” of high tech.

Economics 101
Economics fundamentally concerns choice and how people make decisions, so it’s not surprising that it should serve as a framework for balancing the promises and perils of globalism. A Future Perfect: The Challenge and Hidden Promise of Globalization (2000) is an engaging book by two journalists for The Economist, John Micklethwait and Adrian Wooldridge, and it is a primer on neoclassical economics as the only discipline of genuinely global application.

This perspective is close to being the “official future,” expected to happen based on conventional economic wisdom, and it is generally dismissive of danger and compassion. When any issue clashes with economic orthodoxy, Micklethwait and Wooldridge brush it deftly aside. For example, on the subject of child labor, they stigmatize all attempts at “fair trade” as protectionist. What those who object to six-year-olds working in Pakistan’s sweatshops “really” want is to protect American textile industries, they argue. Interestingly, they approve of protesting these practices if the protest takes economic forms — labeling textiles as free of child labor, for example. Where they found the moral radar to examine the child-labor critics’ “real” motives they do not say.

I regard child labor as both morally abhorrent and stupid, saddling nations with unschooled adults for the rest of their natural lives. An economy like Singapore’s, which has risen from a gross domestic product per person of $450 in 1967 to $28,000 today, has educated every citizen to the hilt and punished companies paying low wages to its citizens with an education tax. We do not hear of these kinds of regional adaptations.

The authors’ reluctance to let go of their purely economic perspective and even consider what the information revolution might be doing to economic “science” limits the book’s value. Not surprisingly, they criticize Schwartz’s new paradigm and anyone who suggests that 19th-century economic metaphors of great machines might need revision.

This book is at its best in exploding myths. These include “size trumps all.” The authors relate cases of smaller players running rings around lumbering giants. McDonald’s is often thought of as an example of the universal product; in fact, the company has survived via its international division and its infinite variations across the globe. Another myth is that globalization is a zero-sum game. The authors argue convincingly that additional value is created, even if some players lose.

The Precarious Balance
One of the best books discussed here is The Lexus and the Olive Tree: Understanding Globalization (1999). Author Thomas L. Friedman has two Pulitzer Prizes and one National Book Award and has worked for many years for the New York Times. Most noticeable about his writing is his wonderful way with metaphors, of which the Lexus and the Olive Tree are but two, powerfully contrasted.

Although metaphors are generally regarded as forms of literary license and style — more common, perhaps, in journalism than in academia — Friedman uses them brilliantly to capture the major tensions between global forces. The resulting work, in contrast to the one-sided views of Hertz, is balanced and well reasoned, which is of real value to puzzled executives.

Friedman dates the globalization phenomenon from the fall of the Berlin Wall in 1989, which ended so dramatically the principle of division that had ruled the world since 1945, when the Iron Curtain descended. If the metaphor for the Cold War period was “the Wall,” the metaphor for globalization is “the Web.” “Your threats and opportunities increasingly derive from whom you are connected to,” Friedman writes. Hence the overnight failure of 56 of Thailand’s 58 investment houses, all doomed by the falling baht and the withdrawal of American funds. “Globalism is the triumph of free-market capitalism. The technologies driving globalism are computerization, miniaturization, digitization, satellite communications, fiber optics and the Internet, which reinforce its defining perspective of integration,” argues the author.

Friedman uses opposing metaphors to create a powerful play of ideas. Whereas the defining measurement of the Cold War was “weight” (e.g., the throw weight of missiles), the defining measurement of globalism is “speed.” The defining question used to be, Whose side are you on? Now it is, Who are you connected to? There are similar shifts between “Big Missile” and “Fast Modem,” “The Treaty” and “The Deal,” “Taming Capitalism” and “Unleashing” it.

Friedman does not just use metaphors, but also recounts many stories. Stories tell of a clash, conflict, or contradiction that reaches a crisis point and is then resolved. The structure is of two opposites and their struggle to reconcile. Which brings us to the central metaphor and plot line of this book.

The Lexus stands for speed, modernization, movement, luxury, and globalization. The Olive Tree “stands for everything that roots us, anchors us, identifies us, and locates us in this world — whether it be belonging to a family, a community, a tribe, a nation, a religion, or, most of all, a place called home.” Friedman sees the world, the nation, the town, and even the person as divided between building the Lexus and disputing who owns the Olive Tree. If the Lexus is driven too heedlessly, the Olive Tree will block its path. Those who download for a living will find themselves confronted by those who upload.

It is the virtue of this book that it clearly dramatizes through stories that neither the Lexus nor the Olive Tree wins an outright victory; rather, both reach intricate and creative accommodations. For example, the Kayapo Indian village in the Amazon rain forest, which has for years been trying to resist the encroachment of modernization, has found a common cause with the environmental group Conservation International, whose biological research station is dedicated to the biodiversity of this unspoiled region.

Sometimes the Lexus acts as a moderating force on the violent nationalism of the Olive Tree. Friedman was in India at the time the BJP nationalist party took power and began testing nuclear weapons. Almost unnoticed, two officials from Moody’s slipped into town and lowered India’s government securities to “speculative grade.” The BJP promptly switched its priorities to the economy.

On other occasions, the Lexus can actively assist the Olive Tree. On Gulf Air planes, an onboard compass indicates the position of Mecca so that five-times-a-day Muslim worshipers know in which direction to kneel. On other occasions, the Olive Tree disables the Lexus. The author left his briefcase on a sidewalk in Israel for a couple of minutes and got it back from the police later with a bullet hole through its center — the standard treatment for all suspect packages.

Of course, so-called free markets have their rules. Friedman calls this “the Golden Straitjacket,” a one-size-fits-all requirement that squeezes and pinches some, but accelerates growth while shrinking politics and diminishing left–right polarities. The author ends up as a traditional liberal type. He wants to unleash the creative chaos of capitalism on a global scale, but create a safety net to catch those mangled by the Lexus careening through the Olive Tree grove.

The Trade Gap
What none of our books addresses is that not one single affluent economy has reached the top by way of free trade. Obviously, once you are at the apex of economic power you want all markets open to you, but neither the U.S. nor Britain, Japan, Korea, or Singapore “made it” in the manner idealized. Britain invented mercantilism and crown colonies and sold its merchandise to captive markets in its empire. The United States used the Monroe Doctrine to keep European trade away from its shores while it built up domestic industries. Thus, the highway to successful globalization is not clearly defined: “We build the road as we travel,” as Spanish poet Antonio Machado put it.

There may well be a treasure chest at the end of our journey toward a globalized economy, but this pathway has not been trodden before, and no doubt we will encounter many snakes along the way.

Charles Hampden-Turner, [email protected]
Charles Hampden-Turner is one of the business world’s most prominent thinkers on cultural diversity and is a partner, with Fons Trompenaars, of the corporate consulting firm Trompenaars Hampden-Turner. Their two most recent books, Building Cross-Cultural Competence: How to Create Wealth from Conflicting Values (Yale University Press, 2000) and 21 Leaders for the 21st Century: How Innovative Leaders Manage in the Digital Age (McGraw-Hill, 2001), attempt to unravel globalization issues.




Best Business Books: Global Management