Global expansion is a core goal of many major corporations, but some are beginning to rewrite the multinational rules of the road. With 300 locations around the world, General Electric (GE) is one such pathfinder, recently rethinking which functions should be regionalized and which should remain local.
Global Operations Executive Leader, Oleg Bodiul, SF ’13 took on the vast transformation role as part of a GE leadership team tasked with creating a global shared-services organization that would centralize many of the company’s key functions, including accounting, finance, and commercial operations.
Among the top 100 firms in the world, GE is a digital-industrial player providing software-defined machines and solutions for markets ranging from aviation, power generation, and oil and gas to renewables, healthcare, and financial services. “Historically, functions like accounting and order management were performed in hundreds of locations around the globe. The objective was to centralize, where possible, into a few locations to leverage scale and deliver better outcomes for our customers, employees, and shareholders.”
Alexander Graham Bell would be astonished at the power of today’s smart phones. Yes, the app that makes it possible to find a Starbucks along an unfamiliar highway can feel like a miracle, but the true revolutionary power of the telephone is felt most in developing countries. In Kenya, for example, the mobile phone has, to some extent, stabilized the economy for many citizens and transformed quality of life.
Nearly all Kenyan households own at least one mobile phone—not state-of-the-art smart phones, but phones “smart” enough to accommodate at least one M-Pesa account. Available to any customer of Safaricom, Kenya’s mobile network leader, M-Pesa is a money transfer service that allows a daughter at one corner of the country to send money safely and securely to her mother in a village seven hours away. Previously, she would have entrusted an envelope of cash to a bus driver heading to her mother’s village (at considerable risk) or relied on a money transfer that took days—and a daunting amount of red tape—to process.
Of course, to withdraw funds through an M-Pesa account you must have access to an agent who can disperse the cash. Happily, in response to the popularity of M-Pesa, the network across Kenya has mushroomed to 150,000 agents. Working with Innovations for Poverty Action, Associate Professor of Applied Economics Tavneet Suri, a native Kenyan, and her colleague William Jack have been tracking incomes in regions where new agents have opened for business. They compared the financial health of those regions with that of regions where agents are not as accessible.
Local governments across Africa should make every effort to promote entrepreneurship, says Flavian Marwa, SF ’10, but they shouldn’t enter the risky business of picking and backing winners. Founder of Sebelda Global Development Advisors and a consultant for the World Bank Group’s Africa region, Marwa is responsible for developing sustainable models of technology-based startup incubators with a focus on Africa.
“When governments provide seed money,” he says, “new enterprises tend to rely on it rather than learn to compete in the real marketplace. They lose their incentive to make it work when they know they can get capital infusions from the government.” Marwa believes that governments can best promote a healthy enterprise culture by partnering with industry to create mentorship programs. “Governments need to facilitate connections between young entrepreneurs and seasoned business leaders who can help them anticipate and navigate thorny patches,” he says.
Marwa also stresses the importance of promoting a healthy lending climate. He notes that government investment is critical, but not straight-out subsidies. “It costs investors a relatively steep sum of money to write a loan, and that discourages them from making the small-scale loans that would be appropriate to help a startup.” He believes that governments can offset loan origination costs with incentive programs—and similarly provide economic perks in the form of tax breaks or subsidies to motivate established businesses to invest in new enterprises.
How does an isolated nation like New Zealand become a major player in the international marketplace? The short answer is that they know how to weave. Lynne Dovey, SF ’02, who has spent the last four decades working for the New Zealand government in a range of policy roles, notes that the nation’s remoteness has inspired Kiwi entrepreneurs to embrace new ideas from around the world through trade relationships, scientific collaborations, and commercial partnerships.
But the country has a prodigious store of indigenous wisdom, Dovey says, and that knowledge is a vital part of the mix. Dovey says that the New Zealand government promotes a culture of entrepreneurship that leverages proprietary knowledge in areas that have become the nation’s province like biosecurity, healthcare, earthquake science, and renewable energy. Into that approach it integrates a healthy dose of ancient, homegrown Māori wisdom, the body of knowledge first brought to New Zealand by the Polynesian ancestors of present-day Māori. Woven together, these components have made for a thriving enterprise climate.
“Work hard and keep your head down—that’s Chile’s unofficial motto,” says Rocio Fonseca, SF ’14, executive director of Start-Up Chile. “The goal of the average Chilean is to get a job working for a corporation.” Fonseca adds that small and medium-sized businesses in Chile are not innovation driven. “They tend to err on the side of playing it safe—and that complacency curbs growth and evolution. Chile is not an entrepreneurial culture.”
In 2010, the Chilean government launched the ambitious enterprise accelerator Start-Up Chile to help it turn that national attitude around. The program helps early-stage, high-potential entrepreneurs bootstrap their startups using Chile as a platform to go global. With an annual portfolio of 200-250 companies, Start-Up Chile has fast become the best business accelerator program in Latin America and is counted among the top five worldwide. It’s also the cornerstone of Chile’s national economic development strategy.
Start-Up Chile is actually a collection of three programs: a pre-acceleration program for early-stage enterprises, a seed program for startups with a functioning product and early validation, and a follow-on fund for top performing startups looking to scale up in Latin American and globally. With robust training programs, workshops, peer-to-peer mentoring, and a busy calendar of networking events, Fonseca fosters a fertile environment that connects Chilean innovators with early-stage, high potential entrepreneurs around the world.
You’re a founder of a new enterprise and one of your top priorities is social and environmental responsibility. Your management team, however, can’t think of anything but the balance sheet. By year’s end, your bottom line is healthy, but you don’t feel your new enterprise has contributed much to society.
It’s a common dilemma that comes down to a core disconnect that many founders don’t think to look for when pulling together their C-suites. But compatibility surrounding worldview, ethical issues, and dedication to social responsibility can be as important to the success of a business as professional qualifications.
Gustavo Mamão, SF ’11, founder of the Brazilian startup Flourish, which guides entrepreneurs in the creation of mission-driven organizations, has always focused on businesses that demonstrate how a company dedicated to a better world can also be profitable. But it’s an ethic, he says, that the whole management team must get behind. “The extent to which a business embraces sustainability and environmental goals is something that should be decided among founders and investors in the earliest days of the enterprise.”
What does advanced management theory have to do with social and economic justice? Everything, according to MIT Sloan Professor of Management Emeritus Robert B. McKersie. In his latest book, A Decisive Decade: An Insider’s View of the Chicago Civil Rights Movement During the 1960s, McKersie reveals how his convictions and his scholarship merged on the front lines of historic events in the civil rights movement—strategy sessions, marches, boycotts, and negotiations.
McKersie is best known for his pioneering work in industrial relations. His groundbreaking publications include A Behavioral Theory of Labor Negotiations (with coauthor Richard E. Walton) and The Transformation of American Industrial Relations, honored with the George R. Terry Award by the Academy of Management as the most outstanding contribution to the advancement of management knowledge in 1986. McKersie’s Strategic Negotiations: A Theory of Change in Labor-Management Relations (with Walton and Joel E. Cutcher-Gershenfeld) has been used effectively in the Northern Ireland peace process as well as in Israeli-Palestinian negotiations.
The African continent is, in many realms, an untapped frontier, and many global business analysts believe that one of those areas is entrepreneurship. “East Africa, in particular, is very green ground for basic entrepreneurship,” says Flavian Marwa, SF ’10. “Here, it’s more important to execute a simple idea well than to come up with an idea that no one has thought of. You don’t have to be a sophisticated technologist to take advantage of this environment.”
A consultant with the International Finance Corporation (IFC), an arm of the World Bank Group, Marwa uses his insights into the continent to advise the IFC on how African countries can implement policies that stimulate the creation and growth of small and medium enterprises (SMEs). “The idea is to bring in the private sector as much as possible. We know this approach leads to sustainable development. To be effective, however, policies to support SMEs also must address impediments in the value chain of targeted sectors.” Impediments like the skills gap, lack of mentorship, and information asymmetry.
Marwa says that leaders who are committed to a robust education system—from primary to secondary to university levels—will enable their citizens to develop a keen eye for opportunities and empower them with the skills to launch businesses. He notes that in Tanzania and other East African countries, the IFC is encouraging multinational companies to collaborate with universities to develop curricula that are relevant to what is actually happening in industry.
When it comes to approaching African leadership challenges, Yaya Moussa, SF ’10, believes the focus should be through a wide-angle lens. The leaders of individual African nations, he says, must think continent-wide and must collaborate with and leverage the strengths of neighbors.
A native of Cameroon now based in the U.S. after two decades in Europe, Moussa is CEO of Kontinent, an investment company that specializes in African extractive resources. His global resume has given him a multicultural perspective when it comes to finding solutions, and he brings that perspective to the problems of Africa.
“If African countries are to survive and compete in the global arena,” Moussa says, “their leaders must transcend narrow nationalism and think of the continent as a whole. Raising that awareness is of survival-level urgency. African countries need to collectively build a critical mass to have some weight on the global stage. A divided Africa is a weak Africa, an Africa with no future.”
Many of the crises facing countries across the continent, he notes, are first and foremost leadership crises—lack of vision, concerns about legitimacy, and misalignment of interests between leaders and their people. “Those deficiencies are only compounded by the sense of exclusion and by the enduring injustice felt by large chunks of the population—the root cause of political, social, and military unrest.”
Necessity has been the driver of invention in Africa perhaps more than any other region of the world. In most nations on the continent, notes Hal Gregersen, executive director of the MIT Leadership Center, everyday life requires innovative responses to a daunting string of challenges. “You have to be able to think on your feet and develop creative workarounds to get things done.”
Gregersen believes this demanding environment could prove ideal for producing the next generation of innovators. In Africa, he says, business leaders have few opportunities for complacency. “Leaders hoping to create new markets and develop business opportunities have to be open to surprises. They also must be able to take setbacks in stride. In temperament, nearly all successful innovators are very present in the world around them. Operating in a somewhat unstable environment commands your attention and delivers opportunities you might overlook if everything is running smoothly.”
Not that uncertainty and turmoil are ideal conditions for sustainable development. Gregersen acknowledges the profound constraints that exist on developing a generation of creative entrepreneurs in African countries. “One of the great tasks of present-day leaders,” says Gregersen, “is establishing trust-based environments for teaching and learning in communities across the continent.” Gregersen cites the transnational art education initiative Room 13 as one example of how this can be accomplished.