International executive education

Global teams: the next generation

Research sheds light on keys to success

Global teams: the next generation

The electronic age has ushered in a new breed of animal: the globally distributed team (GDT). Thanks to advances in technology, managers in offices thousands of kilometers apart can convene at the click of a mouse in virtual meeting rooms.
Many companies, however, are not using the new technology to their best advantage, says Paddy Miller, who will lead an IESE international executive program with Harvard Business School on the topic in March. People tend to see the latest innovations as "add-ons" to existing technology, which can be an obstacle to success.


Change the way of thinking

"A lot of GDTs are at the embryonic stage, says Miller. We're at the starting point of their development and they're changing completely the way we think about organizations."
Miller cites several reasons for the trend toward GDTs. Organizations are downsizing and becoming flatter. As they do so, there is greater pressure to maximize efficiency. Consequently, companies are carving out new global structures which include teams of managers located at far-flung sites who must make decisions together.
He points to corporate giants Procter and Gamble and Shell as examples.
Shell recently closed head offices in London and Amsterdam to make way for networked smaller business units. "This will further the development of the new organizations that are closer to the customer, will better serve their needs and be more cost effec-tive", Shell said in a press release announcing the move.
"What you're seeing here is happening all over the world. Companies are breaking themselves down into business units and structuring themselves more organically", says Miller.


New task definitions

GDT's are posing immense challenges, however. One key problem is the disappearance of the traditional power structure. Since there is no physical contact, the group leader does not have the same type of control that he or she would have in a real meeting room. This can lead to a loss of focus among the group.
To counteract this effect, team members must be skilled in defining issues on an on-going basis, Miller said. "There must be a constant redefinition of tasks, roles, deadlines, etcetera, which you normally wouldn't do."
Also, "the technology can be seductive", he says. The focus can drift to become the means of communicating rather than the mission. He compares the situation with sitting down to create a presentation on a computer. You may have brilliant ideas, but if you're not at ease with the presentation software, your brainchild can take a back seat to the struggle to use the program. Ra-ther than a help, the technology has become a hindrance.
Companies must learn to integrate technology into their management strategy and practices much like previous generations did with the telephone. Break-throughs in computer, video and voice technology are providing unprecedented opportunities for multinational companies within the framework of a global strategy. However, the key is implementing the GDT skillfully and successfully.

Research sheds light on keys to success

In their quest for growth, family businesses face a host of challenges. These range from intensifying competition to diverging goals as the family grows larger.
How can FBs overcome the typical pitfalls which limit their growth? Particularly when statistics indicate the probability for success is so slim? 70% of all family businesses fail to make it to the second generation, while only 10% make it to the third.
First of all, family businesses flourish where there is economic freedom, points out professor Miguel Ángel Gallo, who is IESE professor of Business Policy and a noted authority on FBs.


The biggest companies

"In the United States, 35% of the 500 biggest companies are family businesses, while in Spain they number only 17%. In Russia, though, it's 0%. So it is clear that in countries where there is freedom, more family businesses are found", he says.
Gallo will take part in IESE's new International Executive Program for owners and managers of FBs, "Managing Family Businesses: Nurturing the Entrepreneurial Spirit". It is a three-week program offered in two learning blocks: April 18-30 and September 26-October 1, 1999.
FBs that survive through generations share many of the same characteristics, according to a recent study led by Gallo. The study, which he presented with Kristin Cappuyns at the Family Business Network 9th Annual World Conference in Paris, tracked top family businesses in Spain over a period of 20 years. The research, based on interviews with high-level company management, suggested that FBs which prospered shared five common values, known as ELISA values: Excellence, Laboriousness, Initiative, Simplicity and Austerity.
Specifically: "excellence" refer-red to the FB's continuous search for excellence in areas such as product, service, brand name and organization; "laboriousness" implied the total dedication to working intensely toward the success of the company; "initiative" reflected the ability to change and take certain risks; "simplicity" referred to an unpretentious lifestyle led by the family members and "austerity" to prudence in spending.


Overcoming hurdles

In addition to having these ELISA traits, FBs must overcome certain hurdles. Problems of succession should be handled by establi-shing a family protocol, which also outlines who can work in the company, the family's mission and values and other issues. The protocol will help solve the problem by introducing a plan which satisfies those who wish to sell their part of the company.
Gallo also points out that another critical issue for family members is distinguishing between management and governance, or building a good board. To avoid problems in this area, all boards should have at least three out-siders to advise the family members and provide a balance.
Finally, family members also must learn to be interested in their capital and to avoid personal conflict. As he noted in his recent interview with The Wall Street Journal, "Successful family businesses have a harmony and sense of commitment that you don't ordinarily see. Of course, with the unsuccessful ones, it's the contrary. Instead of harmony, the family members are always fighting. Instead of commitment, they only care about money or power. And it's always black or white with family companies, you rarely see anything in between."

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