I was in 4 countries recently, and it reminded me I had been to each as part of my book tour a decade ago for The New Polymath. It also reminded me I had started the book with “sprezzatura” and ended it with “shoshin” – not exactly words you hear every day.
Sprezzatura is a term from the Italian Renaissance that would translate today to “being cool” – showing a confidence even when tackling complex assignments.
Shoshin loosely translates from Japanese to a “Beginner’s or Child’s Mind”. It is a Zen Buddhist concept of looking with wide openness when studying a subject.
I certainly felt both terms at work during my conversation with a friendly German immigration officer at Frankfurt airport. Flipping through my passport he asked “first time in Germany?” I said no, been here at least 25 times. “Always to Frankfurt?” No, Berlin, Hamburg, Cologne, Hanover, Munich, Fussen….”Only travel to Germany?” no, been to 75 countries. His eyes visibly widened. The more we talked the more I admired his curiosity. The more I talked I also realized I was trying to confidently answer his questions but he had no trail to confirm my statements. They were on 9 expired passports in a safe. Some visas like the Israeli had been issued on a piece of paper, not on any of the passports.
With travel opening up in the last year, I have started traveling more outside the US, listening to global strategy experts, reading more books about regional trends. It is a brave new world, post-COVID and Ukraine crisis, where we need to balance curiosity versus the confidence that comes from previous experiences.
Lots of change – and even more noise
What is particularly striking is the plethora of bold commentary you hear. COVID driven travel restrictions and supply chain chaos have led to the “collapse of globalization”, many say. The Ukraine war related energy crisis has led to terms like “deindustrialization of Germany”. Political rancor and large deficit spending in the US is leading to terms like “dedollarisation” – spelled with an “s” it suggests an even more imminent US decline. China’s one child policy has left it with a dead-end in the form of an aging, noncompetitive workforce, others say. BREXIT, many say, signals the end of the UK.
MNCs like Shell have long had internal analysts which shape their global strategies – in their case, “Scenario groups” have been looking at global trends since the early 70s, when the OPEC oil shock took much of the world by surprise. Their team, their website says, has expertise in fields like “economics, politics, energy analysis, climate policy, socio-cultural change and competitive intelligence.”
Other MNCs leverage think tanks and geopolitical analysts (similar in some ways to us technology market analysts) like Ian Bremmer of Eurasia, Shaun Rein of China Market Research Group and Peter Zaihen among others. There is a ton of global intelligence available – demographic, industrial, energy, agricultural, climate and other data, military assets, political trajectory etc.
When you read the cross-currents across this mountain of data, most individual projections tend to be overly simplistic. Incumbent powerhouses, be they corporations or countries, rarely just roll over and die. They decline slowly and, in many cases, bounce back. Japan has started to grow nicely after a couple of decades of relative stagnation. Most companies have also become way more agile post-COVID and Ukraine. German industrial companies have moved aggressively away from Russian gas with moves to gas from other countries, to metallurgical coal, to their lignite and increasingly a focus on hydrogen as a fuel. The 2023 Fortune Global 500 list shows the power of incumbency – “The companies’ revenue adds up to more than a third of the world’s GDP. And 68% of that revenue is concentrated in companies in Japan. Greater China (including Taiwan), and the U.S.”
A wave of “re-globalization” – a gradual realignment
MNCs are not static. I am seeing more reallocation of resources across countries than I have ever seen before. Supply chains are moving to “China+1”. Sanctions against Russia have forced even more sourcing diversity for fuel, fertilizers, minerals and other commodities. High inflation in places like Argentina is causing a move to neighbors.
Emerging economies are generating their own MNCs. In fact, Saudi Aramco barely missed being ranked number 1 on the Fortune Global 500 list – only $7 billion less revenues than Walmart which has held that rank for a decade. Companies from other rapidly growing economies – India, Indonesia, Nigeria, Brazil among them are joining the next wave of MNCs – servicing their own large markets and focusing on markets western companies have traditionally neglected
There is also a surge in digitally savvy governments. Assisted by proliferation of mobile technology and hyperscaler clouds, entrepreneurs and SMEs in places like Kenya and Estonia are flourishing. We are seeing more real-time digital tax compliance, digital citizen services and other innovation in the public sector around the world. Many governments see AI as a strategic investment focus.
An exciting time for technology vendors
We have come a long way from the time when “two-tier ERP” meant global subsidiaries were on very different software on LANs and AS/400s versus those at the HQ. We have moved to a world of hyperscalers like MS Azure, AWS and Google Cloud which have democratized DevOps across the world. We have moved to a world where Eva Zauke of SAP talks about “585 local versions (including support for payroll processing in 104 countries) as it supports 200+ million users at 440k customers worldwide.” At a smaller scale – both functionally and regionally – vendors like Zoho and Papaya Global are allowing SMEs to think beyond their borders. In the next wave of AI and ML, operational data needed to train machines will be increasingly localized and verticalized.
Not every vendor is keeping pace. It will take the investments the hyperscalers have made with presence in most major markets while meeting local data protection guidelines. It will take localization like SAP has done across so many country tax regimes, currencies and languages.
Here’s why every vendor needs to re-think global opportunity. Forget all the glib talk and simple projections. There are vibrant markets around the world. Someone else will step up to service them if you don’t.
Time for lots more curiosity and yes, the confidence which comes from new investments and customer validation. much more than previous experiences.
Globalization – time for a fresh look at a complex topic
I was in 4 countries recently, and it reminded me I had been to each as part of my book tour a decade ago for The New Polymath. It also reminded me I had started the book with “sprezzatura” and ended it with “shoshin” – not exactly words you hear every day.
Sprezzatura is a term from the Italian Renaissance that would translate today to “being cool” – showing a confidence even when tackling complex assignments.
Shoshin loosely translates from Japanese to a “Beginner’s or Child’s Mind”. It is a Zen Buddhist concept of looking with wide openness when studying a subject.
I certainly felt both terms at work during my conversation with a friendly German immigration officer at Frankfurt airport. Flipping through my passport he asked “first time in Germany?” I said no, been here at least 25 times. “Always to Frankfurt?” No, Berlin, Hamburg, Cologne, Hanover, Munich, Fussen….”Only travel to Germany?” no, been to 75 countries. His eyes visibly widened. The more we talked the more I admired his curiosity. The more I talked I also realized I was trying to confidently answer his questions but he had no trail to confirm my statements. They were on 9 expired passports in a safe. Some visas like the Israeli had been issued on a piece of paper, not on any of the passports.
With travel opening up in the last year, I have started traveling more outside the US, listening to global strategy experts, reading more books about regional trends. It is a brave new world, post-COVID and Ukraine crisis, where we need to balance curiosity versus the confidence that comes from previous experiences.
Lots of change – and even more noise
What is particularly striking is the plethora of bold commentary you hear. COVID driven travel restrictions and supply chain chaos have led to the “collapse of globalization”, many say. The Ukraine war related energy crisis has led to terms like “deindustrialization of Germany”. Political rancor and large deficit spending in the US is leading to terms like “dedollarisation” – spelled with an “s” it suggests an even more imminent US decline. China’s one child policy has left it with a dead-end in the form of an aging, noncompetitive workforce, others say. BREXIT, many say, signals the end of the UK.
MNCs like Shell have long had internal analysts which shape their global strategies – in their case, “Scenario groups” have been looking at global trends since the early 70s, when the OPEC oil shock took much of the world by surprise. Their team, their website says, has expertise in fields like “economics, politics, energy analysis, climate policy, socio-cultural change and competitive intelligence.”
Other MNCs leverage think tanks and geopolitical analysts (similar in some ways to us technology market analysts) like Ian Bremmer of Eurasia, Shaun Rein of China Market Research Group and Peter Zaihen among others. There is a ton of global intelligence available – demographic, industrial, energy, agricultural, climate and other data, military assets, political trajectory etc.
When you read the cross-currents across this mountain of data, most individual projections tend to be overly simplistic. Incumbent powerhouses, be they corporations or countries, rarely just roll over and die. They decline slowly and, in many cases, bounce back. Japan has started to grow nicely after a couple of decades of relative stagnation. Most companies have also become way more agile post-COVID and Ukraine. German industrial companies have moved aggressively away from Russian gas with moves to gas from other countries, to metallurgical coal, to their lignite and increasingly a focus on hydrogen as a fuel. The 2023 Fortune Global 500 list shows the power of incumbency – “The companies’ revenue adds up to more than a third of the world’s GDP. And 68% of that revenue is concentrated in companies in Japan. Greater China (including Taiwan), and the U.S.”
A wave of “re-globalization” – a gradual realignment
MNCs are not static. I am seeing more reallocation of resources across countries than I have ever seen before. Supply chains are moving to “China+1”. Sanctions against Russia have forced even more sourcing diversity for fuel, fertilizers, minerals and other commodities. High inflation in places like Argentina is causing a move to neighbors.
Emerging economies are generating their own MNCs. In fact, Saudi Aramco barely missed being ranked number 1 on the Fortune Global 500 list – only $7 billion less revenues than Walmart which has held that rank for a decade. Companies from other rapidly growing economies – India, Indonesia, Nigeria, Brazil among them are joining the next wave of MNCs – servicing their own large markets and focusing on markets western companies have traditionally neglected
There is also a surge in digitally savvy governments. Assisted by proliferation of mobile technology and hyperscaler clouds, entrepreneurs and SMEs in places like Kenya and Estonia are flourishing. We are seeing more real-time digital tax compliance, digital citizen services and other innovation in the public sector around the world. Many governments see AI as a strategic investment focus.
An exciting time for technology vendors
We have come a long way from the time when “two-tier ERP” meant global subsidiaries were on very different software on LANs and AS/400s versus those at the HQ. We have moved to a world of hyperscalers like MS Azure, AWS and Google Cloud which have democratized DevOps across the world. We have moved to a world where Eva Zauke of SAP talks about “585 local versions (including support for payroll processing in 104 countries) as it supports 200+ million users at 440k customers worldwide.” At a smaller scale – both functionally and regionally – vendors like Zoho and Papaya Global are allowing SMEs to think beyond their borders. In the next wave of AI and ML, operational data needed to train machines will be increasingly localized and verticalized.
Not every vendor is keeping pace. It will take the investments the hyperscalers have made with presence in most major markets while meeting local data protection guidelines. It will take localization like SAP has done across so many country tax regimes, currencies and languages.
Here’s why every vendor needs to re-think global opportunity. Forget all the glib talk and simple projections. There are vibrant markets around the world. Someone else will step up to service them if you don’t.
Time for lots more curiosity and yes, the confidence which comes from new investments and customer validation. much more than previous experiences.
August 23, 2023 in Globalization and Technology, Industry Commentary | Permalink | Comments (0)