"Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains."
Thomas Jefferson
If one looks to the globalization of the corporate world as
giving hints as to possible futures of higher education (I am certainly one of
those), then How We Compete: What Companies Around The World Are Doing To Make
It In Today’s Global Economy by Suzanne Berger is not to be missed. Professor Berger and her colleagues at the MIT Industrial Performance Center set out to study how
individual corporations are actually responding to the pressures of
globalization. Over a five year period, they conducted interviews
at over 500 companies of varying size worldwide. They focused on sectors where underlying
technologies are rapidly and on those where the underlying technologies are
slowly changing. In the former, they
looked at electronics and software, and in the latter, auto and auto parts and
textile and apparel. Their goal was to
let data, rather than theory, drive conclusions about the impacts of
globalization on corporations. That is to say, this book is neither impressionistic nor evangelical, as are many of the other books looking at the effects of globalization, but rather is data driven.
Many contend that the forces of globalization are so huge
and monolithic that all corporations will be forced to respond in a
more-or-less uniform fashion. The
results of this study argue strongly against that view. Indeed, the research team found an enormous
divergence of strategies being used - apparently successfully - to respond to globalization.
Over and over, they found multiple corporations in the same industry and
generally the same geographic location using radically different routes to success. While
they don’t claim to show that this divergence will be maintained into the
future, they find no evidence that suggests that it cannot.
Berger describes one of the major changes of the past twenty
years in many industries as being a “modularization” of production from R&D
through after-sales services. The
explosion in new digital technologies then opened up a vast array of new ways
in which the various modules of production can be carried out. Managers now can look the world over for the
best solutions (in terms of e.g. quality, cost, convenience) for producing each
module in the production chain. Thus
each company is faced with a very rich set of options regarding production of
their product. In fact, according to Berger, the technological and organizational changes that have enabled modularization have contributed to a multiplication of successful models.
As Berger points out, defining “success” or “best approach”
in this fast evolving world is quite tricky, since companies that are booming
today may literally be out of business next year. However, based on what the team learned, they
believe that, “How well the firm mobilizes and reorganizes its legacy in an
open economy is what we believe will separate the winners and the losers.”
(p.45) The company’s legacy “– the
resources it inherits from its previous experiences – is the product of having
grown up in a particular country at a particular point in history. And these resources are also shaped by the
unique story of each company as it has defined its goals and overcome hurdles
over it lifetime.” (p. 239) The legacy is, of course, not a static
resource. Each day, the firm is shaping
the legacy it will need to call on in the future.
Despite the lack of a “silver bullet” that defines how a
company should decide about outsourcing and offshoring, Berger does suggest an
approach that should be followed in thinking about strategies to be used. First, the company needs to fully understand
its legacy and the competitive advantages that it provides. Then, the firm needs to look closely at each
module in its production cycle, and decide whether it can produce that module
in-house in a way that can be favorably tested against best-in-class
competitors. If not, it should question
seriously whether the module should be outsourced. The book gives many examples
of considerations that might be important in that evaluation. Berger does feel,
however, that there is benefit to keeping a wide range of functions in-house,
as this helps a company to advance swiftly into new areas as new opportunities
are identified. In particular, she feels
that there is a case to be made that most American firms need to keep more
functions in-house than they currently do in order to remain competitive in the future. She also believes that companies must invest
in “excess capacity” in many domains in order to be able to move rapidly in the
future into areas now on the margins of current operations.
As opposed to many writers, Berger does find that national
government matters in forming the evolving legacy of a company even in this era
of globalization. In particular, only
government can implement policies to sustain openness, to improve education,
and to support innovation across the economy. Berger finds these three areas to be critical for ongoing renewal of the
legacy. In this, and in her description of
how different countries are handling these areas, there are many parallels with
the work of Bobbitt (post Welcome to the Market State, 2/20/06).
Berger describes a number of areas in which she fears that the US is not implementing appropriate policies. She believes that policies are needed to cushion the individual’s risk
due to changes that occur with the rise and fall of companies and the emergence
of new activity. She finds that there is a serious neglect of lifetime
learning for broad classes of people, leading to skill levels that are often
not sufficient to provide reason to keep activities in the US. She also finds that “Fragmentation of
production seems to discourage wide-ranging research by any one company, with
no compensating mechanism kicking in to build public support for the activities
that firms are shedding.” (p.294)
So what do I carry away from this? First, some comfort that even in the
corporate world, globalization is not forcing a single model. The higher education world, with its wide
variations in approach, hopefully will be even more able to resist being pushed
into a single model by the forces of globalization. This hope also is supported by a relatively recent report by Daniel C. Levy looking at the very wide range of diversity in the rapidly growing global private higher education sector. Second, understanding the
legacy of an institution in all its dimensions and being able to build on that
legacy is likely to be critical in moving that institution forward in
increasingly more challenging times. Third, seeking excellence on a comparative basis (against best in class)
is critical as we evolve and shape our missions in the future. And finally, two of the areas Berger notes as
potentially causing difficulties for the US in the future are things we in higher education know something about and can
contribute to – lifelong learning, and research that will enable the creation
of future products. Understanding what
we as institutions of higher education can do to begin to fill in the types of
gaps Berger identifies will not be easy, but her concerns deserve our
attention.
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