We would define a global mindset as one that combines an openness to and awareness of diversity across cultures and markets with a propensity and ability to synthesize across this diversity.

What is a global mindset?

As Percy Barnevik, the architect of ABB and its first CEO, aptly observed: “Global managers have exceptionally open minds. They

A global mindset combines an openness to and awareness of diversity across cultures and markets with a propensity and ability to synthesize across this diversity.

respect how different countries do things and they have the imagination to appreciate why they do them that way. But, they are also incisive — they push the limits of the culture."

"Global managers don’t passively accept it when someone says, ‘You can’t do that in Italy or Spain because of the unions,’ or, ‘You can’t do that in Japan because of the Ministry of Finance.’ They sort through the debris of cultural excuses and find opportunities to innovate.”

It is useful to compare and contrast a “global mindset” with two alternative mindsets regarding the global economic environment: “parochial mindset” and a “diffused mindset.”

Parochial mindset

As an illustration of a parochial mindset, consider the situation at Ikea, the world’s largest furniture retailer. Until as recently as slightly over a decade ago, Swedish nationals constituted virtually the entire top management team of the company.

Fluency in the Swedish language was considered essential at the senior levels. In short, Ikea saw the world through a Swedish filter.

Diffused mindset

In contrast to a parochial mindset, a diffused mindset is found most often in the case of professional service firms (for example,

Microsoft would not be successful in China if it were not sufficiently able to see events in China from a more integrative global perspective.

in accounting, management consulting and legal services). Often, such firms are structured as networks of local partner-owned organizations.

In such contexts, the power of the CEO and even the senior management team is severely constrained.

While certain individual executives at the top may have highly developed global mindsets, the firm as a whole behaves as if it has a diffused mindset. The appreciation for and understanding of local issues and local differences is great, but often the ability to see the bigger global picture is inadequate.

The value of a global mindset

A look at Microsoft’s entry into the Chinese market attests to the value, indeed the centrality, of a global mindset. It is obvious that China presents a huge market for software today and promises an even larger market tomorrow. However, the promise of the Chinese market is accompanied by perils.

Software piracy has been rampant, at least historically. Public policy tends to be unpredictable and often favors local over foreign enterprises. The sophistication level of the market lags a few years behind the more economically developed countries, though this gap is closing. At the same time, the Chinese market leads all others in some important respects.

Microsoft in China

For example, the estimated mid-2007 number of mobile subscribers in China was around 500 million and the number of Internet users over 200 million — both figures larger than for

"Global managers don’t passively accept what someone says. They sort through the debris of cultural excuses and find opportunities to innovate.”

any other country in the world.

We would contend that when Microsoft formulates and reformulates its strategy for China, it would not be successful if its mindset regarding China were wanting along either of the two dimensions — if it were shallow in its understanding of what is happening in China, or if it were not sufficiently able to see events in China from a more integrative global perspective.

China is not the only country where Microsoft faces dedicated pirates, nor is it the only one with a nationalistic public policy regime. Can Microsoft bring to bear lessons from other markets as it analyzes China? Alternatively, might lessons from China be relevant in other markets?

Questions to ponder

Given a global mindset, these are just some of the fundamental questions that would get raised in the process of developing the company’s China strategy. In the absence of a global mindset, on the other hand, few if any of these questions would be identified or addressed.

What a global mindset does is enable the company to outpace its rivals in assessing various market opportunities, in establishing the necessary market presence to pursue the worthwhile opportunities — and in converting its presence across multiple markets into global competitive advantage.

Acting with efficiency

The central value of a global mindset lies in enabling the company to combine speed with accurate response. It is easy to be fast, simplistic and wrong. It is also easy to become a prisoner of diversity, be intimidated by enormous differences across markets, and stay back —

A global mindset enables the company to outpace its rivals in assessing various market opportunities.

or, if the company does venture abroad, to end up reinventing things in every market.

The benefit of a global mindset derives from the fact that, while the company has a grasp of and insight into the needs of the local market, it is also able to build cognitive bridges across these needs and between these needs and the company’s own global experience and capabilities.

But is a global mindset likely to have value for a company that is local and has no plans to venture outside domestic borders in the foreseeable future?

Does every company need a global mindset?

This is often the situation of companies in industries where the most effective and efficient size of an operating unit is very small relative to the global size of the industry, as is true of many industries (often, but not always, in the service sector), such as nursing homes, hospitals, radio stations, TV stations, commercial cleaning services, and so forth.

Even assuming that the organization’s decision to stay local is wise, having a global mindset —and looking at the local market as a fragment of the global market — can yield at least two benefits.

Benefits of a global mindset

One, a global mindset should make the organization much more

In today’s globalized market, it is always possible that, a global consolidator will acquire one of your local competitors and change the rules of what you viewed as just a local game.

proactive in benchmarking and learning from product and process innovations outside its domestic borders.

Two, a global mindset should make the organization much more alert to the entry of nontraditional (that is, foreign) competitors in its local market.

In today’s globalized market, it is always possible (and increasingly likely) that, whether you are a local TV station, a local supermarket, or a local commercial cleaning service, a global consolidator will acquire one of your local competitors and change the rules of what you viewed as just a local game.