Globality by Harold Sirkin, James Hemerling, and Arindam Bhattacharya |Book Brief

ACCORDING TO THE BOOK GLOBALITY , WE VE ENTERED A NEW ECONOMIC ERA WHERE THE DEVELOPING-WORLD IS RISING-UP TO CHALLENGE THE WEST S HOLD ON MARKET DOMINANCE.

AUTHOR JAMES HEMERLING SHOWS BUSINESSES HOW TO SURVIVE AND THRIVE AS THEY COMPETE WITH EVERYONE, FROM EVERYWHERE, FOR EVERYTHING.

James Hemerling: In the golden age of globalization, the global business environment was dominated by companies from the U.S., Western Europe, and Japan. Companies in the developing world served as little more than a source of low-cost manufacturing for the dominant businesses of the West.

But today, an economic phenomenon we call Globality is turning that model on its head. Those former low-level suppliers from places like China, India, Mexico, and Eastern Europe are bursting onto the big stage as global challengers.

So what s the big deal? This is no mere wave; this is more like a tsunami. This tsunami is unstoppable. To survive and thrive in Globality, companies face a number of struggles.

We call the first one Minding the Cost Gap .

The Challenger s greatest strength is their ability to operate at a lower cost. How do they do it? Let s take a look at a Chinese company called Johnson Electric. Today, Johnson Electric is the number one manufacturer of motion actuators - little electric motors that power everything from hospital beds to your car s adjustable rear view mirror.

In the early 1980 s, the company moved their manufacturing center to what was then the impoverished Pearl River Delta region of China - where an abundance of low-cost labor and land allowed them to build a super-scale facility that today employs more than 30,000 workers. Johnson Electric has a capacity to produce 3 million motors a day.

And the region s large pool of low-cost labor means the company can get by with a lot less high-cost automation. Substituting labor for capital.

What s more, a cluster of 80 plus suppliers are located within and around Johnson City, taking the bite out of transportation and logistics and production costs. These strategies enable global challengers like Johnson Electric to offer high quality products at a lower price. If developed world companies want to remain competitive, they ve got to adopt the same model.

But competitive pricing won t do you much good if you can t access your customers. That brings us to another key struggle we call Reaching Deep Into Markets .

The Brazilian company Natura Cosmeticos has mastered the art of connecting with customers in a country where retail networks are immature, and customers are scattered across the countryside.

Today, Natura is the Brazilian beauty-market leader. How do they do it?

Natura woos customers away from American and European competitors by promoting decidedly Brazilian values like physical well being, and a harmonious relationship with nature. The company sells its products through an Avon-style direct sales network of more than 600,000 part-time commission-paid consultants. This enables Natura to reach consumers throughout Brazil s sprawling cities and vast countryside.

Beyond achieving lost cost and reaching deep into markets, Challengers are adapting and leveraging developed world business models, ideas, and technologies at remarkable speed.

This opens yet another struggle for western companies that don t want to lose their edge we call it Innovating with Ingenuity.

Consider the story of India s Aravind Eye Care. Today, Aravind is the world s largest provider of cataract surgery, performing over 250,000 procedures per year. And get this; fully 60 percent of the company s patients are treated for free, and yet Aravind still makes a profit. How is this possible?

Aravind s expensive medical equipment is scheduled for use around the clock, driving down the cost per procedure. And unlike the west, where Doctors spend valuable time dealing with insurance, ordering tests, and overseeing post-op care, Aravind assigns those tasks to nurses and clerical staff. Doctors do one thing perform cataract surgery moving from one patient to the next. Aravind s model brings sight-saving surgery to India s masses, at one fiftieth the price patients pay in the U-S.

That s just the sort of mind-set it will take to succeed in the age of Globality. Choose to learn from the Challengers and to transform your business globally, and you will be well positioned to compete in the era of Globality.

I hope you enjoy our book.