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Thinking About Business in New Years

The globalized socio-economic development of humanity is bringing the disparate people of the world into more frequent and closer contact than ever before. Nowhere is this more the case than in business.

The organizational demands on today’s business leaders are tremendous. Aside from managing far-flung operations, leaders must find ways to keep a 24-7 eye on business operations, stock prices and currency fluctuations, world events that may shatter business plans and a world of other issues that could affect their corporate bottom lines and the health and welfare of their employees.

For the foreign manager working outside a home country, cultural clashes, both social and business, seem almost impossible to avoid. Some even question what you’re doing wherever you are, both at home and in the host country.

And in a world where knowledge is money and where that knowledge is likely lodged in the collective consciousness of a manager’s employees, getting, storing and using information can have a tremendous effect on a business’s competitiveness.

So Mark Allen’s The Next Generation of Corporate Universities and Edward S. Cohen’s Leadership Without Borders are two new books about this new world of business that may be of great use to the general business reader. Both visited Beijing in March to tout their new books and to participate as speakers in the First Corporate Summit for Corporate University Development held at the AVIC Hotel.

Allen, a professor at Pepperdine University’s Graziadio School of Business and Management in Los Angeles, California, is an expert on the development and use of “corporate universities,” which he defines as “an educational entity that is a strategic tool designed to assist its parent organization in achieving its mission by conducting activities that cultivate individual and organizational learning, knowledge and wisdom.”

One way to explain what corporate universities do is to begin with what they do not do, that is, provide degree programmes or engage in pure academic research.

“These are different kinds of entities,” Allen, who holds advanced degrees in business and education (a doctorate), said. “Corporate universities deal in applied education. The focus is on helping everyone in an organization perform better on the job. Training is part of what a corporate university does, but it can be far more than that; the best ones are. Corporate universities may engage in research, but if they do, it’s applied research that will improve the corporation’s products or competitiveness.”

In a world where “knowledge is power,” Allen said, “we often reward people for hoarding their knowledge and keeping what they know to themselves.

“Most companies today say that their greatest asset is the knowledge of their employees, yet few do very much to improve on that knowledge or to manage it while they’ve got it.”

“We must ask ourselves: How is knowledge actually used? Too often, it’s not.

“Training is based on the hope that people will use the knowledge and skills that are taught on a job, but research indicates that 60 percent to 90 percent of the knowledge and skills taught in training programmes are never used.”

To make matters worse, from a management point of view, few organizations adequately monitor the returns they are getting from their investments in training.

“The worst case is one company that spends US$80 million a year, yet it has no way to evaluate what they are getting in return for their investment.”

Both Allen and Cohen related similar cases of inefficiency in training and coordination that might have been acceptable in the past, but which could be the difference between being competitive and uncompetitive in the market today.

Allen said good corporate universities can serve as “keepers of culture” and can help an organization’s employees adapt to new world business realities in an organized way. They are about people and how they work.

“Sometimes you hear executives say they’re afraid that if they train their employees, the employees will take that knowledge with them when they leave. The fact is that companies that train have higher retention rates. So the question is not: What if I train and they leave? The question is: What if I don’t train them and they stay?

“Smart companies realize that if they make their people better and use their knowledge better, they will be more competitive. The proof of this is in the market place, and that is why corporate universities have won the support of CEOs.”

Cohen, a senior vice-president with—“the largest corporation you probably never heard of”—Satyam Computer Services Limited of Hyderabad, India, specializes in the education and training of business leaders worldwide.

Satyam, which began by taking work “outsourced” from other companies in the United States and Europe, has become an extremely complex organization with 38,000 employees worldwide, operating through 1,700 business units, serving 541 global companies, including 150 FORTUNE 500 companies. Only about half of its corporate leaders based in India. It is building a new campus in Nanjing and expects to increase its staff from 200 to about 2,000 providing services to Chinese and foreign companies, mainly computer programming and Web development services.

The rapid growth and size of Satyam called for a new kind of management strategy and the development of leaders who can thrive as global leaders employing the most important knowledge, skills and attributes needed for success. Satyam not only developed its own educational programme, under the leadership of Cohen, but is expanding into the business education business by cooperating with the U21 Global educational programme.

In addition, its philosophy is being extended into the local Indian communities that provide Satyam its employees and to which Satyam “sub-outsources” work. Through the Raju Foundation, the corporation is developing whole communities by providing jobs and building homes, medical facilities, transport structures and even waste, wastewater and water treatment centres to ensure that local people can take advantages of the jobs that are assigned to them. The foundation even operates a free ambulance service.

The company’s practices amount to a dazzling array of business strategies and a practice of social responsibility that adds to Satyam’s success.

Cohen’s book, however, focuses on the needs of Satyam’s executives and the new world business environment.

“The more senior a manager becomes, technical skills become less important. Our leaders cannot know everything, but they need to know which key levers to pull and who to turn to to ask important questions. They need to be able to read a balance sheet and track currency fluctuations; these are things the specialist does not need to do.”

The delivery of Satyam’s leadership training course is as flexible as its concept.

“We have trained 100 leaders so far and 500 are involved in the process. We graduate about 75 leaders at a time and we hope to get 3,000 new leaders through the programme within three years.”

He said, “We have learned that the best learning takes place at 35,000 feet where these busy leaders are not disturbed. So in addition to the Internet, we’re delivering courses via iPods. Our students asked for a better delivery system, and we’re giving them what they need. We deliver the programme in several ways to give ease of access. It takes about four to six hours per week to do the course, and we provide our employees the time to do it.”

Within Satyam, if the student completes the leadership course in the flexible time allotted, Satyam pays their tuition. If not, Satyam deducts the cost of the education from their salaries via payroll reduction.

Satyam’s purposes are multi-fold, but when it comes to leadership issues, Cohen said, “Companies that want to be competitive globally must do this. The experienced ‘baby-boomer’ executives are beginning to retire very rapidly. We are about to face structural unemployment; it is already being felt in many places around the world. We must find labour where it is, so a lot of our focus is in non-urban areas.”

Both Allen and Cohen raise interesting questions, and their books can serve as a basis for dialogue on the new challenges arising to leadership in the global business environment.