THE AMERICAS

EUROPE/AFRICA

WORLD HEADQUARTERS DSSELDORF PITTSBURGH 49.2159.91680 412.257.0600 LONDON MEXICO CITY 44.1753.616000 52.55.1253.9000 PARIS TORONTO 33.1.41.96.86.86 416.601.5500 Other offices include Other offices include Johannesburg, Atlanta, Calgary, St. Petersburg Chicago, Dallas, Detroit, and Warsaw Monterrey, Montreal, ASIA-PACIFIC New York, St. Louis, San Francisco, Santiago, SHANGHAI and So Paulo 86.21.6113.2525 SINGAPORE 65.6226.5335 SYDNEY 612.9466.0300 Other offices include Auckland, Bangkok, Beijing, Brisbane, Dubai, Hong Kong, Jakarta, Kuala Lumpur, Manila, Melbourne, Mumbai, Perth, Pune, Seoul, Taipei, and Tokyo

THE CEOS GUIDE TO:

FUTURE
GLOBAL LEADERS

P R E PA R I N G

TO LEARN MORE: EMAIL: INFO@DDIWORLD.COM WWW.DDIWORLD.COM/GLOBALLEADERSHIP

*KWCT*
KWCT MKTEDBK02-0706

THE CEOS GUIDE TO:

FUTURE
GLOBAL LEADERS
By David Tessmann-Keys and Richard S. Wellins, Ph.D.

P R E PA R I N G

Development Dimensions International, Inc., MMVII. All rights reserved.

CONTENTS
3 Globalization: The World Is Our Stage 5 Global Leadership Opportunities and Challenges 10 What Is Global Leadership? 16 Great Global Leadership Defined 23 Identifying and Developing Your Global Leader Talent Pool 31 Facing the Global Leadership Imperative 33 Best Practices of Four Global Giants 37 Endnotes 38 Contributors 39 Authors 40 About DDI

Ever since Marco Polo led his team to Cathay (now China) to confab with Kublai Khan (grandson of Ghenghis), global businessand the talent to conduct ithave become increasingly important to corporate growth. Rapid changes in logistics and information technology have accelerated the pace of globalization in recent decades, creating a 21st-century infrastructure for worldwide commerceyet executives leading these global efforts still confront many of the same skill development and management challenges that Polo faced nearly 800 years ago. Its now, of course, far easier to operate around the globe than ever before, even amid political conflicts. The opportunity for any firm to conduct business with anyone and operate anywhere has led to multicountry supply chainsproduct development in one country, sourcing of raw materials and components from a second, assembly in a third, and marketing, distribution, and sales anywhere. For example, merchandise trade from just the European Union (EU) to North America was more than $360 billion in 2005, and trade to the EU from Asia was more than $512 billion.1 Workforce demands are equally staggering: U.S. multinationals alone employed 9.1 million persons overseas in 2005.2 Who will lead them?

SECTION : ONE
Globalization: The World Is Our Stage
New Customers, Markets, Capital, and Suppliers Around the World Globalization means a blossoming of business opportunities as never before. New markets are available to firms with the resources to get their goods and services in front of customers; purveyors of Starbucks, McDonalds, Ferrari, and Gucci not only line the streets of London or Chicago, but Melbourne and Shanghai as well. Computers from Acer (Taiwan), Lenovo (China), and Toshiba (Japan) boot up in North America; and beverages from Tata Group grace grocery shelves around the globe. Capital markets have similarly globalized. The inflow of capital for emerging markets and developing countries more than doubled from 1995 to 2005 ($323.3 billion to $674.5 billion), while outflows for emerging markets more than quadrupled ($245.5 billion to $1.18 trillion).3 Global Business Challenges Commensurate With Rewards Along with increased access to global sales, capital, goods, and services come a slew of strategic and operational challenges:

Newfound competitors emerge from all corners of the globe. So even as businesses tap into the low-cost opportunities for sourcing or offshoring, they also contribute to a global trend toward commoditization making it harder than ever for firms in every industry to maintain margins and profitability.

Risk of asset lossboth physical and intellectualis a real and growing problem. Taking any portion of an organization overseas exposes a firms proprietary processes, products, knowledge, and brand/corporate identity to different intellectual-property mindsets and even corporate predators. Yet many companies have no choice as they follow customers in order to retain business. When General Motors shifted billions of dollars in parts business to India, China, and elsewhere, suppliers either moved with themor were left behind. Unfamiliar regulations can present huge challenges. Companies going global often collide with regulatory and litigious risks that in no way resemble those found at home; these risks may include severe business penalties and even forfeiture of assets. Senior executives responsible for regulatory breaches may also find themselves in a foreign jail with little legal recourse. Inflexible business models derail many global efforts. Not every business model translates across cultural and economic boundaries around the globe. While every organization has a unique DNA that underpins its success, a global company frequently must balance its core DNA with the unique culture and attributes of the host country, region, or market.

SECTION : TWO
Global Leadership Opportunities and Challenges
In many ways, customers, suppliers, and capital are the easiest pieces of the global puzzle to assemble, especially when compared to developing a leadership team to manage that puzzle profitably. Companies that invest in developing global leadership talent find new opportunities and better execution, while companies that dont face new risks and potential failure of their multinational strategy. Opportunities

Strong brands increase access to top talent: Firms that invest significant resources into developing strong global brands enjoy greater access to leadership candidates around the globe, helping recruitment of superior talent (e.g., multilingual, global experience). While the fight for the best of these candidates is aggressive, the IBMs, Toyotas, and Intels of the world have a head start in developing a global leadership pipeline. Competitive advantage: For firms with adept global leaders on board, the competitive playing field tilts significantly in their direction. These leaders not only know the customs, culture, and etiquette of the region or regions in which they operate, but, more importantly, they understand the nuances of business in those areassmall differences that can determine success and failure. These can be as simple as awareness of cultural negotiation norms, or as complex as knowledge of the supply chain relationships in a particular country.

Overwhelming as these risks may seem, they are all manageableand most companies can either build or buy an infrastructure (logistics, technology, financial systems) to support their global ambitions. The tougher challenge by far is developing global leaders who can make the infrastructure serve customers and shareholders profitably both now and in the future.

Expansion of capabilities: The impetus for much global expansion is focused on low-cost procurement, but the potential for much more is available to the right leaders. Global leaders recognize and cultivate the potential of every asset within their global portfolio. Global leaders will leverage additional opportunities and talents that emerge from a new location over time, such as product design or customer service.

or inexperienced graduates for pennies on the dollar compared to salaries in [New York] or London, reports ChinaSolved Blog. Or you can get the real thingoverseas educated, highly trained, experienced bilingual Chinese experts fresh from one of the big consulting firms or investment banksbut you will probably pay more than you do back home.4

Global leaders develop other effective global leaders: Honda initially leveraged its network of global leaders to establish a strong presence in North America, bringing Japanese executives to guide North Companies that invest in American facilities. Now developing global leadership through a global leadership talent find new opportunities program in North America, and better execution, while the firm is transferring those companies that dont face new mentored under global leadrisks and potential failure of ers around the world, even their multinational strategy. back to Japan. We send our leaders to different organizations, to different plants, to help get them started up, says Kim Smalley, AVP Human Resource Management, Honda of America, MFG. Most of the focus so far has been on the North American side, but you increasingly hear about taking a North American associate and dropping them into one of our Japanese or other global facilities into a leadership role. Challenges

Increased business risk related to global talent failures. Poor leadership and decision making at any level are debilitating. Once a company becomes global, such failures make international success all but impossible. Bain & Company reports that more than 60 percent of geographic moves fail entirely, and only 17 percent of companies achieve sustained, profitable foreign growth.5 Many well-publicized global failures ultimately can be traced back to executive shortcomings. While the inane flops grab headlines (Kentucky Fried Chickens infamous eat your fingers off branding in China), more recent failures point to inadequate global leadership. For example, Home Depot sold its stores in Argentina and Chile in 2001 amid upset local vendors who objected to their frequent demands for lower prices, exclusive deals, impatience with out-of-stock items, and general arrogance.6 Culture clashes have also caused another major U.S. retailer to struggle in Germany.7 Whats more, failures in the form of missed or ignored opportunities also occur daily around the globe, throttling overseas efforts, often in ways unseen.

Competition for global leader candidates has heated up. Hiring front-line workers around the world is rarely an issue, but finding skilled senior executives has become increasingly difficult and costly. At the low end of the HR market, you can hire busloads of unskilled laborers

With increased diversity comes the need to unify around common goals. Maintaining organizational focus, direction, and motivation among an increasingly diverse leadership team and workforce is a task that few domestic leaders encounter. In a global firm, its not unusual to lead or work with executive and management

teams brought together from around the world. While broad corporate goals may seem superficially clear, they could be understood and internalized differently by members of a culturally diverse groupmaking motivating and managing far more complex. A successful global HR function will constantly adjust the balance between a strong corporate culture and local cultural differences. According to one DDI study, even as 85 percent of global companies try to establish a corporate culture in all locations thats consistent with the goals and vision of the company, 88 percent also report that local culture and customs have a moderate to great influence on the way they conduct business in particular locations.8 Similarly, 90 percent of global leader companies (vs. 71 percent of a peer group) say our businesses are aligned around a common corporate culture, according to a Fortune study, and 85 percent are effective in integrating operations globally to exploit economies of scale.9

Aligning Global Diversity

Diversity among employees in terms of cultural background leads to a richer, more sophisticated and more effective corporate environment. But diversity in the form of misaligned corporate goals, objectives, and processesespecially as the result of leaders disconnected from operations around the globeis a potential disaster. Jeff Albright, President of the Asia Region, Briggs & Stratton, says, As your organization grows, the risk is detachment from the core message and detachment from the core office. Theres a risk of an outpost becoming detached enough that they see themselves as a different unit, they dont seethey dont feela kinship to the headquarters. For a corporate giant such as General Electric, in which there are as many as 10 different distinct business units operating nearly autonomously, that may not be a problem. But for Briggs & Stratton: where were selling engines and end products theres a risk that our vision becomes separate from the corporate vision, and were moving in opposite directions, or its difficult to coordinate, says Albright. Business alignment equates to better business decisions and a better bottom line.

Business models dont translate easily overseas. Just because a proven approach to products, processes, or services works well in one country or market doesnt mean it will work well in another. What consumers value around the world varies widely. In Thailand, for example, one of the worlds largest toothpaste manufacturers packaged toothpaste in its common economy-sized containers, only to find out that a portion of its buying public could not afford the large-sized containers. Global leaders will leverage local market research to find these answers ahead of time.

SECTION : THREE
What is Global Leadership?
Most companies today understand that the development of human capital must be a management priority; this is doubly important for initiatives that extend around the globe. Because while some leadership traits are transferable anywhere around the worlde.g., trust and mutual respectthere is more to the global leadership equation. Good leaders dont necessarily make good global leaders. Global Leadership Differs from Leadership There is a role for every leader, and, not surprisingly, that role may or may not involve an overseas assignment. Myriad criteria make up a good global leader (see pages 1621), but even without a formal list, its easy to see how good leaders and good global leaders differ. It would be folly, for example, to take an able leader whos been in one location for a decade and assume that his talents will automatically translate to managing a foreign operation or overseeing a global operation dispersed in multiple countries and interacting with multiple cultures. Even when good leaders transfer their skills well overseas, they still need to invest time and effort into acquiring the appropriate cultural sensitivities about the regions in which they operate. The simplest slip-up can often send a global corporate relationship spiraling downward:

A well-meaning U.S. vice president sent to Argentina, who equates familiarity and trust with calling people by their first names, spends a week calling his Argentinean executive team by the wrong name without any appropriate titles of respect (e.g., professor, doctor)when he inadvertently chooses the second of the two surnames (the mothers) rather than the first (the fathers name), neither of which is the familiar first name. The purchasing director of a fledgling multinational is insulted when his potential Russian manufacturer declares that theyve presented their final offer. The director storms from the room and the lousy deal, not knowing that final offer in Russia is rarely the final offer, and that persistence leads to outcomes that can be far more attractive.10 A key executive at a food manufacturer in Brazil was upset that local staff would frequently wander back from lunch late. He repeatedly took offense with the practice, and let his negative reactions carry over into other activities with staff, nearly poisoning relationships. Ultimately, he learned that it was a national phenomenon and that staff were still doing their work and taking care of businessand so he adapted It would be folly, for example, to and built in extra time for take an able leader whos been meetings when they occurred in one location for a decade and near the lunch hour. assume that his talents will auto-

An executive from Texas insists on giving his new China partners an old-fashioned bear hug upon greeting them and uses various hand gestures when making his pointsnot knowing that China executives typically do not like personal contact and that gesturing is distracting (finger-pointing often is seen as offensive).

matically translate to managing Thras Moraitis, General a foreign operation or overseeing Manager, Group Strategy and a global operation dispersed in Development of Xstrata, a global multiple countries and interacting diversified mining group, says with multiple cultures. that many cultural issues can be overcome by getting out of a Western mindset. In the West we basically sit down and we say these are the facts. Were both going to make money. This obviously works for both of us, lets do the deal. It doesnt quite

10

11

work like that in most of these other countries that we are now going to become more active in. Particularly in India, in China, in Korea, relationships are absolutely crucial. Global leaders are most often And so, the ability to not individuals born with certain only adapt to the new style traits, but who are then made of working with people, the into the model of a global leader patience you need, picking through coaching, experience, up the cultural clues that are and support tools. perhaps more subtle than we might be used to, understanding what people are saying to you when they say certain things, all of thats crucial. Jeff Albright, President of the Asia Region, Briggs & Stratton, says, Those that come in with some humility, those that come in with respect for local people, and those who come in to learnthat honestly are humble enough to think that they can learn something from the local environment and local peopleare the people that end up with an endearing connection with the staff and end up becoming not just a leader for those people they have a native tongue to share, but go across cultures and across languages. That to me is the number one key. To make a connection, you have to be humble enough to get down and talk to the people and try to learn from them. The Rewards of Global Leadership Despite the many opportunities for executives to find themselves committing one of the aforementioned bloopers, the rewards from operations headed by well-seasoned global leaders keeps organizations pressing forward:

assessed against total costs (which incorporate logistics/ transportation charges, potential delays, size of purchased inventories, frequency of deliveries), cost savings can still be substantial.

Demand-side cost savings: If a major customer asks you to move overseas with it, you may feel you have no choice. Fortunately, you may also be surprised at the cost savings you achieve while satisfying your client. Japan-based auto supplier Denso has taken its $30 billion business into more than 30 countries to stay close to customers such as Toyota, recently forming a new company in Thailand to support production planning, information systems, and training for its companies in the Asia and Oceania region.11 Operational expertise and innovation: Its every executives tendency to believe that nobody does anything as well as the home office. Yet there are countless product, process, and service innovations emerging around the globe. The only way to access those skills or that proprietary knowledge is to engage with other global firms, often through partnerships and joint ventures. 24/7 business: For processes such as product development or programming, many firms are now orchestrating networks of global teams such that the hand-off of projects allows work to chase the sun. Companies are no longer limited by the work hours of their home country. Some North American hospitals are sending complex diagnostics work, such as brain scans, overnight to India so that results are ready for review the next morning. Growth: There is no greater lure for global firms than the potential of new customers gained by getting a foothold in a foreign country. Imagine if Starbucks had limited itself to only domestic coffee houses. For an increasing

Supply-side cost savings: Even with a growing awareness that sourcing from low-cost regions needs to be

12

13

number of global firms, a majority of revenue will eventually be generated from overseas operations. Take auto manufacturing: 40% of auto sales and 55% of auto production will occur in Asia by the year 2020 (with China and India being the most prominent emerging markets), up from 25% of sales and 35% of production in Asia in 2005 (of which Japan alone accounted for 10%).12 Setting up shop overseas, even with able global leaders, is difficult. But the swiftest really do win the global race. For example, Motorola worked long and hard to establish wireless services within China beginning in 1987, recognizing that the country would bypass development of a complete landline infrastructure for both voice and data. This involved riskChina would not accede to the WTO for another 14 yearsbut considerable reward as well. Where is your wireless China? And how will you assemble the global leadership team to get there quickly? Can Global Leadership Be Grown? Global organizations need executives who excel at collaboration, innovation (turning new ideas into new products and services), and managing change. Such talented individuals rarely walk off the street and into an effective leadership position. Global leaders are most often individuals born with certain traits, but who are then made into the model of a global leader through coaching, experience, and support tools. By far the biggest thing is exposure and experience, says Moraitis of Xstrata, and I think youll find most people will learn how to do this kind of thing the more they get exposed to it. And perhaps they need a bit of coaching because some of the learnings are a little bit more nuanced than you might imagine... but the balance of it is in experience and learning.

Global Demands Define Success Profiles

Thras Moraitis, General Manager, Group Strategy and Development of Xstrata, a global giant in mining, says there are many ways in which globalization has changed his company and the roles of leaders within it. At the practical level, it obviously changes the demands on senior executives and the kinds of skills they need to have, says Moraitis. That starts with the practical travel demands on leaders with multigeographic responsibilities, moving to and from the 18 countries across every continent in which Xstrata does business. But I think it goes way beyond that into the kind of skills you have to have to carry with you wherever you go. You have to be able to adapt, literally immediately, as you land in a new location, to the local customs, approaches, and management styles in order to be effective. That ability to adapt needs to be supported with a solid management style, explains Moraitis, yet one that can be customized to a new environment. A criterion for the kinds of executives that will be successful under those conditions and in Xstrata is cultural affinity, but also the ability to manage in an ambiguous or unfamiliar environment and discovering that it doesnt always work. Thats the stress it places on the individual, on the one hand, and on the way we look at the appointment of senior executives, he adds. So when we worked with DDI to develop our own Success Profile, cultural affinity, the ability to work in an ambiguous environment, and high energy were very important, specifically because our senior executives are traveling a lot, finding themselves in unusual environments.

14

15

Moraitis observation isnt lost on most successful global firms. Although they scour the world for qualified leadership candidates, they still invest in developing global leaders with the capabilities to move and lead from continent to continent as business needs require. What those leaders ultimately must have are attributes that position them for global success.

DNA Components of Great Global Leaders Global leaders are a breed unto themselves. Part inherent nature, part life experience, they have the magic mix of skills to create competitive advantage for the companies they serve. Based on years of research and nearly four decades of experience in growing leaders, we have There is a significant difference developed a blueprint for between excellent leadership global leadership success. and excellent global leadership. Our research specifically But what makes the difference? looked for leaders who For one thing, an individuals could successfully cross hardwiringthe personal style countries, economies, and and attributes he or she brings cultures to achieve wideto the tablegreatly affects how reaching, global objectives. he or she operates globally. DDI conducted research with 25 senior human resources and operations executives at 22 global organizations across a wide range of industries. That work has led to a list of 10 factors that make up the leadership DNA of a standout global operator. These factors are global leadership differentiatorspivotal elements that spell success. Detailed briefly here are the competencies, experiences, and personality factors that back up these essential qualities:

SECTION : FOUR
Great Global Leadership Defined
What does a truly great global leader look like? And how can you identify these individuals who will excel on a world stage? Our research proves that there is a significant difference between excellent leadership and excellent global leadership. But what makes the difference? For one thing, an individuals hardwiringthe personal style and attributes he or she brings to the tablegreatly affects how he or she operates globally. For aspiring and incumbent global leaders, knowledge, experience, and competencies are all critical, but it is the personal attributesincluding potential leadership derailersthat are most likely to predict success or failure. Its essential to measure these qualitiesincluding values and motivationwhen selecting leaders for global roles. Its important, for instance, when seeking to identify future global leaders to consider just how they can be molded. Can you teach someone to be sensitive? Can you teach energy? Or cultural fit?

Intellectual Grunt: Operating as a leader at the executive level is complex in any country. Operating a global organization with multiple regions, economies, political, social, and cultural factors; and an understanding how these factors influence strategy is enormously complex. Global leaders are sharp. And they are street smart. They are going to be working all the time, and they also need to be thinking all the timeon their feet. When a great deal of information needs to be crunched and computed, the capacity to deal with ambiguityas well as complexityis crucial.

16

17

Contextual Chameleon: Effective global leaders must be able to adapt to unfamiliar roles and environments. While this is important in any leadership role, its imperative when working across multiple geographies. You cant change as a person, but you have to be sensitive Great global leaders often face to whats acceptable within unpredictable challenges as different cultures. Great they leverage an organizations global leaders should capabilities in emerging marketunderstand their own perplaces. Displaying entrepreneursonal styles as well as how ial flair, these leaders must be they need to change in able to utilize highly developed order to be effective. analytical and decision-making Handig is a Dutch term skills in order to successfully that refers to the charactermanage unfamiliar environments. istics of Dutch leaders who, through their roles as trading mediators between nations, gained a reputation as extremely adaptable, flexible, and skilled. For this reason, Dutch leaders are often seen as perfect candidates for expatriate assignments.

mainly because they didnt have people skills. A People Black Belt has the ability to stop, listen, and understand how to adjust his or her approach to get the desired result.

People Black Belt: Black belts represent the highest level of mastery in martial arts or Six Sigma. For a global leader, mastery of emotional intelligence is essential, as is the ability to understand how to engage, motivate, and inspire individuals within various cultures. These leaders need to know how to adjust their styles according to each situation. Engaging and motivating in France, for instance, is a different process than whats needed to get the same result in China. An executive vice president at one of the worlds most global banks once said that he never saw people fail in global assignments because they lacked technical skills, experience, or intellectual horsepower. They were ineffective, he emphasized,

Global Explorer: An American senior-level executive who runs a multinational division in China classifies visiting executives into two groups. The first kind arrives, goes directly to the most Westernized hotel available, visits the office, and leaves. Quite possibly a good leader, but a good global leader falls into an entirely different category and modus operandi. He has a passion to understand the native culture. How do things work in this country? These leaders want to know how decisions are made, and how the unique local environment impacts individuals at work or changes the business landscape. Global explorers are passionate about understanding. If you want to spot someone like this, look for someone who isnt afraid to ask questions. He or she must not think my way is the only right way, or that the home countrys way is the best answer. Keep in mind the quote that appeared on the back of Jacques Cousteaus research vessel, Il Faut Aller Voir, which means, We must go and find out for ourselves. Global explorers are curious information seekers by nature. Visionary: Great global leaders often face unpredictable challenges as they leverage an organizations capabilities in emerging marketplaces. Displaying entrepreneurial flair, these leaders must be able to utilize highly developed analytical and decision-making skills in order to successfully manage unfamiliar environments. They have the ability to take business to a higher level. Take for instance Mukesh Ambani, chairman and managing director of Indias Reliance Industries, who is creating what promises to be the worlds largest startup ever

18

19

Reliance Retail, a chain of small and supersize retail stores that will change the face of business in India. Aiming to create 1 million jobs and reach $25 billion in annual sales, Ambanis goal is to increase the standard of living in his country. His goal is both visionary and global, in that it involves setting up airlines and trucking routes that never before existed in India. Ambani, and other leaders with vision, are not afraid to say, Lets go for it.13

through the door. As the most powerful representation of your organizations strategy and values, you have to be able to turn up the energy. Globally speaking, business happens 24/7, and leaders must maintain a consistent, positive demeanor in a fast-paced, always-on environment. The common theme here is a need for boundless energy: When the lights go on, you have to be ready to put on a show. And dont forgeta global leader may be in 10 different countries in 10 days.

Company Poster Child: As the living embodiment of an organizations values, a great global leader is, more often than not, the most powerful representation of the enterprise in a foreign environment. If global clients get to meet just one person from the organization, this is the person you want them to get to know. As George Fisher, the former CEO of Kodakwhich was also one of first 10 companies in Chinaonce put it, you are the company. You represent corporate values. People may never get to go to your headquarters to see how you operate, so you have to bring the corporate culture to them. Global leaders need to be humble, confident (though not arrogant), and open to both change and feedback. Humility: A great global leader is a continuous learner, always prepared to question and analyze his or her own approach while adapting to various cultural environments. When operating in unfamiliar territory, a leader with humility is open to being wrong and willing to adjust strategies accordingly. Be wary of the my way or the highway philosophy. A leader who can lead with humility never thinks his or her values are the center of the universe. Unbridled Energy: Imagine youve flown for 30 hours across the world to a foreign country. Upon landing you travel for a few more hours to a branch office and walk

Master Mobilizer: Global leaders are often required to start up or manage new operationsbut they dont always have traditional resources available within a corporate infrastructure. They need to be able to influence corporate decision makers in order to obtain what they need to get the job done. Able to light a fire under others, these leaders need to be both flexible and highly organized. They know how to find the right people for the right jobs and organize the right teams to accomplish their goals. Integrity: Acceptable business practices vary from one culture to another. In the face of challenging local conditions, global leaders must demonstrate the highest level of integrity. They must be able to have the courage and resilience to stick with their decisions. They must be honest, committed, and able to perform consistently in many different situations. They are genuine, providing true opinions and promoting trust among others. In other words, these leaders are solid as a rock.

In addition to the DNA described in this section, some common global leadership derailers to watch out for include impulsiveness, low tolerance for ambiguity, arrogance, micromanaging, self-promoting, volatility, risk aversiveness, defensiveness, imperceptiveness, eccentricity, and approval dependence.

20

21

Broad Perspective
Every organization that has successfully grown leaders and placed them around the globe has some model or template of global DNA upon which it develops executives. Honda of America is no different, but Kim Smalley, AVP Human Resource Management, places a premium on the ability to have a broad perspective on issuesespecially if that perspective is outside the corporate box. Smalley says hes been spending time ensuring that were building a solid base so that when guys like me leave in another six, seven years, were handing it off to a group of people that are probably much better prepared than we ever were to ascend into some of these leadership roles. He says that there are moments when global leaders have got to be courageous, to step out and challenge things. In large far-flung enterprises such as Honda, bureaucracy can grow as the organization grows. That can be a problem, which is why global leaders need to question the status quo, and, in doing so, feed innovation and growth. There are times youve just got to take a good hard stand and say, You know what? Were not going to do that. [You] step up and challenge people to look at new and creative ways of doing things, and not get so caught up in This is the way weve always done it. Its real easy to fall victim to that trap.

SECTION : FIVE
Identifying and Developing Your Global Leader Talent Pool
Global leaders dont just appear out of thin air. Ask yourselfespecially if you are already a successful global leaderhow much of the DNA of global leader was in your makeup prior to any development experiences. Thats why organizations must work harder to identify and attract potential global leaders; to sift through their ranks to select the best and the brightest; and to continually develop the leadership skills required for the international stage. A comprehensive approach for developing global leaders must be a core component of the overall strategic talent plan for any global firm, including:

Start with the end in mind. Define what it will take for your organization to succeed globally over the next 3-5 years. Youll need to determine the key challenges (business drivers) that leaders must face to successfully execute against your strategic and cultural priorities. Ask yourself: Do we have enough leaders to tackle these challenges? If not, how can we accelerate their readiness? Paint a clear picture of what global leadership success looks like for your organization by developing a Success Profile for key positions. The Success Profile will include the essential experiences, knowledge, skills, personal attributes, and motivations your global leaders will need for exceptional performance. This business-focused metric for leadership success can leverage the aforementioned DNA components, but must be relevant to your organization.

22

23

Be realistic. DDIs research proves there is a significant difference between great leadership and great global leadership. But what makes the difference? For one thing, an individuals hardwiringthe personal style and attributes he or she brings to the tablegreatly affects how he or she operates. While some of these attributes can be developed, many cannot.

identifying and progressing candidates have both a solid understanding of leadership potential factors and the criteria against which to judge candidates. By instituting an effective process, organizations will have clear criteria for predicting leadership potential, as well as the tools to quickly integrate decision makers perspectives. Ultimately, a strong process will provide you with the ability to identify and focus development resources on people who will yield the highest return on investment and provide a pipeline of qualified leadership talent to meet increasing demands. Such a practice also helps companies avoid common mistakes, including:

LETS BE REALISTIC
1
- Adaptability - Adjustment - Sociability - Accurate Self Insight - Inquisitiveness - Humility - Interpersonal Sensitivity - Managing Ambiguity & Complexity - Energy - Culture Fit

2
- Strategic Thinking - Resilience - Cultural/ Interpersonal Effectiveness - Building Trust

3
- Leading Through Vision & Values - Risk Taking - Strategic Decision Making - Driving for Results

4
- Building Strategic Working Relationships - Driving Execution - Global Economics

5
- Communication - Global Business Acumen - Developing Talent

Focus on current performance, Inconsistent criteria, No common vision for future global leadership, Unchallenged perspectives and opinions, Provincialismpromote your own strategies, and Singular focus on strengths with not enough attention to weaknesses.

LOW

DEVELOPABILITY

HIGH

While some personal attributes can be developed, many cannot. The key is to be realistic.

The result of a successful identification process is that you will more readily identify high-potential global leadersand you may be surprised by some of the top contenders. Assessing and Selecting Global Leaders There are few HR decisions more important than assessing the readiness of high-potential candidates for global leadership. A robust assessment helps organizations to accurately assess and develop new, aspiring, or experienced leaders relative to the ideal Success Profile for a global role. Once an in-depth evaluation of a leaders strengths

Early Identification of Potential Global Leaders The first objective for firms embarking on a global leadership strategy must be to identify potential global leaders, both within the company and among external candidates. Successful organizations have in place systematic approaches for early and reliable identification of highpotential leaders. Its critical that those involved in

24

25

and development needs is in hand, the data can be leveraged several ways. In the short term, the results enable you to make better hiring and promotion decisions, so that you can dramatically increase the probability of successful executive performance and reduce time to business impact. In the mid- to long-term, assessment data is often used to accelerate development, so high-potential global leaders are ready when you need them. At the executive level, an effective assessment process measures candidates against your most important business drivers (e.g., enter new global markets, execute competitive strategy, drive profitability), cultural priorities (e.g., values and beliefs), and leadership requirements for upcoming global positions (e.g., business acumen, develop talent, drive execution). One proven method of readiness assessment is to place new, aspiring, or veteran executives in a business simulation as a global leader for a day. During this experience, prospective global executives are bombarded with scenarios from staff, asked to make decisions that they would likely encounter in the real world, and put action plans in place. Participants also make presentations on global business strategy, coach staff, and interact with the media. At DDI, individual and group assessment results are analyzed against a companys business drivers to determine where and how talent should best be deployed and developed. No firm achieves a 100 percent success rate in moving candidates to global leadership placements. But successful organizations dramatically improve their overall operational and financial performance by moving that success rate as close to perfection as possible. These companies understand that pushing a marginal candidate up the global leadership

ladder not only exhausts both time and resources, but often results in disaster through underperforming operations, botched market entries, or irreversible regulatory and No firm achieves a 100 percent financial problems. success rate in moving candidates to global leadership Companies with successful placements. But successful selection systems assess organizations dramatically candidates in a variety of improve their overall operational ways, including the use of and financial performance by competency models, tests, moving that success rate as close simulations, and behavioral to perfection as possible. interviewing. These solutions leverage the latest knowledge and technology to provide leaders with the data and skills they need to make the right selection and promotion decisions for global positions. One independent product-safety testing and certification organization we know does this exceptionally well. With more and more of its customers moving manufacturing facilities out of the U.S., this organization needed to migrate some of its operations to China to support customers needs. The company needed to develop and execute a selection system to hire 80 engineers in Suzhou and 26 in Taipei. With a world-class selection system, this organization not only found the engineers it was looking for, but also integrated operations. The system worked so well that the company is leveraging it to ensure quality and consistency worldwide. Developing Global Leaders There is no one-size-fits-all global leadership development approach. DDI has helped to conceptualize, design, and develop leadership programs around the world and in every industry. Best practices often include:

26

27

Cross-cultural executive development that often brings together senior leaders from around the world. Focused development helps these leaders navigate three pivotal transitionsthose related to the global organization, their new roles, and their own personality as it plays out on a world stage. Rather than being a one-time event, executive development experiences should be built to drive sustainable, transformational changeboth for the organization and the individual. Foreign assignments and experiential training that, for the executive, offer a taste of working and leading overseasideally stretching them out of their comfort zone. For the company, this represents an opportunity to test the candidates capabilities in a contained setting (e.g., where they cant do too much damage if they fail). In-country leadership coaching, peer mentoring, and buddy systems that make sure that no one global leader, regardless of position, feels like theyre going it alone. Support networks that enable global leaders to bring a broader base of knowledge to any business issue. Such networks also help address the personal challenges faced by global executives (e.g., support to ease families into foreign lands). Global landing training that provides the basics regarding country language, beliefs, values, communications, behaviors, and dress/attire. Online performance-support systems that swiftly bring resource materials, on-the-job tools, tips, and insights to the desktops of active global leaders. Virtual coaching tools provide guidance, action planners, assessments, worksheets, and performance tools, helping leaders maintain corporate focus, policies, and procedures.

Performance tracking measurements and systems to ensure that global leaders are fulfilling the mission relative to their corporate assignment (e.g., operations, financial, growth goals), but also succeeding at the intangibles related to global leadership.

One organization that has incorporated best practices like these is Xstrata. In recent years, Xstrata has acquired a number of firms, says Thras Moraitis, General Manager, Group Strategy and Development, and so the company has taken the initiative to help build global competence among incoming managers. Within business units that are run fairly autonomously, leaders are alive to the fact that we have to create this cultural exchange and opportunities to teach people new things. They tend to actively rotate people through their careers geographically to give them new ideas on how to do their same business, but in a different geographic environment. At the group level, Xstrata has two development programs, the first of which is for young high flyers between the ages of 28 and 35 who have the potential to be top senior executives. This program tries to find opportunities for them to gain multicultural experience, either by moving physically to another location or by taking on a role like marketing or sales that naturally gives them exposure to other cultures. The second program is for the most senior executives in line for the next business-unit CEO positions, giving them an opportunity to work and meet people from other industries and countries.

28

29

Developing Leaders Worldwide at Philips

Philips is one of the worlds most recognized brands, especially in consumer electronics, but behind that brand is a large, complex global organization that employs more than 120,000 people. While Philips had long focused on identifying and developing its high-potential leaders as part of its succession management initiative, it had never offered a global leadership development program for its general leader population. Philips built a core curriculum, bringing together courses that addressed several important leadership skills, including communicating for results, making effective decisions, and contributing to change initiatives. In 2006, more than 11,000 leaders went through at least a portion of the core leadership curriculum. It has been delivered in 35 of the 62 countries where Philips maintains a presence, with more locations being added all the time. Philips has discovered that by providing development opportunities to its leaders, it has realized a competitive advantage in recruiting leadership talent. Its an attractive element for new employees or future new employees, says Wiesje ten Hoor, global program director. From a recruiting standpoint, it has had an enormous impact. If you benchmark what we are bascially doing at this moment, I only know of a handful of companies that are doing learning and development on a global level, says Jan Aernout, global commodity manager of learning and development. We want people to develop. We want people to learn.

SECTION : SIX
Facing The Global Leadership Imperative
Although most organizations today understand the need to be global, many focus solely on building the infrastructure for global expansion and do not invest time and effort into identifying, selecting, and developing the talent necessary to succeed globally. Leadership on the global stage is differentand smart companies are increasing their investment in developing leaders who can deliver results. Are You Building a Global Leadership Talent Pool? If your organization is unsatisfied or unsure of the quality of its global leadership base, the following questions may help:

Willingness: Does your organization recognize the need to build a global leadership talent pool? Are you and other leaders ready to move in that direction? Resources: Are you willing and able to put the time, effort, money, and intangible resources against global leadership identification, selection, and development? Talent: Do you have the potential talent on board to jumpstart your global leadership initiative or will you have to look beyond your organizations walls? Human resources skills: Do you possess the HR talent and tools and/or the consulting expertise at your side to make global leadership a reality in your organization?

If you answered yes to all of the above, then your organization is ready to start down a path to global leadership that will enable it to leverage new markets, attract new customers, find new sources of capitaland grow beyond your wildest expectations.

30

31

Global Leadership Roadmap

1
CREATE YOUR GLOBAL VISION Clearly define your global vision as well as the strategic and cultural priorities for your organization. ESTABLISH GLOBAL LEADERSHIP REQUIREMENTS Determine what it will take for your organization to succeed over the next 3-5 years. What are the key challenges (business drivers) that leaders must face to successfully execute on your priorities? Start with the end in mind by developing a Success Profile for exceptional performance. IDENTIFY HIGH-POTENTIAL LEADERS Identify those leaders in your organization who have the highest potential to be great global leaders. ASSESS READINESS AND SELECT TALENT How do you know whos ready for the world stageand whos not? Gauge readiness of leaders to assume global leadership roles in your organization. Leverage the assessment and selection data you collect to make successful hiring and promotion decisions. ACCELERATE DEVELOPMENT Determine and deliver the right mix of experiences aimed at developing your senior executives and high-potential leaders. DEPLOY TALENT Decide how you will deploy your talent around the world. At the end of the day, the ultimate objective is to determine who will have the highest probability of achieving your global vision and executing successfully against your business and cultural priorities.

SECTION : SEVEN
Best Practices of Four Global Giants
Apotex Inc., Ontario, Canada
Human Capital: The largest Canadian-owned pharmaceutical company, employing more than 6,000 people in research, development, manufacturing, and distribution facilities worldwide. In the last few years, Apotex has hired more than 1,200 new employees. To meet the growing world demand for Apotex medicines, the company is hiring hundreds of new qualified technical professionals. Key Differentiators for Global Leaders: Able to communicate an inspiring and compelling vision. Innovative management skills that bring the creative talents of others to market. Able to act in a concise and precise way even when the world around them has been turned upside down. Global Leadership Strategies and Best Practices: Provides either a buddy system with an international leader or puts staff into a six-month exposure position. Throws potential global leaders in deep water to see if they can swim (i.e., take on a large project and succeed, have the right stuff, exhibit adaptability). Global Leader Challenges: The inability to extract business success from global leaders in a short period of time (it may take a minimum of five to 10 years).

32

33

Microsoft Washington, United States

Human Capital: The worlds largest software company, Microsoft has offices on every developed continent and into the farthest reaches of the globe, employing approximately 71,000 people from Algeria to Zimbabwe. In the last 10 years, Microsofts headcount has grown by more than 246 percent. Key Differentiators for Global Leaders:

Philips The Netherlands

Human Capital: Royal Philips Electronics is a global leader in healthcare, lifestyle, and technology, and employs approximately 121,000 employees in more than 60 countries worldwide. Key Differentiators for Global Leaders: Intellectual flexibility to take a perspective that is global. Ability to engage and mobilize the workforce in such a way that they sign up to the direction. Ability to influencebecause your dependence on people not under your control is much higher. Global Leadership Strategies and Best Practices: Identify a specific group within the talent pool who will make the most effective global leaders. Develop a career program for global leaders that includes experiences in two to three countries, business lines, and role models. Develop competencies of entrepreneurial business strategy (strategic direction) and people leadership. Give global leaders five to seven years to develop. Global Leader Challenges: Building a larger pool of global leaders in order to fuel growth. Providing global leaders with an engaging environment and developmental opportunities that can turn into career opportunities.

Experience working in different geographic regions because it breeds cultural sensitivity. Cultural sensitivityability to connect with people on a different level.

Global Leadership Strategies and Best Practices: Getting rising global leaders into a variety of offshore assignments, from startups to mature units to turnaround scenarios. Providing a coach who has global experience. Offering an appropriate level of support on the personal/private side. Global Leader Challenges: Trying to not have many assumptions when entering into new countriesbe prepared to start all over again.

34

35

Citi, New York, United States

Human Capital: Citi is a financial services company with more than 300,000 employees and approximately 200 million customer accounts in 100 countries serviced by more than 5,000 bank branches and consumer finance offices. Citi has an HR staff of approximately 3,000 outside the United States. Key Differentiators for Global Leaders: Exceptional leadership goes a long way regardless of country.

ENDNOTES
1

Merchandise trade of the European Union (25) by region and economy, World Trade Organization, 2005. Summary estimates for multinational companies: Employment, sales, and capital expenditures for 2005, Bureau of Economic Analysis, April 19, 2007. Global Financial Stability Report, International Monetary Fund, September 2006. Searching for the middle of the HR market in China, ChinaSolved Blog, www.chinasolved.com/blog. James Root and Josef Ming, Making foreign moves pay off, Bain Brief, December 1, 2005, Bain & Company. Scott Larson, Culture clash: Vendors and rivals say Depots cold shoulder doomed effort in South America-Reporters Notebook, Home Channel News, December 17, 2001. Wal-Mart: Struggling in Germany, European Business, Businessweek, April 11, 2005. Sheila Rioux, Paul Bernthal and Rich Wellins, Globalization of HR Practices, Development Dimensions International, 2000. Telis Demos, Going Global: The most admired companies are more focused on managing from the center than on local initiatives, Fortune, February 24, 2006. All examples created based on cultural information from International Business Etiquette and Manners, www.international-business-etiquette.com. Densos Asia and Oceania regional headquarters establishes new company in Thailand, Denso Global, April 3, 2007. Foresight 2020 Economic, Industry and Corporate Trends: A report from the Economist Intelligence Unit sponsored by Cisco Systems, Economist Intelligence Unit, 2006. Ron Moreau and Sudip Mazumdar, Indias Mr. Big, Newsweek, September 18, 2006.

A multicountry leader needs multicountry experience, knowledge, and awareness. Global Leadership Strategies and Best Practices: Spend time defining roles and competenciesmetrics tied to competencies. Tailored action planning for global leaders that includes identifying high potentials, individual coaching and development plans, offsite assistance programs (e.g., Harvard/London School of Business), and job rotation. Growing global leaders up from local businesses within the country; reducing the number of expatriates. Global Leader Challenges: Accelerating development of global leaders and getting them up to speed more quickly. Getting global leaders to work together with staff as a common team with common goals.

10

11

12

13

The CEOs Guide to: Preparing Future Global Leaders was developed in cooperation with The MPI Groups John Brandt and George Taninecz. MPI is located on the web at www.mpi-group.net.

36

37

ABOUT DDI
Its a grow-or-die marketplace. And having the right talent strategy is crucial. Development Dimensions International will help you systematically and creatively close the gap between todays talent capability and the people you will need to successfully execute tomorrows business strategy. We excel in providing a full range of talent management solutions covering the entire employee lifecycle, including testing, selection, onboarding, performance management, leadership development, and succession planning. DDI is all about giving you the kind of business impact you want over the long termthats what we call realization. The work we do together is tied to your organizations strategies and becomes part of your business and your culture. And if your business is multinational, DDI has 75 offices located in 26 countriesprecisely the kind of global resources needed to implement your talent initiatives effectively and consistently worldwide. Take a closer look at www.ddiworld.com/ globalleadership. The CEOs Guide to: Preparing Future Global Leaders is the second in a series. To receive the first booklet, The CEOs Guide to: Talent Management, please contact DDIs Client Relations Group at 1-800-933-4463.

40

41