All the World’s a Business Stage

No business leader interested in the challenge of globalisation can afford to ignore the work of Kenichi Ohmae, an acclaimed management strategist renowned for his work on globalisation and the borderless economy.

Dubbed “Japan’s only successful management guru” by the Financial Times, Ohmae is a man of many parts. He is a concert-playing flautist, a nuclear physicist, a would-be politician, former McKinsey consultant, a motor-cycling enthusiast and author of over 100 books – to name but a few.

Though he is Japanese and lives in Tokyo, Ohmae is instinctively global. As well as being dean of two private schools in Tokyo – Isshinjuku, which teaches public policy, and Attacker’s Advantage, which teaches entrepreneurship – he is also the Chancellor’s Professor of Public Policy at the UCLA School of Public and Social Research in California. He lectures all over the world, advises businesses and governments in every continent and writes regularly for western journals.

His writing focuses on the forces that are dissolving national borders and building new regional economies, how businesses should leverage technology and other new platforms for growth, how to lead a global corporation and the role governments play when nation states no longer matter.

Ohmae’s most recent book, The Next Global Stage: Challenges and opportunities in our borderless world, builds on much of his earlier work and is intended, he says, “to provide a script to help people through the shifting plotlines of the global economy.”

Borderlessness is the most important characteristic of the global economy, Ohmae believes. “In terms of communications, capital, corporations and consumers, which are the four key factors of business life, the world has already attained borderlessness,” he says.

He explains that the concepts of America Inc or Japan Inc are already largely irrelevant, because e-commerce knows no boundaries. When you get an email you have no indication of which country it comes from, knowledge workers can and do work anywhere, financiers – and individuals – switch their investments to whichever country yields the best returns, and so on.

He goes on to argue that nation states are declining because their fixation on borders is out of kilter with today’s transnational world. The nation state, he says, “has the potential to hold back human development through artificial compartmentalisation of skills and markets.” By contrast, ‘region states’, which used to be seen as parochial and inward looking, will become more important.

Emerging region states include places like Beijing, Shanghai and Guangzhou in China, Hyderabad and Mumbai in India and San Jose in California. But Ohmae stresses the importance of ‘human magnets’ to a region too, describing the effect Michael Dell has had on the growth of Austin in Texas, the original location of his eponymous computer company, as “monumental.”

The most important element of any successful region, he continues, is openness to the outside world. “The rest of the world must be viewed as a source of prosperity. All lingering concepts of native versus foreigner must be erased, so rules limiting foreign investment or foreign ownership of land or capital must be abolished.”

Ohmae judges the ‘annus domini’ of the global economy to be 1985, the year that Microsoft launched its Windows operating system, and he uses the tongue-in-cheek dating system of BG and AG – that is, Before Gates and After Gates.

Success in the new global economy will depend on good leadership, he continues. “Given the uncertainties, leaders must be creative and pragmatic, refusing to be imprisoned by the past. Business leaders should have vision. They must embrace innovation and court flexibility. They must also possess a full understanding of, an instinctive sympathy with and a total commitment to the global economy.”

The Mind of the Strategist, which made Ohmae’s name 20 years ago, is still viewed by many as a Bible of corporate strategy because of its good sense and clear advice. Its underlying premise is that successful business strategies do not come from rigorous analysis but from a thought process that is creative and intuitive rather than rational.

One chapter in the book is an essential aide memoire for anyone running a business. It comprises a list of things to avoid and concentrate on. For example:

Avoid tunnel vision: consider alternative routes rather than being fixated on one.

Avoid the peril of perfectionism: sometimes it’s better to do something that’s almost right rather than wait for the perfect solution and miss the strategic opportunity.

Focus on the key factors and don’t be distracted by minor complications: all businesses are simple, once you get to know them. Banking, for instance, might look complicated to the outsider, but boiled down to its core it is nothing more than getting in money cheap and lending it out as expensively as you can.

Always challenge the constraints and ask ‘what can we do?’ rather than ‘what can’t we do?’ Strategy is a question of attitude more than numbers.

In the book Ohmae contrasts the Japanese and American approaches to strategy. The Japanese look at what they think their customers will want, whether the company has the competence to meet these demands, and whether they can do so profitably in the face of competition. The American way, at the time, was to analyse the numbers for the different possible options – something Ohmae calls ‘spreadsheet doodling.’

But it is the bigger issue of the changing shape of the world of business that truly fascinates him and will no doubt continue to do so, and it is a source of concern to him that so many businesses fail to take it seriously.

“The global economy is reality, not a theory,” he says. “It is growing stronger, it will feed on its own strengths, it is irresistible. There is no use complaining about it or wishing it to go away. People just have to learn to live with it.”

Or, more accurately, they have to learn how to conquer this new ‘invisible continent’, before the rules and laws are too fixed and before others see the possibilities.

As he points out, what others saw as Florida marshland, Disney turned into a hugely successful theme park.

Previously published in the Business Review, Impact Executives and http://www.onrec.com/newsstories/22623.asp