Special Feature: The Midwives of Globalization

Meet the next generation of American strategists, a group that New York Times columnist and globalization guru Thomas Friedman says must spot the strong interactions and entanglements among different global elements — technology, financial markets, foreign policy, politics, national security, worldwide balance of power, and culture — and then connect the dots.

In her five years with Andersen, Cary has exercised her authority as a global intermediary in Brisbane, Sydney, and, for the time being, Chicago, further traveling from there to engagements in St. Paul, Wilmington, and Kansas City. She's also managed to sneak in some sailing between assignments (and French and German language studies) while charting a career she hopes will next lead to a European post.

Meet the next generation of American strategists, a group that New York Times columnist and globalization guru Thomas Friedman says must spot the strong interactions and entanglements among different global elements — technology, financial markets, foreign policy, politics, national security, worldwide balance of power, and culture — and then connect the dots.

Although the notion of globalization has been batted around with gee-whiz (but vague) promise over several decades, successful global consulting firms nail down a firm understanding of the benefits and risks connected to their ever-widening reach. They do so by continually reexamining the dimensions that fuel globalization's increasing complexity, grooming their consultants to think as globalists, and distilling from individual consultants important insights and practices that strengthen the organization's global services. Knowledge management (KM) systems synthesize those individual global perspectives, intelligence, and experience into knowledge reservoirs. And consultancies with the deepest and most accessible reservoirs consistently emphasize the social and cultural aspects of their KM processes over the technological component.

"If you accept as I do the proposition that the corporation is the principle proponent and beneficiary of globalization, then the consultant is the midwife," says Paul Laudicina, vice president and managing director of A.T. Kearney's global business policy council in Alexandria, VA. "Representatives and leaders of global consulting firms have been among those individuals whose trade and talent has been based upon the continued assumption that goods, capital, and ideas would continue to move rapidly, globally, uninterruptedly. When anyone or anything begins to cast doubt about that proposition, one needs to step back and look at all of the basic assumptions."

Recent events have solidified the assumption that leading consultancies are global entities. Following the destruction of the World Trade Center, clients besieged Big Five firms with questions about security, disaster recovery, and business continuity planning. A couple of weeks later, a KPMG LLP consultant with FBI experience helped a USA Today reporter break coverage of the covert banking system known as hawala that terrorist networks like al-Qaeda reportedly use to transfer money across the world.

On a lighter note, in the following month Accenture opened new technology-development facilities in Prague and Mumbai (the city formerly known as Bombay). And leading strategy management firms have operated globally since their inception. Bain and Company has three times as many offices overseas than it does here in the U.S., and less than half of Boston Consulting Group's employees were born in the U.S.

But having offices in dozens of different countries does not a global consulting firm make, notes Scott Hartz, CEO of PwC Consulting. "There are franchise businesses around the world that do that," Hartz says. "In our view, it's really about being able to respond to global clientele." When PwC recently bagged a U.K.-based client, Hartz asked the company why his firm was selected. The client, Hartz notes, had judged that PwC was "more global" than its competitors for the project. "They said, 'Well, we're sitting here in the U.K., but we have a major problem with a couple of businesses we acquired in the U.S. Everyone else came in here with a team of five Brits to tell me how great they'd be at solving the problem,'" Hartz notes. "We came in with a British team that included a bunch of Americans. The clients said we gave them confidence that we wouldn't send three Brits into Texas to try to solve the problem."

One of the most essential assumptions consulting firms wrestle with is the future of globalization. "One of interesting things since Sept. 11 is how global the world has become," says Gail Steinel, global managing partner of Andersen's business consulting practice in New York. "Before this, there were a lot of questions in the business community: Is globalization a reality? Or, does it just mean international operations at times? If you look at the impacts of Sept. 11 on economies and on people's emotions around the world, I think it has proven to everybody — beyond their wildest dreams — how global our economy really is and how interrelated all these different businesses are."

Midwives, Inc.

Long before the terrorist attacks on New York and the less harrowing antiglobal protests at World Trade Organization (WTO) and World Bank conferences, leading consulting firms defined what it means to be global and how that translates to harnessing their consultants' global insights.

Grounding the benefits of globalization requires consultants to accept a definition that covers the generation of wealth through the increasingly unfettered movement of goods, capital, and information to and from a growing number of locations. Policy liberalization initially launched the process, while technology has more recently turbocharged it. A definition of global strategists that appears in Friedman's book, The Lexus and the Olive Tree, sounds as if it were lifted from a consultancy's mission statement. "Globalists," Friedman notes, "assign different weights to different perspectives at different times in different situations," but understand that the interaction of all of those elements is the most critical factor in the insights they draw. "I think it has always been part of the core mission of the major global strategy consulting firms to truly think and act as globalists," says Bob Armacost, director of knowledge management at Bain and Company in Boston.

Discussions with managers at leading Big Five and strategy firms reveal that successful global consultancies consider their globalist qualities as inseparable from underlying strategy. The three mandates that guide A.T. Kearney's development, for example, include leadership, growth, and globalization. "The kind of consulting firm that can meet and exceed the needs of its global clients is, first and foremost, global itself, and therefore subject to the same dynamics, which it feels intensely rather than just academically," Laudicina says.

Andersen counts geography as one of the key dimensions of its matrix management structure. "A client calls and wants help setting up a global customer care capability," says Steinel. "If I only go to my industry guys, who know retailing well, I have one answer for the client. If I only look at it through all my customer-care experts, I might give them a different answer. But there are geographic differences as well — Asians respond differently to call centers than Americans do. So, I allow my people to be developed over time so that they see the world and see our clients' problems through all three of those dimensions."

Waiting on the World's Tables

Former consultant Lisbeth Claus sends her graduate students back into the real world with the same parting advice each year, a global business version of the everyone-should-wait-tables. "I tell my graduates to spend two or three years as a junior person in consulting and then decide where you want to go in life," says Claus, associate professor of international organizational behavior and cross-cultural management at the Monterey Institute of International Studies. "As a consultant at a top firm, you look at something microscopically, which is your client, but then you step back and examine the problem as it arises in that industry or in the world. Clients always say that their problem is very specific. But when you are a consultant and you take five specific problems, you suddenly step back and see that these five specific problems have an underlying core."

The ability of consultants to zero in on those patterns distinguishes globalists from their more parochial counterparts. "The most difficult thing for anybody is to build the recognition of how radically different other parts of the world are," says Charles Lucier, senior vice president with Booz-Allen Hamilton in New York. "For example, what's public and what's private differ radically in different parts of the world. What's government and what's not? What is acceptable for antitrust purposes differs in different countries. The distribution channel structures in different industries are different in a lot of places. It's important not to generalize that the world is going to be similar in very many respects to your experience in the United States."

In Europe, for example, environmentalism has reigned as one of the top issues for the past 15 years. Not so in the U.S., where green concerns have not held a prominent position in public opinion since Earth Day launched in 1970. "It helps consultants to begin to carry those generalizations around," Lucier adds, "so you know that if your client is marketing something in Europe, the environmental aspects of it are going to cause a different reaction than they do in the United States in every respect. Over time, you begin to see what some of the enduring differences are regionally, and that helps you begin to generalize and see what that likely means for your clients."

The Global Loom

Consulting firms take two types of approaches to weaving consultants into globalists: tactical and cultural. The fairly straightforward tactical strategies include an emphasis on overseas assignments for junior-level consultants, regular interaction between younger staff and more globally seasoned veterans, and global training facilities.

BCG, Booz-Allen, and Andersen, for example, regularly rotate junior-level consultants to different worldwide offices for assignments that range from three months to three years. "If we have a client in New York with a major business in China, we will have a couple of junior people assigned to that client in New York go to China and work with our teams on the ground in China for three to six months," Lucier notes. "We work pretty hard to get people engagement-specific and client-specific opportunities to build those global understandings, as opposed to, for example, transferring someone to the office in China for three years. That's actually worked quite well for us, and it helps people to begin to synthesize those differences in their own minds."

Bain's approach to global training also is representative. "We intentionally look for a very broad geographic and ethnic mix in our people because that can only further the global perspective of everyone," says Armacost, who, like Andersen's Steinel, emphasizes the fact that his firm avoids a "siloed" approach to training. "We don't deliver training in siloed offices," he adds. "We fly everybody to a single location and mix everyone up so that you're literally building relationships while at the same time also learning the perspectives of people from different countries during the Bain training."

But Claus believes that because of knowledge-sharing difficulties, some consulting firms are really less global than they portray themselves to be. "I've seen it over and over again, when I have alumni working for the same consulting company," she says. "One will get in touch with me and tell me what they're working on, and I'll say, 'Do you know that somebody with your firm in France is doing the same thing?' And they're not aware." Claus believes that consultants born outside the U.S. adapt more easily to knowledge-sharing. "They're used to doing that," she notes. "But the Americans will not look at a French report that's been written in French for a French client because they really don't have these multicultural, multilingual skills to share that knowledge."

Successful global consultancies overcome this pitfall by cultivating their individual consultants' global wherewithal through social networks within the firm. Managers at these firms punctuate their discussions about grooming globalists with qualifiers like "discussions," "in person," "coming together," and "team rituals." Laudicina describes the globalization of A.T. Kearney as "an organic process that's seeped into the deepest recesses of firm consciousness."

Mark F. Blaxill, a senior vice president at Boston Consulting Group's Boston office, also emphasizes the important role of internal relationships in fostering global savvy. "I think it's impossible to underestimate the social dimension," he says. "We invest a great deal in the social fabric of BCG, meaning opportunities to bring people together, whether it's on a client team, whether it's within a practice area, whether it's on a particular problem, whether it's on administrative issues or recruiting questions. We invest a great deal of time in bringing groups of people together so that we're not just a collection of offices in a bunch of different places."

No Globalist is an Island

Blaxill's point sheds light on the critical role global firms assign to their knowledge management strategies. "To really be global," Claus says, "firms need a knowledge system. At its core, consulting is knowledge-sharing."

Firms cultivate their global offerings base by equipping consultants with common methodologies, tools, and vocabularies to shape and refine their perspectives and experiences. "But if all the consultant did was utilize the training, tools, and relationships, in my mind he simply becomes a very informed localist," says Steinel. "The only way to turn them into globalists is by adding the ability to synthesize those perspectives, to balance all the lenses they look through to make a good business decision."

KM systems and organizational structure fuel the synthesis process Steinel mentions. While that framework often involves an IT system, knowledge management at its core relies on human interaction. "Many people argue that the management and creation of knowledge is by its nature a social phenomenon," Blaxill notes. "And that it's not simply an exercise in putting something up on a page or a database and downloading. It's very much an issue of nuance and interpretation and creation of new insight from things through the process of interaction."

In the hours, days, and weeks after the World Trade Center towers collapsed, Booz-Allen held a series of worldwide calls and meetings to determine what Sept. 11 meant for its clients. "In those sessions," Lucier notes, "you have a number of partners saying, 'Gee, here's what I'm hearing from my clients.' And then, based on that we synthesize what that tells us in general about what the implications are for clients. For my specific client, it's my job to do that integration, but as we start to move broader across industries or across global, economy-wide issues, no single individual can do that. And that's the place where you need the organization to step up."

Ultimately, it is the organizational structure that determines the success or failure of a consulting firm in the global marketplace. "For us, most of being more global is about the way we team and the way we operate as an institution," Lucier adds. "It's not as much about individuals. There's a hell of a lot of stuff that people have to learn to do these days, and we can't always expect to make them better Renaissance people." No matter how many Jane Carys are sailing around the world.

Sidebar: Harnessing Global Experience

One of the most notable features of Bain and Company's state-of-the-art knowledge management (KM) system is its name. The "Global Experience Center" (GXC) in many ways serves as a better description of the Bain mission than "consulting firm." Bob Armacost, the company's Boston-based director of knowledge management, says that Bain began developing the high-cost, high-priority KM system nearly three years ago "because the pace of change and the globalization of knowledge make it much more relevant now to know, for example, how the German asset management market could impact our clients with business in multiple countries. It has really put a premium on our ability to capture our best thinking on different industries, different business issues, and different parts of the world, and rapidly share that thinking."

Armacost says that the GXC, which aims to "get our people as smart as they can be on important issues as quickly as possible," is supported by five best practices:

• Senior-level management leadership. "KM needs to be driven by your business's strategy and endorsed by and invested in by senior management," Armacost says. "At Bain, the GXC was sponsored by our worldwide managing director at the time and was unanimously endorsed by our worldwide partner group as one of our most critical investments in 1999 and 2000."

• An emphasis on people and process. Moving beyond the notion of KM as an on-line bulletin board, Bain assigned "knowledge brokers" to its knowledge management center to comb through the intellectual ground covered in each project. The brokers identify the best and newest thinking, and then codify it on the system if it makes sense to do so.

• The involvement of client teams. "All of our newest and best thinking is actually coming out of our active client teams," Armacost says. "Those insights seldom come out of central think tanks at Bain." The firm's KM program motivates the partners, managers, and consultants on each of those teams to donate their insights through a series of internal rewards and incentive systems tied to their compensation.

• Comprehensive but carefully pruned content. The Global Experience Center's "internal capability toolkits" offer leading industry points of view, as well as intelligence on government regulation, industries, distribution channels, and so forth. Knowledge brokers bolster Bain's internal intelligence with external content. "For example, Bain's experience in China is just a fraction of what the overall world experience has been there," Armacost adds. "Our Asian toolkit not only publishes our best work but also points to the best external sources out there — market research reports that we've bought, government sites, experts we can interview, and so forth."

• A powerful but flexible IT system. Tellingly, the technology piece occupies the bottom of Armacost's list. While the system must be robust and user-friendly, the technology never trumps the value of human interaction and judgment. "Developing knowledge brokers was something that came out of prior KM experience, in which we simply left the process to the devices of IT," Armacost says. "That's how we discovered that so much of this truly revolves around people."