.Worldsourcing

I just finished reading a new book called Globality, written by Hal Sirkin, Jim Hemerling, and Arindam Bhattacharya - all from Boston Consulting Group. The concepts in the book hit close to home. Ideas like pinpointing and clustering parallel Lenovo’s ‘hubs of excellence’ setup, and the book’s commentary on global business so closely describes Lenovo’s approach that the book in fact could have been called Worldsourcing.

The authors describe “challenger” companies - companies from emerging markets that are rewriting the rules of global company operations- as those that “….have no centers. The idea of foreignness is foreign. Commerce swirls and market dominance shifts.” Just the opposite, “incumbent companies have a bias toward standardization. One-world strategies. Centralized authority. Home office. Alignment of people and ideas.”

Like the “challenger” companies, Lenovo has no headquarters – no single location that holds the locus of control- and is comprised of a flexible structure comprised of hubs that allows us to take advantage of multiple geographies and the best resources from around the world.

This wisdom from the book has stuck with me: “The struggle of globality is learning to live with and thrive on manyness.” Lenovo has learned and lived this experience, embracing cultural diversity as a strength, and can testify that this truly is the key to global success for any enterprise competing in today’s Global 2.0 economy.

A fascinating piece in Sunday’s The New York Times by Larry Rohter that serves as a perfect illustration of why worldsourcing is fundamentally different – and better — than “globalization.”

Rohter’s piece discusses how the sharp rise in fuel prices is causing a lot of companies to rethink the way they organize their supply chains. Their globalization approach of chasing the lowest prices for goods and labor – which worked as recently as last year – has been turned on its head by the huge increased cost of transporting parts as well as finished goods. The cost of moving things now outweighs the savings in labor – the story cites a study by CIBC World Markets that found the cost of shipping a 40-foot container from Shanghai to the east coast of the United States has nearly tripled in since 2000, and is set to double again if oil reaches $200 a barrel. Add to that cost the fact that the ships themselves are slowing down to save fuel, adding significant time to market.

It’s no surprise, then, that so many companies organized around typical globalization models are scrambling to re-configure their manufacturing operations and global supply chains to enable them to respond to local market conditions rapidly and efficiently at the local level. That’s why companies like Lenovo now view their global supply chains as a key competitive differentiator.

Companies that have adopted a worldsourcing strategy already have responded to the issue by shifting their resources. This underscores one of the key advantages of worldsourcing: sourcing things where it is best to obtain them, not merely the cheapest, inherently means incorporating the kind of flexibility you need to rapidly respond to the increase in shipping costs. Lenovo already has manufacturing facilities in areas close to customers, as well as the infrastructure to shift where it gets its supplies as well as how it ships its ideas around.

Given the unpredictable nature of the global economy, and the probability that higher fuel prices are a long-term reality, it’s clear that globalization as it has been practiced is no longer truly viable. Under today’s economic realities, worldsourcing is more than just a better idea, it is the essence of economic survival for a global enterprise.

We’ve proffered a definition of worldsourcing as a “network of innovation, where the best ideas can come from anywhere.”  And that’s literally the basis for the creation of a new type of user-generated media taking shape on the web that is rising to the fore to help drive innovative thinking in the new Global 2.0 environment.   

This new category of online media is best exemplified by ChangeThis, which uses existing tools (like PDFs, blogs and the web) to challenge the way ideas are created and spread. The stated mission of ChangeThis: spread important ideas and change minds. The site is populated by “manifestos” — powerful fact-based ideas in essay form that incite the user to action.  In order to qualify for acceptance and publication on the site, manifesto proposals first must be vetted and voted by the user community in competition against other submissions. 

I couldn’t think of a better place to help propagate the worldsourcing vision.  Check out my recently posted ChangeThis manifesto:  Globalization Becomes Truly global:  Lessons Learned at Lenovo.   And, by all means, as the ChangeThis site exhorts:  pass this manifesto along to your friends, colleagues and family.

 Guest post: Pradipta Bagchi of Tata Consultancy Services 

As a senior executive of a global company with its roots in Asia, I find myself in strategic, historic, and personal agreement with the concepts in this blog on “worldsourcing.”  

My company, Tata Consultancy Services (TCS) – the world’s leading IT services, business solutions, and outsourcing company – has been practicing the precepts Reid and Lenovo call “worldsourcing” for 40 years. Today we call our approach the Global Network Delivery Model. Whatever its name, the strategy of our two companies is an outcome of the same fundamental insights.  

The global proliferation of high-technology and communications has created an environment in which innovation in products and business models can and does emerge from anywhere and everywhere at any time. Some products, business models, tastes, and trends are global. Some are hyper-local.

As a result, companies are obliged to survey the business landscape with a telescope held to one eye and a microscope to the other – without suffering myopia or vertigo. As a result of worldsourcing, companies must view the entire world as their marketplace and to profit from it, these firms need to find talent, production infrastructure, materials, logistics, R&D capabilities and customers wherever best available. And they must sell wherever profitable markets exist. That’s the telescope. 

Companies must also work continuously to get closer to their customers – physically, culturally, procedurally, and emotionally – in the expanding number of far-flung markets where customers are found. That’s where the microscope is handy. 

Faced with the challenge of shaping the underlying forces of globalization to maximize the value and quality we deliver to customers worldwide, it’s no coincidence that Asian-born companies like TCS and Lenovo developed similar distributed, decentralized approaches to meld the telescope with the microscope. One element of our common recipe is the legacy of Asia’s historic role as a rich source and destination of global trade dating back centuries before the rise of a civilized West. A more contemporary element is the knowledge we have accumulated struggling to grow modern businesses in challenging parts of the world, knowledge our companies now project globally. 

Our heritage allows TCS and Lenovo to look with fresh eyes on a world filled with potential new markets. For example, TCS has in recent years become the leading IT investor in Latin America, where we now employ more than 5,000 people in 14 countries. Latin America is just one of numerous crucial nodes on the new global network. In a 24-hour world, where work is always being done – somewhere – the concepts of “outsourcing” or “offshoring” no longer make sense. Where is “out”? Where is “off”? Global businesses must be everywhere. The sun never sets on bright minds grappling with business challenges and we have the business models to follow the sun. 

Our companies share the same goal: maximizing value for our customers, our shareholders, and our employees. At the same time, as multinational companies with roots in ‘emerging markets’, we feel a special responsibility to the new markets we enter. We work with people in these markets to further expand their capabilities to create wealth that benefits those who create it.Whether we call it the Global Delivery Network Model or worldsourcing, the best path to sustainable riches is a global/local partnership to bring out the best talents and capabilities of the people in each region while nurturing the development of a robust global market economy. 

The International Herald Tribune published a new Opinion piece from Bill Amelio.  Check it out online.

 The World Bank recently revisited its “dollar a day” global poverty yardstick and came to a startling conclusion: It was wrong when it said some 250 million people in China had escaped from severe poverty between 1990 and 2004.

Instead, by its latest count, some 407 million Chinese citizens rose out of poverty during those 14 years - roughly one-third of the entire population of the most populous country on the planet!

This upward shift is being repeated around the world with amazing implications for society. The Brookings Institution recently forecast that one billion people would join the ranks of this rising middle class by 2020.This is cause for global celebration: The world’s riches are being opened to all of its citizens, who in turn are contributing new value and advances that will propel the world economy to greater heights of shared prosperity.

Tyler Cowen -  professor of economics at George Mason University and co-owner of the economics blog Marginal Revolution – is no stranger to the conflict of opinions around globalization.  In “Creative Destruction: How Globalization is Changing the World’s Cultures,” Cowen examined how globalization increases personal choice, enriches cultures through cross-fertilization of ideas, and boosts global creativity – conclusions at odds with the “known truth” about globalization’s ill effects.

Cowen’s recent New York Times op-ed in defense of globalization, however, is especially timely – as world food prices rise, and concerns grow over the ongoing climb of oil, globalization is taking more of the public blame. Free trade and the world engine of economic growth are increasingly coming under fire for making things worse – not better.

But the truth is exactly the opposite. As Cowen references, the World Bank estimates that in China alone over 400 million people escaped from poverty from 1990 to 2001.  This unprecedented step forward has been echoed around the globe as international trade and the flowering of entrepreneurship combine to create new possibilities for poorer nations – and for the developed world, as well.

We are standing at the birth of “Global 2.0”, where ideas and talent are pooling around the world, not just in the traditional centers of the West. Where the West once sent out ideas to be made into products through cheap foreign labor, developing nations now have the chance to contribute fully to the global economy, adding their own insights and advances. 

In turn, this explosion of growth and creativity is creating incredible opportunities for business, enriching consumers, investors and creators across nations.  New markets are developing daily, fed by the rise of a world middle class.  New ideas and insights are rising as well, as we tap into the collective global talent.  We see this first-hand at Lenovo, where our entire business is focused on taking advantage of local insight and global talent, in a decentralized and non-hierarchical way.  This is the growth engine of our collective future. 

Lenovo CEO Bill Amelio’s recent article in BusinessWeek laid out the foundations of what makes worldsourcing work, and why it matters.  We’re entering the world of Global 2.0, where competition is being increased and redefined by the transition from a Western-centric model of controlling the high-value aspects of  production, to a world-based, decentralized model where ideas and innovation can come from anywhere to serve markets everywhere, fueling the explosive growth of a rapidly evolving world consumerist market.  The competitive relevance is staggering, and it’s a reality that many companies are only now fully beginning to grasp.

For individuals around the world, Global 2.0 and the rise of worldsourcing means empowerment.  It’s about reducing barriers to entry and chasing the best ideas where they bubble up, not limiting ourselves (and others) by looking only where we’re accustomed.  It can also allow entrepreneurs around the globe to do what talent does best: compete, create, and succeed

In a recent New York Times op-ed, Thomas Friedman examines the coming political challenges for the United States – the rise of unexpected competitors, the need to innovate, and a redefined balance of power that takes in a sweeping array of new world players. As Friedman writes, “the real story…is how few countries are waiting around for us to call. It is hard to remember a time when more shifts in the global balance of power are happening at once.”

Citing Fareed Zakaria’s recent essay (discussed below), Freidman warns that the political shift to a multipolar landscape demands new strategies, and that the “rise of the rest” means the West can no longer merely expect success or assume that established patterns will endure.

What’s interesting is how perfectly this describes the challenges facing business. The political changes that Friedman recounts parallel the ongoing economic evolution, as the shift to a “Global 2.0” world creates waves of change across industrialized and developing nations alike.

Comfortable, familiar assumptions are being overturned. Ideas no longer flow in smooth concentric circles from a defined and Western center out to foreign ports for consumption, or for retooling by cheap labor. Instead, new engines of innovation have emerged across the globe, redefining the traditional poles of power. And in turn, these engines of development are creating unexpected new markets, thinking and challenges worldwide.

When Friedman wrote the business best-seller The World is Flat in 2005, he described Lenovo’s just completed merger with IBM’s PC division, as a key example of a business adapting to a changing world – “a global company with roots just as strong from all parts of the globe.” Since then, we’ve evolved that concept even further with our worldsourcing approach creating an organization that combines the best of East and West with distributed operations and a decentralized, global identity.

The rise of Global 2.0 has only become clearer since then, and changes are rapidly spreading across the political, economic and social landscape. What next?

Fareed Zakaria (author of The Post-American World) wrote on the evolution of the new world economy in a recent issue of Newsweek, summing up the complexities of the post-globalization era in two succinct sentences: “Billions of people are escaping from abject poverty.  The world will be enriched and ennobled as they become consumers, producers, inventors, thinkers, dreamers and doers.”

These few words carry a wealth of implications.  The world is changing, and this change is transforming countries and communities across the globe.  For businesses, this means facing a uniquely new environment, defined by the rise of underserved markets, and the need to collaborate with an increasingly educated and sophisticated world audience – as employees and entrepreneurs, a key source of talent; as customers, the future of global demand.

The challenge for companies is learning how to adapt.  Lenovo is leading the way through worldsourcing, working across borders and across the world to tap global talent and integrate with local communities, bringing the best minds and skills to bear where needed.  As business responds to the shifting economic and social environment, this post-globalized, non-hierarchical approach will be at the core of the new model for world operations.

The future is not a static, zero-sum game, but a larger playing field, where rising talent and growing markets mean increased wealth and competition across the globe.  Lenovo is embracing these new markets and new ideas – along with the thinkers, dreamers, and doers of an ever-expanding world.

The earthquake on Monday in China’s Sichuan Province has claimed 12,000 lives by the latest estimates. Survivors urgently need food, medical aid, and shelter.

Lenovo is making an initial donation of $1.4 million to the disaster area, and Lenovo employees in China are responding to the crisis by donating blood for local hospitals and emergency care services.

More than 600 employees in Beijing lined up to give blood (see above), while cash donations from more than 800 Lenovo employees reached $100,000 USD in only six hours.

Lenovo is part of each community in which we operate, around the world. Our thoughts and hopes are with the survivors of this terrible tragedy. To add your contribution to the relief effort, visit: International Red Cross .