Being Global. Gregory Unruh
and bartered since they became human. The Carthaginians and northern Africans exchanged goods as early as 430 BC.3 Wealthy citizens of the Roman Empire were fond of Chinese silk even before they were aware of China. Yet global trade today is different, largely because it is so pervasive and efficient. Virtually every modern sector and every geographic location has the potential to link to a global market.
Plenty of events and innovations had to happen through the course of history to create the ease and speed of transport and communication necessary for these linkages to occur.4 Today's firms are taking advantage of the enabling environment by investing more heavily in foreign markets, regardless of what, to them, is foreign. Between 1988 and 1997, there were 366 cross-border mergers or acquisitions valued at $1 billion or more; in the following decade, the number of deals more than quadrupled to 1,583.5 Even during a crisis year like 2009, the foreign direct investments made by companies around the world were twice what they were in 1997 and six times what they were in 1989.6
World employment figures tell a similar story: in 1990, multinational corporations employed about 25 million people in foreign subsidiaries—employees working in one country for a company headquartered in another. By 2007, the number exceeded 81 million people.7
As global business connections are increasing in their number and value, the nature of international business is also becoming more inclusive, multidirectional, and interlinked. The approach to global business first modeled in the seventeenth century by the Dutch East India Company (VOC) as a hegemonic enterprise, wholly driven from an American or European headquarters, with Westerners dominating the management positions, is gradually disappearing. Global business in the modern era is truly transnational. Innovations, supply chains, talent, know-how, and capital no longer flow west to east and north to south, while commodities move along opposite currents. Instead, players at all locations along the supply chain are influencing and adding value to the products and services that reach the customer. One of the most compelling details from United Nations data shows that in 2010, nearly half of foreign direct investment came from developing economies and half went to developing countries—a major change since 1989, when developed economies received 84 percent of foreign investment, most of which came from their wealthy peers.8
Today, the world's largest steel company has its origins in India. Another Indian company owns the iconic British auto nameplate Jaguar. The largest building-materials supplier is Mexican. The most sophisticated semiconductor fabrication plants are in Taiwan. The hub of solar energy technology development is in China. Brazil's Embraer is the envy of Boeing and Airbus.
There is plenty of disagreement over the dynamics, modes, benefits, and costs of globalization. Thinkers with wide-ranging views such as New York Times columnist Thomas Friedman, urban studies theorist Richard Florida, historian Robert Kagan, and economists Jagdish Bhagwati, Joseph Stiglitz, and Pankaj Ghemawat have all taken varying positions on the trends, results, and effects of globalization.9 For our purposes, it does not matter which of these thinkers is eventually proven more right than the others. Our interest is not precise measurements of the state or pace of globalization in the present or near future.
Our interest is to help inspire and develop a new generation of leaders who can make globalization better and fairer for all, or who can, in the language of the United Nations Global Compact, create a more sustainable and inclusive global economy. Globalization is the reality that we live in, and we need global leaders who can thrive in this complexity while leveraging its fundamental forces to have a positive impact.
A global world founded on a global marketplace is a hard-won gift given to us by our predecessors. We have the opportunity to create shared prosperity at an unprecedented level. We cannot take this opportunity for granted—it is not predestined or preordained. It can be squandered and lost. Seizing the opportunity depends on this generation of existing and emerging leaders.
Global Leadership Opportunities, Global Leadership Challenges
Globalization benefits have been distributed unevenly. International commerce has consequences that are not always positive—many people have been excluded from global trade networks, and the very act of trade puts a burden on limited natural resources and the climate. Despite unprecedented growth in world economic output and advances in medicine and technology, there are still billions of people who do not have access to clean water, quality healthcare, a good education, or the opportunity to participate in the institutions that will dramatically affect their lives and futures. These problems can be surmounted, we fervently believe, by global leaders of the type documented in this book. But we need more of them if we are not to let our global inheritance to slip away.
Economists since David Ricardo (who first articulated the theory of comparative advantage in 1817) have documented how market connections can bring enormous benefits, often in the form of economic growth and technological innovation. International trade can bring about advances in personal productivity, health, the efficient use of energy and resources, and food production, just to name a few, by allocating work to places where it can be carried out comparatively better, faster, or cheaper. International investments can help expand markets for existing products, optimize the use of existing capital, and transfer innovations and technologies to locations where they can be best leveraged.
Economic expansion and integration also bring challenges, however. Many of those challenges are more extreme today than any we've faced in the past, expressly because we are much more interconnected than we've ever been (even more than during the often-cited nineteenth-century wave of British-led globalization). The global financial crisis that began in 2007 offers a case in point for how seemingly local issues like increased personal savings in China and rising U.S. home values, low interest rates, and a large third-party market for securitized loan packages could lead to a gargantuan speculative bubble that, upon bursting, could reverberate around the world to affect economies as distant as Iceland and Belgium. In 2011, we are confronting a possible double-dip global recession and a repeat of the global credit freeze, as European leaders fail to contain the contagion of a crisis that started with the public finances of tiny Greece and that has put the very euro on the brink.
Our natural environment is another global system taxed by increased connectivity and growth. We have put severe pressure on our supplies of resources and energy, resulting in dangerous levels of greenhouse gas emissions that are altering established climate patterns. To sate our hunger for more, and more affordable, fuel, we have assumed massive risks, made visible in the Deepwater Horizon oil rig catastrophe in the Gulf of Mexico and the escape of radioactivity from the Fukushima nuclear reactor following the Japanese earthquake and tsunami of early 2011.
Global pressures extend beyond energy. Increases in disposable income push demand for animal protein, in turn driving demand for grains, commodities, and water. Mass urbanization stresses the supply of fresh water, energy, and open space. HIV/AIDS, bird flu, swine flu, and other infectious diseases can now spread at the speed of commercial aviation, turning local epidemics into regional or even global pandemics. Poverty and hunger, security, universal education, affordable public health care, equality, and human rights are at once global and local. They are also interlinked, multifaceted, and hugely complex.
The world needs leaders to capture global opportunities and solve global problems—sometimes with the same vision. We need global leaders to engage with businesses, governments, and nongovernmental organizations, to bridge the distance between these disparate players, all of which have something to contribute on the path to shared prosperity and sustainability.
Global Leaders for All Sectors and Institutions
Global leaders are not born but made. The enterprises, organizations, and governments making strides to capitalize on opportunities and solve problems on a global scale are not leading themselves; they are led by individuals who have invested in developing the skills they need to function—even thrive—in a globalized world. Being global is a personal journey. It is about how you choose to focus your attention, spend your time, and engage your mind.
The payoff for this investment is great, but it is not necessarily measured in the traditional