Sunday, November 4, 2012

Companies need a geography lesson

Ahhh ! If only the world was as simple as 50 years ago. Global companies found it quite simple then to divide the world ; there were only three regions in the world - America, Europe and Rest of the World. If you were an American company, 70 % of your revenues came from America, 27% came from Europe (Oh god; we have to improve there) and 3% came from Rest of the World (where's that ?). If you were an European company, 70% came from Europe, 27% from America (the bloody Yanks) and 3% from Rest of the World (where's that ?) Quite simple.
Alas life has got a bit more complicated for global companies. How to cut the world ? A popular division is to split as America, Europe and Asia Pacific. That threw up a problem - what about Africa (where's that ?). So came EMEA - Europe Middle East and Africa. Right - President Americas, President EMEA and President APAC.
That threw up more problems - does it make sense to group France and Mali in the same group ? And Venezuela and US didn't seem the same either.  So companies moved to split as per the continents - North America, Latin America, Europe, Africa and Asia.
That threw up more problems. In Europe, Western Europe was dead and declining. Central & Eastern Europe was growing at 35% per annum. Lumping them together under the same management seemed daft - they required completely different strategies. And what to do about Japan & China. Japan was more like Europe. China was an altogether different story. And was Dubai Asia or Africa ??
So companies started inventing "clusters" - the world was North America, South America, Western Europe, CEE, Africa & Middle East, South Asia, North Asia and South East Asia & Australia. Each had a President.
But that's got its own problems. Australia was more like the UK than Asia. Japan and China got still grouped together. So what to do ??
So, how to carve up the world ? In the good old days, geriatric Brits (since Britain owned most of the world), in smoky pubs, took out a world map and drew some random straight lines - how straight the line depended on how many beers they had had.  That's how country borders were created - if you see a map of Africa for example, that's why many so many national boundaries are straight lines. Never mind that it divided tribes, or ran halfway through a lake , and so on.
Now the same thing has been going on in companies. Substitute geriatric Brits for political company bosses, and smoky pubs for company boardrooms, and exactly the same things happen. There isn't a single company where this is being rearranged every three years.  Empires are made and they fall, just like in the political world.
I suggest that company bosses enroll for Geography 101 with Sriram,  before they start to draw their lines ! They might become a little more educated on the world.
Meanwhile readers are invited to present their own pet carve up of the world !