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TALKING MANAGEMENT

Transcript: Empathy the new watchword for multinational leaders Add to ...

KARL MOORE – This is Karl Moore of the Desautels Faculty of Management at McGill University, talking management for The Globe and Mail. I am delighted today to talk to [Insead business school professor Subramanian] Rangan.

Subi, you have been studying globalization for a number of years now. What do you see as the latest issue when it comes to the future of globalization?

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SUBRAMANIAN RANGAN – I think it has worked wonders. Open economies certainly seem to be doing economically better, and of course it is not an unmixed blessing.

I think there is a whole tension, if you will, between value creation and value capture. As globalization has unfolded, firms are looking at value capture but states and societies are equally looking at value capture and they realize that this is not easily contractable.

If you come and operate in my society, whether you are in the primary industry like mining or whether you are in the manufacturing secondary sector or whether you are in the tertiary sector, every state is under pressure to deliver more to its constituents, and there is a little bit of a disconnect between the necessary architecture and the existing architecture.

What I mean by that is, technology has interconnected us; economics and supply chains and global patterns of consumption have made us interdependent; and movement of jobs, movement of entire value-added activities in a dispersed manner et cetera, but politically … . So all of this efficiency has been about the size of the pie and the world’s GDP today is bigger than it was 20 years ago, et cetera, but the share-of-pie issue, which is where the value-capture dilemma comes in, has become a first-order concern.

As a result, some business leaders are now very alert to the notion that they have to be corporate statesman and not just corporate leaders.

KARL MOORE – Subi, what is the difference between a corporate statesman and a corporate leader? What do you see is the difference between those two? You are suggesting we need more of the first – what is that?

SUBRAMANIAN RANGAN – What this implies is a much more empathetic person at the helm of the enterprise, empathetic not just to the customers but also to the local interests – and by local, I mean in the host economy.

So if you are leading a multinational enterprise today, every state in every region that you operate in, whether it is on taxation or whether it is on jobs or whether it is on innovation or whether it is on safety, environmental, deepening of capabilities of the human capital, et cetera, et cetera, the local jurisdictions are asking more and more.

What this requires, then, is that same corporate leader, who was focused on market strategies, is to become a corporate statesman and also focus on non-market strategies.

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