Summer 1996 - Volume 2, No. 1
Old Lessons, New Perspectives : Moving Toward A Global Mindset
I would like to offer some of the lessons we at Eastman Chemical are learning as we put new plants and people around the world. You'll note that I the present-tense - we are relatively new at this and, for us, doing business on a global scale is very much of a "learn-as-you-go" proposition. We are currently in the midst of rapidly expanding outside the U.S., and I may be able to bring a fresh perspective to the subject of moving from a domestic mindset to a global one. So far, the lessons that we are learning are:
Communication, or miscommunication, is at the root of many of the difficulties in moving from domestic business into the global marketplace. One area of potential miscommunication is in the differences between initial plans and what turns out to be feasible. While this is often only a matter of things taking longer than you had hoped, until you actually do what you appear to have promised, your credibility is open to question. This reminds me of the story you have all heard of the fellow who came to work one day with a black eye. His friend asked, "What happened to you?" And the fellow said, "I misunderstood my wife. I stood up when she said "Shut up!" That's what can happen when you misunderstand or misread a situation: you can end up with a "black eye." In a real sense, that's what was happening to our credibility, both with our employees and in certain influential circles abroad, when we first started our globalization efforts.
In order that you fully appreciate this point, it's important that you understand that for the vast majority of our 75 year history, we simply did not see ourselves as a global player. We were, for the better part of that time, what I would call an "opportunistic exporter." We simply shipped overseas whatever we were unable to sell here in the U.S. That strategy worked fairly well for us as a rather small, and somewhat obscure, division of Eastman Kodak. But during the late 70s and early 80s, our understanding of the importance and potential continuity of our international customers began to change, and we became aware of the great potential for continue growth outside the U.S. In the late 1980s, we formulated some very ambitious globalization plans for the first time, and rolled out these expectations to our business managers with great fanfare. But nothing happened. Our managers continued to locate their new plants in Tennessee, Texas, South Carolina, or Arkansas, where there was wonderful existing infrastructure and Southern hospitality made them feel very comfortable indeed.
But we in senior management became increasingly convinced that we could not maximize our participation in the growing marrets of Asia, Latin America, and Europe if we remained primarily an exporter. So we pushed our business managers to make some substantial investments outside the United States. They enthusiastically agreed with us and just as enthusiastically continued to invest in Sullivan County, Tennessee. We had simply not been able to change a deeply embedded, 75-year-old mindset.
In the meantime, we were not only failing to accomplish what we intellectually knew we must eventually do, but we were beginning to create a credibility problem, both inside and outside the company. We had done a fair amount of talking, both with our employees and with some rather influential people in Europe and Asia, about our plans for locating manufacturing facilities around the world. We talked about how we would decentralize our asset base and place people and systems around the world in support of these assets.
Our employees were very excited at first, but after a few years of inaction. Many of them began to discount what management said, believing that our intentions were good, but that either our resolve or our ability to implement were weak. It got worse as we got the further we got away from Kingsport, Tennessee the epicenter of our universe. (At least in Kingsport, they humored us.) We had acquired a large, highly visible piece of land in the Rotterdam harbor complex, and had made some pretty aggressive statements about the investments we expected to make there. When several years elapsed and we had not moved any dirt, we found ourselves on the receiving end of public criticism in the Netherlands. The economic development authority for the port even suggested that we return the property if we weren't going to use it. At this point, I began feeling somewhat like the woman from the hills of East Tennessee who went to a judge to plead for the release of her husband, who had been thrown in jail for stealing hams.
The judge said, "He must be very good to you for you to come down here and plead for his release." She said. "No, he runs around on me and treats me real bad."
"Well, he must be very good to the kids, then" the judge said. And she replied, "No. He's really mean to the kids."
"Well, you must miss his paycheck every week." She said, "No. He doesn't work half the time."
The judge looked at her and said, "If he runs around on you, and he's mean to the kids, and he doesn't work half the time, why do you want to get him out of jail?" She said, "Because we're almost out of ham!"
Well, we were almost out of credibility and it was clear we had to find some way to break out of that comfortable "do-it-at-home" mentality if we were going to be able to accomplish any of the things we had promised.
Over the years, we had learned that in our culture, if you really want something done, you pick a very strong, influential person and then stand back and let that person go at it. So we decided to apply this principle to our globalization problem. We chose three special people -- one for Europe, one for Asia, and one for Latin America and said, "Go get it!"
These were very senior people whose careers were in good shape, who knew where all the bodies were buried, and who weren't afraid to shake things up. Complimenting their efforts, I took on the overall leadership of this globalization thrust, for whatever I could contribute, but partially also for the signal sent by making the No. 2 person in the company responsible for this job. Fortunately, this has worked. We now have plants in various stages of completion in Spain, in the Netherlands, Mexico, Malaysia, Argentina and Singapore. Although our timing was off, our credibility with employees is now back to whatever is the normal level of senior management's believability among that stakeholder group. And we now have some concrete successes to point to when we talk with folks outside the U.S., including those in Rotterdam.
Looking back, our early experience in globalization was, in the words of Yogi Berra, "the kind of experience that keeps you from making the wrong mistakes." We learned the hard way that we had to do a better job, up front, of managing the expectations of our employees, of potential foreign/international associates and of our own senior management. Events rarely move as quickly and in as straight a line as you hope they will. Now, I am not suggesting that the objective is to simply hold down expectations. Saying nothing can be just as damaging as saying too much. But I am suggesting that one must be sensitive both to one's own culture and to the value systems that drive other cultures and, within that context, strive for realism in public statements. Now, to my second point, which is the important role that female expatriates can, and do, play in globalization of businesses.
In the past women haven't played much of a role in Eastman's overseas operations, but that is changing. In the words of one consultant, "no company can afford to waste brainpower simply because it's wearing a dress." We are striving at Eastman to challenge some of the traditional beliefs about the success of women in foreign assignments. Globally, there are certainly some cultures in which women, foreign or native, are virtually excluded from professional work. However, this, is the exception, not the rule. We have done some informal research on this subject. A study conducted by McGill University (Montreal) in the late 1980s surveyed approximately 700 major U.S. and Canadian companies and found that about 6% of all international management positions were held by women, and that the percentage was growing. At present, Eastman is in line with these statistics. We currently have 99 employees in foreign assignments, of whom six are women. Each of these women serves in a responsible position in functions like financial services, sales, or material management in places like Singapore, Mexico, and the Netherlands. Like their male counterparts, some are fluently bilingual; some are married; some are single parents. We have some husband and wife teams in foreign assignments serving together as expats. For example, one couple is Mexico (he in manufacturing, she in cost analysis) and another couple is in Singapore (he in raw materials purchasing and she in staff support). What we are finding is that females are equally successful in foreign assignments as males and I expect that this experience will cause us to move beyond the 6% level for females in management positions outside the U.S.
The success of females in our company is helping dispel the misconceptions at Eastman, that women (1) don't want to serve in foreign assignments; (2) don't have the stamina of their male counterparts and (3), that dual career marriages are poor candidates for overseas assignments. The presence of females in foreign assignments has helped us realize that our expatriate employees are not judge primarily by gender in the host culture, but are usually seen first as foreigners. The cultural norms that might limit native women from reaching certain levels in management seem to be suspended for foreign women. We're finding that acceptance of women expatriates hinges more on nationality than on gender. Our current, positive experiences in no way to suggest that we are "experts" in placing female employees in positions that guarantee success. To paraphrase the popular investment house TV commercial, "we measure success one expat at a time." Of course, the ideal situation is to be far enough along the path of globalization that the need for employees did not exist. The reality of the present is that we are in the early stages of the globalization process and still have a great need to send senior and mid-level managers overseas to jump-start our international facilities.
We do have a plan for replacing our employees, which brings me to my third and final point. Through our selection process, we hire foreign nationals who we believe have the potential to take on leadership positions in their respective countries. They first work for a year or so in their home country, under the tutelage of American management and then, as one of our senior managers likes to put it, we bring them to Kingsport to "cure them in the smokehouse" with our own unique set of corporate values. We believe this is a critical element in our globalization process because as important as it is to develop good relationships with your host country, it is equally important that the local managers you have in any country understand your company. We have to understand local culture to operate effectively, but by the same token, those local managers must understand our corporate values, our corporate culture, and our brand of management so that we continue to portray a consistent corporate image around the world, with our employees and our customers.
This "curing" process for newly hired foreign employees might last as long as two or three years, but we feel that it's extremely important that these potential managers from outside the U.S. develop good working relationships with key decision makers here in the U.S., in order to increase their probability of success when they return home. We now have 13 foreign nationals on assignment in the U.S. Each has an executive sponsor who acts as a mentor and who helps guide them through various assignments. For example, Joe Iamizumi from Japan is now serving as staff assistant to our senior sales officer; Eric Lim from Singapore is serving in our coatings, inks, and resins business organization; and Harish Davey from India is being trained to return to India as our general manager there. It is our hope that within the next five years, we will have nationals in the key leadership roles in most countries. We believe that in order to become a truly global chemical company, you have to become an integral part of your plant site community -- not as a visitor, or a foreign company -- but as a real contributing factor to the success of that town and that region much as we are regarded in Kingsport or Longview, Texas or Batesville, Arkansas. One way to gain acceptance is by hiring local managers who will also become community leaders.
The second reason for replacing employees with nationals is that, in the short-term, expats are very expensive. The care and support of an Eastman manager in our foreign markets is three to five times greater than it is here in the U.S. Housing costs are staggering. An appropriate three or four bedroom apartment in Hong Kong or Tokyo rents for as much as $20,000 a month. There are also educational allowances for children and travel back and forth to the U.S. sometimes several times a year over the course of their stay. The sooner we can replace an expat, the better off we are in terms of reducing short-term expense.
In closing, let me leave you with these words by Will Rogers, "Even if you're on the right track, you can still get run over if you just sit there."
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