We propose that multinational organizations and their headquarters have evolved in tandem with their markets, such that both still play critical, if newly defined, roles in what we call the Global Multi-business Firm (GMBF).
While characteristics of the first two models are well known, the third, the GMBF, is less understood.
They then follow through with a two-part approach to managing the organization: First, understanding that the crucial managerial task at hand is enabling emergent processes both for exploiting existing resources and capabilities and for exploring for new or evolving assets, and second, establishing that the critical control mechanisms to support that task involve establishing, maintaining, and enabling communication networks throughout the GMBF. To some extent, the top management task becomes simpler, although not simplistic; corporate headquarters is no longer expected to control worldwide operations in detail, nor is it expected that the firm will become one giant integrated operation with a common culture.
The GMBF also moves beyond the simplistic rules of the Growth-share Matrix and similar diversification models, in which independence of assembled parts is given.
We see that organizational animation requires an attitude of incentivized voluntarism from managers and workers throughout the GMBF, with headquarters providing overall guidance, encouragement, and incentives, but without the ability to enforce detailed demands a condition that we characterize as control without command on the part of headquarters managers who must be in charge of the overall firm, but must do so without taking charge of specific activities.
This requires balancing exploitation and exploration initiatives and allowing both to emerge from the practice of the dispersed units of the GMBF. Exploitation refers to the never ending opportunity to improve, extend, refine, elaborate and reduce the costs associated with existing products, technologies, skills and competencies.