Globalization 3.0:
Opportunities & Challenges
PROFESSOR N. VENKATRAMAN
David J. McGrath Jr. Professor in
Management
Boston University School of Management
April 1,2008Headlines.. Of Many Kinds 2
(c) Venkatraman, 2008And there are cartoons.. 3
(c) Venkatraman, 2008Look Back in History: May 12, 1896 4
(c) Venkatraman, 2008 40.94Fast Forward to 2050: 'BRIC' 5
(c) Venkatraman, 2008We are in an era of global networks…
6
Live Connect
Work Create
Consume
Play
(c) Venkatraman, 2008Or to put it differently….. 7
(c) Venkatraman, 2008And according to Dilbert… 8
(c) Venkatraman, 2008Process offshoring.. Just getting started 9
(c) Venkatraman, 2008Globalization: Stylized Shifts
10
Globalization Globalization Globalization
1.0 2.0 3.0
(c) Venkatraman, 2008Globalization 1.0 11
(c) Venkatraman, 2008One of the First Global Corporations… 12
(c) Venkatraman, 2008Globalization 2.0 13
(c) Venkatraman, 2008Globalization 2.0 Infrastructure 14
(c) Venkatraman, 2006Globalization 2.0 Infrastructure 15
(c) Venkatraman, 2006Globalization 3.0
(c) Venkatraman, 2006 16Three Technology Laws….
17
Moore's
Law
What's the impact
today?
What's the likely impact
Bandwidth Metcalfe's in 2010? 2015?
Law Law
(c) Venkatraman, 2008Globalization 3.0 is about IT-enabled work
18
Engineering
Software
??
??
Services
Tech Support
Medical
?? Design
?? R&D
Call Centers
BPO Legal
Analytics
(c) Venkatraman, 2008Where's it designed? Where is it manufactured? 19
(c) Venkatraman, 2006Globalization through digital networks.. 20
(c) Venkatraman, 2008Remote, Connected Work 21
(c) Venkatraman, 2006Globalization 3.0:
Early observations…. But not prescriptions 22
(c) Venkatraman, 2008(c) Venkatraman, 2008 2324
ANILLUSTRATIVE
COMPARISONOF COSTS
(SOURCE: BUSINESSWEEK)
Healthcare in Global Business
Networks
(c) Venkatraman, 2008Heart Bypass
U.S.: $130,000
Singapore: $18,500
Thailand: $11,000
India: $10,000
Photo: EastShore Hospital, Singapore
The EastShore Hospital is an International
Data: Business Week,
Member of Blue Cross, Blue Shield of
South Carolina..Heart Valve Replacement
U.S.: $160,000
Singapore: $12,500
Thailand: $10,000
India: $9,000
Photo: Apollo Hospital, Chennai. India
The Apollo Hospital is an International
Data: Business Week,
Member of Blue Cross, Blue Shield of
South Carolina..Angioplasty
U.S.: $57,000
Singapore: $13,000
Thailand: $13,000
India: $11,000
Photo: Bumrungard International Hospital , Bangkok
35,000 Americans traveled to Bangkok in 2007
Data: Business Week,
for this treatmentHip Replacement
U.S.: $43,000
Singapore: $12,000
Thailand: $12,000
India: $9,000
US Private equity firm, TPG has taken a controlling
interest in the Parkway Group that owns the hospital.
Photo: Gleneagles, Singapore
Data: Business Week,Hysterectomy
U.S.: $20,000
Singapore: $6,000
Thailand: $4,500
India: $3,000
Active discussions with US insurers
Photo: a subsidiary of Wockhardt in Mumbai, India
Data: Business Week,Knee Replacement
U.S.: $40,000
Singapore: $13,000
Thailand: $10,000
India: $8,500
Early stage infrastructure; not yet world-class..
Photo: St. Luke's Hospital in Manila
Data: Business Week,Spinal Fusion
U.S.: $62,000
Singapore: $9,000
Thailand: $7,000
India: $5,500
Experimental stem cell treatments, not available
Photo: Tiantan Puhua Hospital, Beijing, China in the USA..
Data: Business Week,Medical Tourism in Thailand
Medical Tourism %
USA: 33%
China: 29%
Japan: 18%
UK: 14%
Middle East: 6%
Australia: 6%
Others: 17%
Thailand had 1.5 million medical tourists in 2007
Photo: Phuket Hospital, Bangkok
Data: Business Week,Remember Lessons from the Global
Motorcycle Sector?
33
(c) Venkatraman, 2008It's not all about accent neutralization! 34
(c) Venkatraman, 2008Globalization 3.0: Early Experimenters 35
(c) Venkatraman, 2008Globalization 3.0:
Positioning it in the Strategic Agenda
36
What's our How's our
business governance
scope? distributed?
Where's our How to
global architect
footprint? global
processes?
(c) Venkatraman, 20081. What's our business scope?
37
Strategic
Importance of Sourcing
Capabilities Core Logic
Necessity
Support
"Weak" "Good" "Best"
Relative Position
(c) Venkatraman, 20082. Where's our global footprint?
38
Shoring
decisions
(c) Venkatraman, 20083. How's the governance distributed?
39
[Shoring]
"On" "Off"
Captive
"In" Insourced Offshore
Operations Centers
[Sourcing]
Domestic Global
"Out" Outsourcing Offshore
Operations
(c) Venkatraman, 20084. How to architect global work?
40
–What's the design logic for work?
¡Transactional
¡Transformational
¡Tacit
(c) Venkatraman, 2008 Source: McKinsey4. How to architect global work?
41
–How to design different types of work?
¡Sequential work
A B C
¡Reciprocal work (A) (B)
¡Pooled work (A) (B)
(C)
(c) Venkatraman, 2008Value creation and capture in
Globalization 3.0
42
What's our How's our
business governance
scope? distributed?
Where's our How to
global architect global
footprint? processes?
Strategically thinking about Globalization
for value creation and capture
(c) Venkatraman, 2008Embarking and Embracing Globalization 3.0
43
What's our How's our
business governance
scope? distributed?
Where's our How to
global architect global
footprint? processes?
Core Key
Processes Cases
(c) Venkatraman, 2008"The Changing Geography of
Work and
Shifting Locus of Value
Creation and Capture"
Thank You Very Much!
(c) Venkatraman, 2008 44