3.3 Changing the Boundaries of Geography-free Business

In order to address the impact of technology on business transactions that span geopolitical boundaries, it is necessary to define the basic premise of these technologies and their associated meanings; it is also necessary to readdress the definition of geopolitical boundaries. Without venturing into a long dissertation on the pros and cons of globalization, it is important to note the new roles that technology will play in facilitating commerce, communication, community and culture.

In A Future Perfect, John Micklethwait and Adrian Wooldridge put into perspective how popular culture is using the term ‘globalization’ as a scapegoat for larger socio-economic issues that are not being directly addressed by either world governments or business. While identifying the underlying problems associated with globalization, Micklethwait and Wooldridge dispel five myths which have been traditionally linked to this phenomenon: size trumps all, the triumph of universal products, economics needs to be rewritten, globalization as a zero-sum game, and the disappearance of geography. In their words: ‘For most cultural conservatives, globalization is a code word for everything that perturbs them about the modern world, from broken homes to ubiquitous pop music.’^[106] Their argument is clear, concise and puts the five issues currently associated with globalization in a perspective demonstrating how each item is linked to a hidden agenda such as national feelings of protectionism. More importantly, the authors argue that these myths are used to conceal underlying socio-economic problems. Because these issues have direct implications on how firms add value and, more importantly, will shape future value propositions, they will be examined here in more detail.

Micklethwait and Wooldridge remind us of the conditions that surround these myths:

In many cases, size does not trump all. Micklethwait and Wooldridge remind us that the history of western business is littered with large multinational firms that do not stand the test of time, citing: ‘The title of world’s largest bank changed hands at least six times in the twentieth century.’^[107] This is but one of many examples which indicate that large bureaucratic structures in these changing business conditions are often too slow to remain viable in their own right over time. The trend of mergers and acquisitions will continue as industries redefine themselves and technology will play a larger role in facilitating that process.
The triumph of universal products is predicated on a belief that everyone in the world wants to purchase products that are the same everywhere. Here again Micklethwait and Wooldridge point out: ‘Indeed, in recent years, marketing departments have become obsessed with segmenting customers rather than bundling them together. Companies err if they treat entire countries as single markets, let alone the whole world.’^[108]
Economics needs to be rewritten is a myth that Micklethwait and Wooldridge addressed before the dot-com meltdown. With hindsight, their argument appears to be more than valid: ‘Globalization means that competition can spring up anywhere. But the underlying rules of how to make money are the same as always.’^[109]
Globalization is a zero-sum game. Here Micklethwait and Wooldridge strip away the issues that cloud globalization and address the underlying misconception: ‘For some people to profit from globalization, others must lose to an equal degree.’^[110] By taking a non-partisan view of the dynamics of the economics of globalization, the evidence clearly indicates that trade of all types fosters long-term economic growth. Erecting limits to trade by special interest acts only to reinforce the myth and does not make for a sound global strategy.
The disappearance of geography as corporations continually search for cheaper labour. Micklethwait and Wooldridge reveal that geographic clusters of business are needed to enable competition and that businesses operating in a global economy must weigh the savings in labour cost with the additional added cost associated with logistics.^[111] Another aspect of moving business to remote geographies is that eventually the labour cost rises and one could argue that as the economies, industrial output and financial markets of the world become more and more intertwined eventually (too many years to estimate with any credibility) world labour costs will reach an operating parity.

If the role and application of technology is examined in each one of these globalization myths, it becomes understandable how technology can be associated with perpetuating them. Technology is so interwoven into the fabric of corporate activities it is often difficult to separate it from the effects seemingly attributed to it. Furthermore, the value proposition to a firm and, more importantly, how value is represented to its customers are linked to the five myths in the following ways:

Size trumps all – Technology will be used to expand market presence by using customer-linking technologies to bring western products to all corners of the globe.
The triumph of universal products – The Internet will bring the products of the world to our doorstep.
Economics needs to be rewritten – Technology provides mechanisms to drastically reduce cost and expand revenues.
Globalization as a zero-sum game – Technology enables a global workforce in which anyone can do anything from anywhere.
The disappearance of geography – Technology will enable you to order globally branded products to the exclusion of local products.

Unfortunately, firms with global aspirations in the post-dot-com economy are still reciting the same technology mantra. However, since the number of total consumers who can effectively purchase goods is a relatively fixed number, there must be winners and losers in the new growth estimates of any technology company professing to decimate the competition in the emerging markets.

What is clear is that the laissez-faire attitude corporations are taking towards globalization can be viewed as exacerbating the issues raised by anti-globalization groups. Corporations operating in the global economy must develop a concise definition of their globalization policy in order to identify how technology will ultimately integrate into their value proposition with customers. A brief examination of the five myths isolates the role of technology in which corporations are basing value generation.

Firstly, the terms used by the technology community must be understood in the context of the technologies they represent and the actions which firms must take to employ them. ‘Commerce’, in its broadest sense, can be defined as interactions and activities that result in transactions between business entities, including but not limited to barter, exchange and transfer of materials or value between two parties. Terms such as ‘eCommerce’ denote that the transactions associated with commerce are now conducted with the use of a sophisticated telecommunications technology. If one considers that the same set of words could have been used during the early years of the twentieth century, when firms were first embracing electricity as a technology to improve productivity, slogans such as ‘Powered by Edison’ or ‘business at the speed of the electron’ could have easily been applied. One could project that the ‘e’ in eCommerce is simply the new state in which business now operates. That said, the definition of Internet commerce redesignates the type of commerce as falling into two broad categories: commerce which has achieved a new level of efficiency by employing technology to facilitate transactions and new commerce resulting from the introduction of technology.

Secondly, the definition of geopolitical boundaries or, more importantly, the concept of nationalism, must be examined to ascertain the relative impact that factors have in the adoption and implementation of technology by various global cultures and nations. Nations or geopolitically bounded sovereign states as we know them today are a relatively new idea for mankind. Not that the geopolitical map is due to be redrawn in the near future, but, as we discussed in section 3.5, new technology is creating debates on what constitutes a nation state, fair and equitable taxation and the role of government in the emerging information age. These factors coupled with the cultural aspects of consumer taste must be an integral part of a firm’s comprehensive management strategy when deploying brands, products, people and technology.

Regardless of the degree of cultural consumer loyalty that can be generated by technology for various businesses or market channels, organizations should develop scenarios of varying degrees of business activities and market conditions in order to react in a timely fashion to changing market conditions. A good example of technology-based scenario planning is demonstrated by the United States Air Force, which compiled a series of possible global economic scenarios to determine which type of response is warranted. These scenarios only provide a set of corollary conditions in which each could be considered in the next evolution of technology and its influence on global business activity. This type of strategic scenario planning which anticipates various permutations of future operating states is a crucial skill that corporations need to develop to stay competitive in a global market.

^[106]J. Micklethwait and A. Wooldridge, A Future Perfect: The Challenge and Hidden Promise of Globalization (London: William Heinemann, 2000) p. 100.

^[107]Ibid., p. 101.

^[108]Ibid., p. 104.

^[109]Ibid., p. 106.

^[110]Ibid., p. 109.

^[111]Ibid., p. 114.