Willy Chiu was parked outside a Palo Alto (Calif.) convenience store early one evening in January with his notebook PC switched on. Suddenly he heard the ping of an instant message arriving. It was the Tokyo-based head of IBM's Asia operations with urgent news: A major competitor was homing in on a pivotal project IBM (IBM ) had been chasing. The job, to develop a new IT system for a Korean bank, could be worth up to $100 million. Chiu, who runs IBM's worldwide network of elite labs, was needed to help develop a pilot product.
That plea ignited a flurry of online, BlackBerry, and cell-phone conversations across four continents. Within minutes, Chiu had 18 chat windows open simultaneously on his laptop. "How do we mobilize resources worldwide?" he typed in one message to the head of worldwide operations in San Jose. "I'll take the lead," responded IBM's country manager in Seoul. Chiu dashed off a note asking a team in Beijing to free up staff and quickly received confirmation that they were on the case. Then a banking specialist from England chimed in: "Our team can provide reference cases from Spain." Chiu to his administrative assistant: "Stella, please change my flight to a later time tonight. Also, looks like I may go to Korea again in a few weeks." Chiu to his wife: "Will be working late."
For global corporations, the borderless world of Willy Chiu offers a glimpse of what's to come. International success once meant having bodies and factories on the ground from São Paulo to Silicon Valley to Shanghai. Coordinating their activities was a deliberately planned effort handled by headquarters.
The challenge now is to weld these vast, globally dispersed workforces into superfast, efficient organizations. Given the conflicting needs of multinational staff and the swiftly shifting nature of competition brought about by the Internet, that's an almost impossible task. And getting workers to collaborate instantly—not tomorrow or next week, but now—requires nothing less than a management revolution.
Complicating matters is the fact that the very idea of a company is shifting away from a single outfit with full-time employees and a recognizable hierarchy. It is something much more fluid, with a classic corporation at the center of an ever-shifting network of suppliers and outsourcers, some of whom only join the team for the duration of a single project.
To adapt, multinationals are hiring sociologists to unlock the secrets of teamwork among colleagues who have never met. They're arming staff with an arsenal of new tech tools to keep them perpetually connected. They include software that helps engineers co-develop 3D prototypes in virtual worlds and services that promote social networking and that track employees and outsiders who have the skills needed to nail a job. Corporations are investing lavishly in posh campuses, crafting leadership training centers, and offering thousands of online courses to develop pipelines of talent.
To function in this Age of Diffusion, businesses are rethinking traditional practices. In human resources, the era of standardized benefits and work requirements is vanishing. Instead, to keep prized talent, companies need to accommodate a wide range of cultural and generational idiosyncrasies. In China, where personal relationships are paramount, employers have to tread carefully with hard-edged practices such as management reshuffles and 360-degree performance reviews. To keep valued Indian workers from jumping ship, companies are offering one-on-one career planning and reaching out to parents and spouses. Multinationals that viewed Eastern Europe as a terrific low-cost engineering shop are finding that if they don't give the local scientists a crack at real innovation, they soon are coping with a brain drain.
Dow Chemical (DOW ) is trying to navigate this complex new territory. Dow expects 30% of its 20,000 workers to retire in the next five years. Meanwhile, enrollment in U.S. chemical engineering schools is declining, forcing Dow to fight against deep-pocketed oil and gas companies for scarce talent. To persuade veterans to stay as long as possible, Dow is offering flexible hours, three-day workweeks, and reminders that the door is always open should they want to come back after retirement. But when recruiting college grads, says Dow human resources manager Deborah Borg, the company stresses its efforts to develop green technologies and improve living standards in developing nations.
The hard part for multinationals is getting people to work well together, especially given that day-and-night collaboration across the globe is growing. Over the past decade many companies rushed to spread key functions, such as product development, to the far corners of the earth. The idea was to save time and money. But corporations are finding that running these new operations requires much more effort than connecting staff by phone and e-mail. "One problem with distributing work is that you lose the intimacy of talking things through at a local café," says Forrester Research (FORR ) network innovation expert Navi Radjou. London Business School management professor Lynda Gratton, who led a study of 52 global teams in 15 leading multinationals, spotted the same problem. "Complex teams really struggle to be productive," says Gratton.
Such pressures put a premium on recruiting staff who are globally minded from the outset rather than being mere technicians. Gratton found that global marketing and product development teams at Nokia (NOK ) were especially effective, even though they involve scores of people working in several countries. She says Nokia is careful to select people who have a "collaborative mindset" and carefully includes in task forces a range of nationalities, ages, and education levels. Teams also are made up of people who have worked together in the past and others who have never met, Gratton adds. Members are encouraged to network online and share their photographs and personal biographies.
Training is essential to making staffers globally minded. Accenture (ACN ), which spent $700 million on education last year, says its 38,000 consultants and most of its services workers take courses on collaborating with offshore colleagues. And each year, Accenture puts up to 400 of its most promising managers through a special leadership development program. They are assigned to groups that can include Irish, Chinese, Belgians, and Filipinos, and specialists in fields such as finance, marketing, and technology. Over 10 months, teams meet in different international locations. As part of the program, they pick a project—developing a new Web page, say—and learn how to tap the company's worldwide talent pool to complete it.
IBM aims to set itself apart with a spate of Web-based services that make it easier for its 360,000-member staff to "work as one virtual team," says Lab chief Chiu. Big Blue has launched what it calls an innovation portal, where any employee with a product idea can use online chat boxes to organize a team, line up resources, and gain access to market research. Developers in IBM labs around the world then can collaborate on prototypes and testing. This way, enterprising staff can build a global team in as little as half an hour and cut the time to start a business from at least six months to around 30 days.
An example: For a major U.S. telecom client that needed a Web-based tool to launch new services such as video streaming for cell phones, IBM organized a 20-member group including staff from Japan, Brazil, and Britain. These IBMers built a working prototype in two weeks and delivered a finished product in two months.
Since IBM introduced the portal, in early 2006, 93,000 workers have logged on, leading to 70 businesses and 10 new products.
Creating a seamless global workforce is hard. But certain multinationals are slowly figuring out how to do it.
By Pete Engardio