CIO Summit: Globalization and its Responsibilities

By Edward H. Baker  |  Posted 06-13-2006

In his keynote speech last night at Ziff Davis Media's CIO Summit at the Silverado Resort in Napa Valley, Calif., Stuart Varney spoke to the value of consolidation, churn and change, in the U.S. economy and around the world. That's very much part of the meaning of globalization: Worldwide growth is derived from capital investment, innovation and change. Yet he also warned the audience about the risks of globalization: most notably the fear of change, and the disruption that comes with it on the part of anti-globalization activists, as well as the geopolitical risks involved in doing business in such places as China, India and Russia.

His talk gave rise to many fascinating conversations during the reception that followed and at breakfast today. The IT executives I sat with this morning brought to the table an amazing range of background and global experience: one hailed from Iran, another from India, while the others all had significant experience in global enterprises. The discussion quickly turned geopolitical: what are the chances of significant political disruption in China? Does the political risk in China make India the better long-term bet economically and as an outsourcing destination? What is the effect of national culture on a country's ability to innovate? Can that culture affect a country's willingness to participate in the potentially disruptive process of globalization?

Such thoughts were clearly on the mind of IBM Chairman and CEO Sam Palmisano recently. After committing IBM to investing $6 billion over three years to build up its services, software and R&D in India, Palmisano wrote a letter to the Financial Times, challenging business leaders to rethink the nature of the multinational corporation. The old model, where a company builds a few factories around the world while retaining such functions as marketing and R&D in the home country, must give way, he says, to what he calls "the globally integrated corporation." In this new model, companies must bring the whole vertically integrated process to the markets in which they operate. Otherwise, he warns, "The alternative to global integration is not appealing: left unaddressed, the issues surrounding globalization will only grow. People may ultimately elect governments that impose strict regulations on trade or labor, perhaps of a highly protectionist sort. Worse, they might gravitate toward more extreme forms of nationalism, xenophobia and anti-modernism."

Given the risks and opportunities, it should come as no surprise that the participants of this week's CIO Summit are thinking carefully about globalization. In the next few days, I will try to capture the mood at the summit on the risks and rewards in doing business beyond the borders of the U.S. Stay tuned.