The "global economy" is a myth. I don't know who first dreamt up the phrase or what they really meant by it, but just try to move your product or service from one country to another. Yes, information zips through the ether faster, people are more mobile and UPS, FedEx and DHL operate in more countries these days. But the only thing that really seems "global" about the world's economy is that when one country has a financial hiccup, it can affect the economy of another. That's because there is more trade among countries, and we lend one another a lot of money.
Why does this myth matter? Because today, the Internet really makes a boundary-less marketplace possible -- possible, but not yet a reality. My wife and I experienced this recently when we wanted to buy a piece of furniture we had seen in a European magazine. It was a ready-made catalogue item. No special manufacturing was required. So we followed our now normal practice of searching the Web for the manufacturer's page. We found it and also found our way to the company's US representative. But that's where our global experience stopped. To get what we wanted would have taken lots of paperwork, lots of bucks and months of waiting. It was hardly an easy or pleasant customer experience.
We really don't operate in an open global economy, so a company's technology and distribution strategy is also affected.
Recently, I saw the dilemma from the supplier's point of view. A client had built a successful e-commerce site for its products here in the US. But the question now is how to expand into Europe and Asia. Certainly someone from Paris or Bangkok could dial in to its US-oriented site, but processing the orders wouldn't be easy, and there were questions about whether the business practices that worked in the US would be accepted by buyers in other countries. The only workable strategy might be to set up a site for each country and forgo creating a global logistics capability -- which seemingly contradicts the idea of the "World Wide Web". All this suggests to me is that the Web may be only an electron deep.
Here are my thoughts on the breakthroughs required to build a global Internet Age economy and what you can do about it.
First, follow the principle that we learned a long time ago: adhere to local sales and marketing customs. I'm reminded of the simple question that I get from the ATMs in my neighbourhood: Do you speak English or Spanish? Offer your customers choices of not only language, but business practices. The French have a penchant for lots of useless paper, so print out shipping documents and fax them. Don't be so American as to assume that we set the business rules.
Assuming that you can get the order, the next challenge will be to deliver it -- at a cost acceptable to the customer yet that still allows you to make a profit. I believe that the biggest barrier to large-scale e-commerce lies in logistics, not in communications and IT. Logistics companies still don't make a profit on many home deliveries, mainly because often no one is home. Eventually, either the shipper or the customer will have to pay for the loss.
Doing business across borders either with consumers or companies adds to the costs and challenges. But I see this as an opportunity. Who will invent the global equivalent of what FedEx first did in the US?
But the biggest obstacle to global commerce still lies in trade barriers. The formation of the European Union makes it easier for its members to trade between themselves, but it's raising even more protectionism toward non-European companies trying to sell to Europe.
So the next time you hear a politician take on trade issues, get a bit more active. IT makes a real global marketplace possible. Now we have to perfect it.
Jim Champy is chairman of consulting at Perot Systems in Cambridge, Massachusetts. He can be reached at JimChampy@ps.net. His newspaper columns are syndicated by Tribune Media Services.