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Confronted with the fundamental changes that are transforming today's global business environment, a number of firms are finding it necessary to reevaluate their organizational priorities. "These are turbulent times for business as many companies struggle to adjust to a diverse set of changes simultaneously," commented HBS professor Christopher A. Bartlett in a recent interview with writer Peter K. Jacobs.
Bartlett, faculty chair of the School's Executive Education Program for Global Leadership, identified the globalization of markets and competition, the arrival of the information age, the expansion of the service-based economy, rapid technological innovation, deregulation and privatization, and today's knowledge revolution as forces that are "driving companies to fundamentally rethink their business models and radically transform their organizational capabilities."
Most modern corporations rely on information planning and control systems and processes that are designed to help management make sound strategic choices and ensure efficient implementation of those decisions. "They do this by allocating scarce capital resources to the best opportunities, then measuring and controlling performance against plans and budgets," Bartlett explained.
"But, what if the assumptions behind that management philosophy are flawed?" he asked. "What if intellectual capital rather than financial capital were the scarce resource, as it is in most companies today? Unlike financial resources, an organization's vital information, knowledge, and expertise cannot be hauled to top-management levels for reallocation across competing needs. These reside deep within the organization and therefore must be developed and leveraged through processes completely foreign to the vertical, control-based management approaches that proved to be all-powerful in earlier times.
"Increasingly, the drive for global expansion must be to capture scarce sources of intellectual and human capital -- resources that can provide sustainable competitive advantage in the 21st century. It's a very different game, strategically and organizationally."
A longtime observer of multinational corporations, Bartlett is the School's Daewoo Professor of Business Administration. In 1998 he and Sumantra Ghoshal published a second edition of Managing Across Borders: The Transnational Solution, their 1989 groundbreaking work. The Individualized Corporation, their 1997 book that explores the revolutionary changes occurring in organizations, received the Igor Ansoff Award for best new work on strategic management.
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