EMB
attempts to import Western models have, more often than not,
yielded lackluster and even disastrous results.
With historical perspective and present day indicators providing
the evidence needed, for business leaders across continents, the
message is clear: rather than looking to what leading companies
in the West are doing now, it is important to learn how they moved
through the corporate eras if you want to succeed in the emerging
markets. Mapping the corporatization of a society can help
businesses understand the past, present and future potential of
any given market as they seek growth and greater productivity.
Mapping Corporatization:
Five Fundamental Eras
1 - Agrarian: With the majority of people still liv‑
ing in rural environments, economic dependence
is on the land and what it produces. Typically, in
this era the majority of people are dependent on
themselves for their livelihood rather than being
paycheck employees reliant on a corporation.
2 - Employment Creation: The rural to urban
migration which triggers the beginning of
corporatization is typically survival-based.
Future employees know that if they stay in their
rural environments, they and their families will
starve, rendering the promise of even the most modest of pay
checks attractive. Fueled by this reality, as workers gravitate
towards urban hubs, companies begin to hire and expand, while
depending on low labor cost as their means of competition.
3 - Standardization: Realizing that maximum
prosperity comes from maximum productivity
gains, business owners seek to introduce
standardization in order to remove the variance
in pace and efficiency produced by employees. Rather than
merely making a profit by keeping labor costs low, in this
era, business owners discover that uniformity around the one
“best way” to do any business activity yields maximize output
per hour. This results in the standardization era providing the
greatest productivity gains of all corporatization eras.
4 - Specialization: The transition from a pre‑
dominantly un/semi-skilled workforce to a
skilled workforce ushers in the era of speciali‑
zation. The complexity of the industrial process
and creation of additional employment types
(primarily white collar jobs and management) lead to separa‑
tion of tasks within a system, shifting the focus towards spe‑
cialized employment and related skill development.
5 - Professionalization: As a society passes
through the corporatizing eras, jobs are
relocated to the most cost-effective places
and work shifts towards knowledge-intensive,
service-oriented and high value-add activities.
This represents the current culmination of the corporatizing
era given the demand for highly educated and skilled workers
as well as technology-based connectivity.
In the United States, it took forty years to progress through
each era. Today’s first-generation corporate societies are
able to accelerate through the journey to corporatization
by learning from the successes and mistakes made by their
developed market counterparts.
HOW TO SUCCEED
IN A FIRST GENERATION
CORPORATE SOCIETY
The sudden realization of the existence of first generation
corporate citizens made the VP of International Operations at
the British multinational supermarket ask the question: “What
do I need to do?” Business leaders of other multinationals as
well as homegrown emerging market companies looking for
growth, should now ask the same.
The answer in short is this: understand where a country is
on the corporate development trajectory. Only then will you
know what actions can positively impact productivity. To gain
this understanding, advanced market firms, emerging market
companies and first generation corporate societies as a whole,
must put down the Western lens and change the debate from
how to develop a mature corporate market, to how to grow
from where they are.
THE BEGINNINGS
OF STANDARDIZATION
During the rise of the first corporate generation in America,
Frederick Taylor a laborer on a factory floor discovered the
need for a second era of corporatization. He recognized that
employees were not working their machines, or themselves,
nearly as hard as they could and that this resulted in high
labor costs for the company, even though labor rates were low.
Compounding the fiscal impact was the loss of productivity
engendered by an environment that allowed each man to do his
work the way he thought best.
Frustrated by the slack that could be tightened, Taylor, a gifted
individual who had deferred admission to Harvard in order to
to work in the factory, began a set of experiments that would
revolutionize the working world. He was a habitual optimizer who
set out to make more, faster, with less. He knew that throwing
more low-cost workers at a problem was an efficiency charade
and that the focus should be on labor output per hour.
Through hands-on experience that first began while he was an
apprentice at Enterprise Hydraulic Works, Taylor discovered
how workers could produce more per hour and how the
company could make greater profits as a result. He went on
to become the pioneer in applying engineering principles to
employee performance on the factory floor and rigorously
studied practices that had been accepted as good enough so he
could find “the one best way.”
Taylor’s fascination with the precision of machines and his
application of this to the unscientific processes of employees,
produced undeniable results. The cost of overhauling boilers
dropped from $62 (around $2,000 today) to $11; the time required
to machine a tire was reduced to one-fifth; and making a cannon
projectile became significantly faster just ninety minutes instead
of ten hours. In sum, 1,200 workers could suddenly do the work
of 2,000 people at any other company.
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