Photo: Manish Swarup / AP
As growth slows in Western economies, companies are increasingly looking to emerging markets for growth. That means they’ll expect their future leaders to not only be familiar with these markets, but to have spent significant time there. Despite that, according to IESE Business School professor Pankaj Ghemawat, many business schools fall short in preparing students for a global business environment. He spoke to the Wall Street Journal on why their approach is flawed.
For one thing, practical efforts to teach international issues are often limited to short trips, as short as a few days and rarely longer then a week or two. That’s far too short, and could even be counterproductive, Ghemawat argues:
“There’s little or no permanent effect of something that short, in terms of really opening people up to other realities. If it’s all that the faculty will allow, a week or two weeks has a somewhat higher chance of success if you give people some orientation around cross-country differences before they set off on their excellent adventure.
I just worry that a week in an emerging market might almost be worse than doing nothing because it leaves people with a false sense of knowledge.”
Beyond that, students operate with a flawed understanding about globalization. When Ghemawat polls his students on what percentage of phone calls are international, they guess 40 per cent. The real number is 2 per cent.
We’re not as globalized as we think we are, which means that preparation and skill in dealing with emerging markets is essential. Different markets are still highly differentiated, and approaching them as if the world is flat is a recipe for failure. Business schools don’t do enough to teach the limits of globalization, and the skill sets required to deal with them.
Change is essential, he argues, otherwise:
“We won’t have made much progress from decades ago, when there was a tendency toward one-size-fits-all biases: “I’m going to go forth and assume that the world’s like home, until I stub my toe really badly. Then maybe I’ll pay attention.”
Teaching [more] about globalization is a way of taking some of that learning offline, because stubbing your toe can be very expensive in corporate terms.”
The problem can be especially acute in the United States. Because the market’s so large, and because less than 5 per cent of the country’s multinationals are in more than 20 countries, the focus is frequently on the home market.
The burgeoning consumer class in China and India alone could be worth as much as $10 trillion in sales in coming years, and companies like Unilever are succeeding by rapidly growing sales with strategies specifically geared for emerging markets.
It’s going to be increasingly difficult to reach the top tiers of companies without a proven track record of success in emerging markets. Companies are looking for new types of leaders It seems like the education system designed to produce them is still playing catch up .
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