Book reviews

of business. In the practical context of the book this is entirely defensible, although the attentive reader is sometimes left speculating about how the ideas relate to those of other authors. What is important, really, is that there is considerable intellectual weight behind OHares writing, which is belied by the simplicity of the presentation. The exception to the lack of relation to other authors is in the extensive use of Michael Porters value chain concept. The value chain is used intelligently to illustrate how firms can look for opportunities to innovate not only within their own system, but within the context of their links with both suppliers and customers. Having defined innovation in broadly strategic terms, OHare goes on to offer comment on the process of innovation, and its position in the structural and behavioural context of the firm. In addition to discussion of the search for opportunities to innovate, he also stresses that much can be made of external discontinuities in market or competitive activity. Other issues relating to the process are evaluation of opportunities, customer involvement, cultural barriers to innovation, the idea that less can be more ~unbundIing of complex offerings may provide new customer value), and organizing for innovation. Among these, the section on evaluating the opportunity deserves mention, as it is an interesting treatment of a somewhat overlooked topic. OHare identifies two broad forms of evaluation: tight financial and people-led, observing that companies tend to base their evaluation either on comprehensive projections of cash-flows and profits, or on the track records of managers. Both these methods have their advantages; however both have severe limitations in strategic terms, especially as the same type of investment appraisal is often used to evaluate widely differing types of project. In recommending a better way, the author suggests that the important features of evaluation should be: strategic focus on how customer value is delivered; positive feedback into

strategy development; a reflection of the inherent uncertainty of many innovations; the ~exibility to cope with significant change in the concept between initiation and realization; financial appraisal. The recognition of the importance of adopting an appropriate evaluation mechanism for truly innovative activity is an important step forward. In his analysis of the structural and behavioural aspects of innovation. OHare uses the concepts of adaptive and repetitive behaviour and conceptual maps. He stresses that the development of new conceptual maps is critical to successful innovation, and highlights the problems confronting mature and growing companies in this regard. Of adaptive and repetitive behaviour, he suggests that aithough business cycles call for balance between the two, there is a natural tendency for companies to act in one way only. A behavioural review is recommended to help establish a balance according to the strategic requirements faced by the company. Even if it does nothing more than make you think about the nature, means and ends of innovation, this book is worth reading. It is to the authors credit that the book is concise, well argued and practical in nature. The subject matter, and the line of thinking are sufficiently important though, to warrant further and more detailed attention by management authors and researchers. Damian Brown

Managing Across national Solution

Borders:

The

Trans-

by Christopher A. Bartlett and Sumantra Ghoshat, Harvard Business Books, 1989, Hardback, 265 pages, lSBN 0 09174 1181.
The 1980s had no business heroes. fn the winners, wilI be entire developed cultures that shortage of individual 1990s the heroes, the companies that have instead of fearing the

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pace of change relish it. This is the view of John Welch, CEO of General Electric, and it echoes the central theme of Managing Across

Borders.
Today the international business environment is being transformed by a new era of global competition. More and more managers are being forced to re-evaluate worldwide strategic approaches and the development of organizational capability. The book proposes that in order to cope with these demands, successful firms are moving towards a new kind of organization called the transnational. In the book Bartlett and Ghoshal provide an analytic framework for managers for rising to the challenges of the 1990s. Although the authors question the validity of much accepted management practice, they provide managers with practical guidelines for what they call the transnational solution. Three main themes are pursued, linking environmental complexity, strategic demands and organizational capabilities. The first considers why transnational management has become an imperative in the 1990s. Historically, most worldwide companies have employed a unidimensional strategy. Strategy was either biased towards achieving efficiencies of scale (a global strategy), responsiveness to the local needs of host countries (a multinational strategy) or development and transfer of knowledge to operations worldwide (an international strategy). The authors show that a companys preferred strategy stems from its administrative heritage, which in turn is a legacy of leadership, country of origin and the era of international expansion. Each of the nine companies investigated in the book found that a unidimensional strategy is no longer sufficient. The companies are from diverse industries-branded packaged goods (Unilever, Procter & Gamble and Kao), consumer electronics (Matsushita, Philips and General Electric) and telecommunication switching (Ericsson, ITT and NEC). The authors argue that, in response to increased complexity in the worldwide competitive environment, companies will have to develop global com-

petitiveness, multinational flexibility and international knowledge transfer simultaneously. Together these abilities represent the means for competing across national borders. The second theme of the book is to describe the characteristics of transnational operations. The authors argue that while there is no single transnational blueprint, companies should seek to build on existing capabilities in developing an integrated network of dispersed assets and interdependent specialized operations. National subsidiaries should become strategic partners with differentiated roles and responsibilities, depending on their capabilities, tasks, resources and strategic importance. Importantly, companies should not try to manage different functions in different countries in the same way. The key to success in worldwide companies lies in interdependence of subsidiaries with differentiated capabilities. The third and most important theme of the book is to illustrate how transnational capabilities can be developed and managed. Bartlett and Ghoshal found that even though management may recognize the need for transnational operations, they are very difficult to develop and manage. The authors offer a practical solution, clearly illustrated with examples. In creating a transnational organization the task is not to build a sophisticated matrix structure, but to create a matrix in the minds of managers. This means that rather than change the organization by changing the formal structure, the attitudes and mentalities of individuals should first be changed, followed by changes in interpersonal relationships, communication flows and decision-making processes. Only in a final stage can change be consolidated and confirmed in structural re-alignment. Central to the transnational solution is the creation of a managerial mentality that promotes co-option, rather than enforcement of a new unknown organizational structure. In this way internalization of organizational processes ensures that organizational heritage forms an integral part of the transnational solution.

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Managing Across Borders provides relevant and stimulating reading. It is an important book not only for managers of worIdwide companies, but for all managers, because none can escape global competition. In the future a com-

panys ability to develop a transnational organizational capability is likely to be a key factor in separating winners from mere survivors in more and more industries. Leon Vermaak

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