President Trump and I agree on one thing. We want America to be competitive. But we have opposing views on how to get there.
Trump pushes the United States toward walls — psychological, physical, and diplomatic — that separate us from the rest of the world. But American companies need to double down on global expansion efforts, not retreat. They need to devise aggressive multi-year global strategies. They must benchmark against global, not just local, competitors. They need to prepare their employees to work effectively across borders.
Are they ready? Not if America First comes to fruition. The idea that work can be done in only one location, in only one culture, and in only a native language, is both unrealistic and anachronistic in today’s interconnected global economy.
China and India are seizing global growth for themselves, through acquisitions and trade deals. In less than a decade, China will surpass the United States in nominal Gross Domestic Product, according to a recent long-term forecast by the Economist’s Intelligence Unit. By 2050, the forecast adds, India will be on the heels of the United States in GDP, leapfrogging Japan, Germany, the United Kingdom, France, and Brazil as the United States clings to second place.
In addition, US public company revenue growth outside our own borders is slowing. In 2016, foreign sales recorded by companies in the Standard and Poor’s 500 hit their lowest level since 2003. In 2015, US exports of goods and services were about 12 percent of GDP. Compare that to Russia’s 28 percent, China’s 22 percent, and Japan’s 18 percent.
The move toward protectionism under Trump will make matters worse, creating ill will and limiting our access to markets and consumers around the world. Boycotts of US companies and products are a real threat. What’s more, by turning inward, we risk cutting off potential jobs for millions of our workers, thereby bridling companies increasingly desperate for skilled employees. The global workforce is estimated to reach 3.5 billion by 2030, according to a recent McKinsey Global Institute report. US companies need to learn how to participate effectively in a borderless workplace.
As I have seen firsthand in my work as a business scholar and adviser on global leadership and organizational issues, companies, to start, need leaders with an unapologetic global vision, a common language, and culture strategies. They need the resources to blend these ingredients in order to compete as one cohesive force. But how? An example of the model I have been studying for 15 years is the Japanese e-commerce giant Rakuten, whose strategic plan recognized the importance of global markets and led it to spread its wings far beyond its homeland to become the largest shareholder of Lyft, a significant investor in Pinterest, and owner of Ebates, Kobo, and Viber, among other operations. The company also became the primary sponsor of the championship FC Barcelona soccer and Golden State Warriors basketball teams.
Rakuten offers a blueprint for how a company can become truly global, all accomplished without diminishing its devotion to its corporate and national cultures. It started in 2010, when Rakuten’s celebrity billionaire CEO and founder, Hiroshi Mikitani, decided that if his company was to compete on a global level, his workforce in Japan and other countries needed to communicate with one another in a single voice: English. If employees didn’t clear a certain fluency level within two years, they risked demotion. This radical move was both a shock and source of considerable anxiety for the majority of his workers.
But Mikitani’s gamble paid off. Just a few years after his plan was introduced, most employees were proficient in English, while the company maintained its distinctive culture. At the same time, Rakuten aggressively scaled up its acquisitions, joint ventures, and greenfield entities across global markets; established innovation development centers abroad, including France, Israel, Singapore, and Silicon Valley; and significantly raised overseas revenues
A workforce proficient in English and global collaboration enabled the company to rapidly integrate new global entities, hire global talent, and easily share information across global divisions. Likewise, US companies have to think and act globally. Trump can’t discourage that if he wants this nation to improve its competitive advantages. Creating trade walls isn’t the answer. Tearing them down is. Otherwise, US firms will yield their place as global leaders for generations to come.
Tsedal Neeley is a professor at Harvard Business School and author of “The Language of Global Success.’’