Samuel J. Palmisano
Chairman, President, and Chief Executive Officer, IBM
I believe that innovation and global integration are two sides of the same
coin. Global integration is the new playing field, and innovation is how you win
The nature of that game today can be summed up in a very simple principle:
When everything is connected, work flows. It's like water finding its own level.
And success in getting work to flow to you—whether you're a business, a nation,
a region, a community, or an individual—increasingly depends on how you
differentiate yourself through innovation.
For large companies, this is taking the form of a new corporate
architecture—what we call the Globally Integrated Enterprise (GIE). This
business model is very different from the "multinational," which created
mini-versions of itself in markets around the world, driven to this by the
accretion of trade barriers. The GIE, in contrast, locates work, skills, and
operations wherever in the world it makes sense, based on expertise, economics,
But where does that leave the small business and the entrepreneur? Can they
be global players, too? In the past, if you were a small businessperson, you
were a local businessperson. You served a local market, had local suppliers, and
drew from a local workforce. Your unique asset was your local knowledge—of
customers, the regulatory environment, tax policies, and so on.
But this local-to-local model now is being augmented by something entirely
new. Thanks to the globally networked infrastructure that was built out during
the 1990s, entrepreneurs now can tap into global supply chains and global talent
pools, with skills available anytime, and deliverable anywhere. They are able to
adopt very new kinds of management systems—networked, real-time, and
collaborative. And they can reach out to huge new populations of consumers
rising around the world—hundreds of millions of people who are opening their
first bank accounts, getting their first cell phones, using their first credit
cards, and tens of millions who are buying their first automobiles.
According to the World Bank, by 2030 there will be 1.2 billion people in
developing countries—5 percent of the world population—in the "global middle
class." That's up from about 400 million today. This group will have a
purchasing power of between $4,000 and $17,000 per capita and will enjoy access
to international travel, cars, and other advanced consumer goods, as well as
international levels of education. They will play a major role in shaping
policies and institutions in their own countries and the world economy.
The new global small businesses, like the larger global enterprises, have
noticed. This is important because, as we know, small businesses and
entrepreneurs are the engines of job creation. And the issue of new job creation
is at the heart of both the economic and political debate over global
So the most important actor in the unfolding drama of global integration may
actually be the smallest and closest to home—not the large organization, but the
new global entrepreneur, the new global professional, the new global citizen.
This is enormously exciting. Of all the issues surrounding global
integration, perhaps the most emotional and polarizing is the question of how
the individual competes and wins in a global economy. Nations and large
companies can look out for themselves, but when you think about yourself as an
individual on the vast ocean of a new global economy, it seems daunting. And the
anxiety that this engenders can have, as we know, major political
And yet, in truth, it is individuals who may be the chief beneficiaries of
global integration—if they understand their options, choose to seize their
opportunities, and are empowered and enabled to do so. This is true for
individual entrepreneurs—and I believe it is also true for individual employees
of large companies. We are at the dawn of a new kind of relationship between the
enterprise and the individual, based on the idea that the individual is in the
best position to make decisions about his or her work, learning, and career.
Companies—and the people who lead them—will need to move away from corporate
paternalism, which is as much about top-down control as it is about jobs, pay,
and benefits. And individuals will need to change, too. They are telling us they
want flexibility, more of a voice, more control over their destinies. But in
exchange for that, they will need to take on greater levels of responsibility,
accountability, and ownership of the consequences of their decisions.
The convergence of the digital network revolution, the reality of global
integration, and new kinds of innovation and integration open up vast new
possibilities, usher in an unprecedented complexity to societal and economic
life, and present us with enormous challenges. Hundreds of millions of "new
global citizens" seem eager to make this journey. Will we?