Logistical and Cultural Challenges of Global Business: A Visit to Microsoft Dublin

A big goal for my trip this summer is to examine on-the-ground how globalization is impacting countries, businesses, and cultures. Yesterday afternoon I spent a little time at the Microsoft Dublin operation, the third largest employee-base location for Microsoft outside of North America and Tokyo (ahead of India and China!). Dublin attracts many U.S. multinationals because of their advantageous tax structure and English speaking and educated workforce. So, Dublin is a good sampling of how global organizations work with their major satellite offices overseas. Simply put, it’s a fascinating logistical and cultural challenge which raises several interesting questions which I will outline in this post (relevant to big business and start-ups alike).

My host here in Dublin, Frank Lynch of Microsoft, who I met through my blog and who’s made the start of my journey truly extraordinary, works with folks all over the world on operations IT support internally. It’s sometimes easy to forget how massive of an organization Microsoft is — operations support is an essential part of keeping the company going. Frank and his team operate out of three core time zones: Redmond, WA; Dublin, Ireland; and Asia (mostly Beijing, some India too). This enables a truly 24/7 operation. There are three conference calls a day on which two of three time zone groups participate: one at 9 AM, 5 PM, and 1 AM. At these times access to the development environment is passed over to the group just waking up. They review the progress made while the others were sleeping.

The logistical and cultural challenges associated with managing or participating in such a global, nonstop effort are daunting. Logistically, the sheer number of electronic communications require useful collaborative software and smart email protocol. Web 2.0 in the enterprise will be all about collaboration, says Peter Rip. Also, finding the overlap work time can put stress on employees since they can’t work on their own hours.

Culturally, each person brings national norms, some of which are antithetical to efficient business practices (at least as defined by Americans). In the West, if someone presents an idea, and there’s silence, it’s taken as implied agreement. In some Asian countries, speaking out is not always encouraged. In the West, if you ask if someone can commit to do something by Tuesday, and the person says yes, it should be done by Tuesday. In India, sometimes yes means no. You don’t want to ask yes or no questions (instead: “When do you think you can do this by?”). Western businesses usually involve rules-driven cultures — develop a system and process for evaluating things and making decisions. Other cultures believe relationships should be formed before doing business. Legal contracts and the like, then, can undermine trust and potentially harm relationships. Some commentators estimate that approximately 70% of the world’s population come from primarily relationship-based cultures. Another cultural difference is where status comes from: “Who you are” versus “what you do.” If the latter, it’s easier to challenge your boss. (See Global Integration for more on this stuff.) (NB: These observations are general, not related to my visit to Microsoft.)

These challenges raise an important, provocative question: Should firms look to decentralize their operations a la Southwest Airlines’ plane routes or centralize as much as possible around corporate headquarters and just ship out self-contained, niche projects to overseas facilities? SAP, while based in Germany, maintains a huge global presence with each facility of almost equal importance and scale. Their CEO, head of sales, and head of products are in Frankfurt, Paris, and Palo Alto respectively. Microsoft, on the other hand, continues to drive the bus from Redmond even though they have tons of offices overseas such as in Dublin, where there are 1000+ driven, competent employees. Within the satellite office at Microsoft, though, there is some decentralization as the employee mix at the Dublin office cuts across all domains, from XBox to Mac Office to internal ops, and the employees in each division may only have one or two project colleagues sitting next to them. Some quick strengths of each model:

Centralized model:

– more efficient (fewer logistical and cultural pitfalls)

– easier to project one corporate identity

Decentralized model:

– better talent since it’s spread all over the world

– immune to a natural disaster or the like taking down the guts of the organization

– can localize your products much better

The open-source movement definitely promotes the decentralized model. Check out this great Fortune article on mySQL called “Banish the Headquarters”. We have entire small companies plugging away even though their executive team has met at most a few times in-person. So, the need for entrepreneurial companies to understand and solve the logistical and cultural challenges of global business will only get more pressing. For most technology companies it starts with outsourcing, and more and more non-core business functions will be outsourced in the next several years, I’m sure.

One other note: Big corporations are often hammered by Valley folk and entrepreneur types for being boring dinosaurs. Some even say it’s riskier to work for a Microsoft than for a start-up. I generally agree, but it struck me while being a fly on the wall out here that despite Microsoft’s size it can actually be a dynamic, fun place to work. You’re part of a humongous community of people from each corner of the globe who embrace company core values and mission first (no matter what national culture says). You’re one of many working toward a huge shared goals (ah, to be one of 2000+ working on Windows). Some can see this has demotivating — you feel like you don’t have a real impact — but you can also look at it as the highest level of collaboration, where the collective wisdom and work of many make change no single person could do alone.