Globality is a term in both academic and business use that refers to the end-state of globalization - a state in which the process of globalization is complete or nearly so, barriers have fallen, and a new global reality emerges.
The term entered wide popular use in 1998, when author and economist Daniel Yergin featured it in a Newsweek article that described the end-state of the globalization process. "Globality" also appears in his book, Commanding Heights: The Battle for the World Economy. Yergin was credited with having coined it. But the word is in fact much older. William Safire traces the etymology of “globality” in his book No Uncertain Terms and identifies a range of citations as far back as 1942, when it was used as a synonym for “global.” Current use of “globality” as it applies to business – as a description of the current competitive state of world commerce – was not adopted until recently.
A thorough discussion of globality and its impacts on business can be found in a book by three partners of The Boston Consulting Group (BCG): Harold L. Sirkin, James W. Hemerling, and Arindam K. Bhattacharya. Their book, GLOBALITY: Competing with Everyone from Everywhere for Everything, is primarily concerned with the consequences for corporations of this new state of heightened economic competition.
According to all these authors, globality is what comes next after globalization: a new state of worldwide hyper-competition. Sirkin et al. further detail globality’s three main features as they apply to commerce and business:
1. A significant structural shift in the flow of commerce: companies from every part of the world are now competing with each other for “everything” – customers, suppliers, partners, capital, intellectual property, raw materials, distribution systems, manufacturing capabilities, and most important, talent. In this competitive free-for-all, products and services flow from many locations to many destinations.
2. A breakdown in the established hierarchy of commercial power and influence: power is shifting away from traditional centers of influence in developed markets in the United States, Europe, and Japan, as companies from rapidly developing economies (RDEs) are quickly assuming leadership positions in global markets, forcing established leaders to compete on new terms.
3. The emergence of new business and governance practices better suited to a truly global and decentralized business environment. To compete successfully in a world of globality, established industry leaders from developed markets are being forced to learn from competitors in developing markets. The practices include shifting autonomy and decision making outward to satellite operations; redeploying assets to build commerce within emerging regions; and expanding quickly into new markets to match the speed and scale with which challengers are rising.
Yergin’s chief distinction between globality and globalization is conceptual – he says that former is a “condition” while the latter is a “process.” He describes globality as the end-state of the process of globalization:
"The borders that constrained commerce―but also protected companies from the full brunt of competition―are eroding. Governments are retreating from control of the commanding heights of their economies: they are privatizing and deregulating. Barriers to trade and investment are coming down rapidly. Ever-cheaper communications and ever-faster computers, along with the Internet, are facilitating the flow of goods and services, as well as knowledge and information. Increasingly, companies are integrating their global strategies with global capital markets.”
In their book, Sirkin et al. focus on the business conditions that emerge - and the challenges for management - once the state of globality is established. They distinguish globality from globalization based on the emergence of a new set of competitive dynamics between established leaders from developed economies and challenger companies from developing economies. With respect to global business, they argue that the three fundamental characteristics of globalization were these:
1. Established industry leaders―known as “incumbents”―from the developed economies of the United States, Europe, and Japan - relocated their manufacturing activities to developing countries in order to lower the cost of production and, accordingly, reduce the price of their goods offered in their home markets.
2. The incumbents also began to sell their offerings―usually with few if any modifications for local consumers―into the low-cost markets and enjoyed incremental sales gains, as the consumer economies began to grow in these countries.
3. Local companies in developing economies acted primarily as suppliers, jobbers, and local distribution partners, to these established industry leaders.
In this traditional model of globalization, the flow of commerce was predominantly from West to East and followed established Western business practices.
According to Sirkin et al., globality is a totally different kind of environment - one in which the competetive landscape has changed dramatically. In today’s new phase of worldwide trade and economic development, companies are “competing with everyone from everywhere for everything.” And while there is no ultimate model for success, no surefire strategy for innovation and growth, emerging-market challengers have evolved new management and governance structures that are ideally suited to this new competitive reality.