Marketing Strategies for Globalization Globalization 0.1: The Rise of the Multinationals
In 1602, the Vereenigde Oost-Indische Compagnie (VOC), literally translated as the United East India Company, but better known in English as the Dutch East India Company, was founded as the world’s first transnational, publicly-traded company. Granted a monopoly charter by the nascent rising Dutch Republic, the VOC logo became recognized internationally, bringing spices into Europe, while exporting all manner of manufactured goods to East Asia and the Pacific.
Since that time to the present, companies operating internationally have wrestled with how precisely to structure and strategize their global efforts. How much should be left to the corporate headquarters? How much should devolve to local control? How do you create a mutually-beneficial, productive relationship across all levels and regions of the organization?
Caption above right is Latin: “Navis Mercatoria Hollandia, per Indias Orientales”
(“Dutch Merchant Ship, for East Indies”)
In the era of sail, it took upwards of six months to a year (or more) to transit from Europe to the Asia-Pacific region. This necessitated a great deal of delegation to regional administrators, as far too many critical decisions required local knowledge, expertise, relationships, not to mention a reasonable and realistic cycle-time, to be controlled from a remote headquarters.
Local point-to-point deals were cut amongst various trading colonies to foster new markets, with nearly complete autonomy from the home office. Anti-piracy operations, even wars would be entered into and fought, with the headquarters only learning the results months after-the-fact.
Trademark of the Verenigde Oostindische Compagnie (literally, United East Indian Company)
However, historic nostalgia cannot hide the sins of these colonial trade companies. Looking at the annals of the VOC and its contemporary colonial efforts, such as the Portuguese crown colonies and British East India Company (EIC), you can see from the Asian-Pacific point of view this was an era of arrogance, exploitation, extortion, extraction and repression. In terms of implementing globalization, colonialism was not a mutually beneficial arrangement. The EIC itself boasted a standing army of over 200,000, and used it to violently subjugate millions.
There are many reasons these enterprises ultimately failed, often directly resulting in a violent expulsion of interloping Europeans. The bitter taste of colonial and post-colonial exploitation is a historic context and reality that must be considered when plotting a modern course in foreign countries. Beyond glorified exploits of the era of European exploration, we should learn and take to heart the darker, starker lessons of how not to run a globalized operation in the 21st Century.
Globalization 1.0: Top-Down Management
With the advent and advances of the Industrial Revolution and Information Age, particularly mass-production, transportation and telecommunications, many brands saw the rise of technology as an opportunity to have tighter-than-ever corporate control back at the headquarters. Over successive advances from the telegraph to telephony to satellites and the early Internet, round-trip time of global communications shrank from months, to hours, to mere seconds. Theoretically, all key decision-making could now be run out of headquarters. As authors Larry Light and Joan Kiddon describe it, it fostered a “one-box” model, which they label “Global Centralization and Standardization.”
Bell Labs’ Telstar 1, the first commercial communications satellite, was launched in 1963
Optimizing for mass-production meant you sell the same product to everyone in all markets. This fell in line with industrial-era “top down” management models. It seemed perfect.
Theodore Levitt coined the term “globalization” in its modern use in his seminal 1983 Harvard Business Review article, “The Globalization of Markets.” In it, shamelessly embracing the one-box model he opines, “Gone are accustomed differences in national or regional preference.” And later in the same article, “The global corporation operates with resolute constancy—at low relative cost—as if the entire world (or major regions of it) were a single entity; it sells the same things in the same way everywhere.”
Theodore Levitt, who coined the modern concept of globalization
modern concept of globalizationHowever, this relentless push for central control still maintained an imbalance of power between headquarters and regions, and still had the taint of the old colonial-era systems, which were being increasingly swept away in the decades following the Second World War. Even though many corporations sought to maintain standardization and centralization of their brands and messaging in the latter half of the 20th century, it hardly ever worked out as cleanly as in theory.
Compelling and quite real issues remain against centralization, from local knowledge of language and culture, to jurisdictional and legal systems, to awareness of local political and market conditions, to basic issues of equity and justice. While Levitt would argue those are mistaking “a difference for a distinction,” the world shot back, quite clearly, that they didn’t want one-size-fits-all solutions. They did not want a global monoculture. They did not want to be robotic, generic consumers.
Globalization 2.0: Think Globally, Act Locally
Make it stand out
Thus, towards the end of the 20th Century, corporations shifted towards more distributed, localized solutions. No better motto for this more balanced dynamic between global corporate headquarters and regionalized branches exists than the pervasive quote to “Think Globally, Act Locally.” This, too, seemed perfect.
Except, of course, that doing all the “thinking” globally (i.e., from HQ), and only doing the “acting” locally was a way to again set strategy from the center, and push out the implementation to the regions. It was a veneer of one-box globalization on top of what would remain, truly, an HQ-centric agenda-setting and decision-making system. A lot of “bottom-up” methods never got past their own local market implementations.
What prevented “think global, act local” from truly taking root? In many cases, a lack of empowerment for peer-to-peer communications and decision-making. Even if initiatives were begun at the local level many companies did not have the infrastructure or philosophy to truly allow their regions to work independently together, without the main headquarters acting as a center of a “hub-and-spoke” communications arbiter, approver, and filter.
Globalization 3.0: The Collaborative Three-Box Model
After the global financial crisis of 2007-2008, a lot of the failings of the second wave of globalization were laid bare. A great deal more attention was paid towards fiscal resilience, independence, and interdependence by companies around the world. By 2015, the new motto of “Think Global, Act Global” was born.
In their 2015 book, Larry Light and Joan Kiddon espoused this new 21st century model under the name of the Collaborative Three-Box Model. Under this model, the brand vision is controlled 80% by global (headquarters), and 20% under local (regional) control. Bringing the brand to life — implementing the services and goods to clients and consumers — according to their model, should be controlled 80% by the regions, and 20% by global headquarters. And, in terms of creating the brand plan to win, according to Light and Kiddon, this should be a shared and equal commitment by both headquarters and regions.
Here, both “thinking” and “acting” are responsibilities for both local operations as well as headquarters. There is clarity for when decisions would be collaborative. A greater emphasis placed on a truly meshed, peer-to-peer organization paradigm.
Whether this new type of thinking will take root against the winds of extant corporate culture, expectations and inertia remains to be seen. Though now, with modern cloud-based collaboration tools and processes, such as Asana, Trello, and Basecamp, it is far easier to organize your business based on such egalitarian principles.
Globalization: What’s Your Strategy?
Each organization has developed corporate culture based on its own historical roots, its own philosophies and mission. Each organization has to tailor its business practices based on the economic realities, as well as the customs and laws of the localities and regions it operates in.
Your strategy needs to comprise a number of considerations:
Geographic and linguistic market choices — Where are the best market growth opportunities for your industry? What languages are most prevalent for your business?
Direct representation, or partnerships? — Will your organization have its own representation, or will you be using a foreign-market partnership, distributor/channel model, or local licensing agreements for your brands overseas? How will you ensure your partners and channels translate your brand into their markets appropriately?
Presence, or telepresence? — If you want to operate directly, what should be your strategy to build out local presence? Will you have actual offices and operations in overseas markets, or telepresence via web, social, mobile, email, chat or other media?
B2B or B2C? — Often B2B companies mistakenly default to a global “English-only” model, though many countries truly prefer to do business in their native languages. B2C is even more sensitive to native-fluency communications, though, still, all-too-many businesses ignore large minority language populations, such as Spanish in the U.S.
Multilingual Marketing & Customer Services — Once you decide to present your brand in a foreign language market, you’ll also need to consider how to respond to your audience in their own languages. You may not need a full-time hire for certain linguistic markets, or you may need a whole team for others. They’ll need to be experts dealing with the market they operate in, as well as your own internal processes and offerings.
Social & Messaging Channels — While Twitter, LinkedIn, YouTube and Facebook may be big social brands in the U.S., you may need to select entirely different social channels and messaging platforms for the markets you are looking to penetrate.
Business Models & Payment Methods — Overseas, you are faced with expanding your options of doing business. How do you wish to sell? How do customers want to pay you? What works for the U.S. may not fly in your target market. While e2f does not provide these services directly, we may be able to help advise you on your choices.
Governance — What laws and standard practices do you need to comply with?
Risk analysis — What pitfalls, risks and downsides do you need to consider?
Because the world is multivariate, there is no “one-size-fits-all” one-box model. No single prescriptive solution to globalization exists. Emerging models arise year-after-year, and, as technology continues to evolve, new capabilities for decision-making, planning and operations emerge daily. Over our own decade-plus history, we’ve already helped hundreds of companies grow globally. We’d love to hear how you currently tackle, or wish to tackle, your worldwide go-to-market strategy. Treat us as a trustworthy partner in bringing your vision to fruition.
It all starts by reaching out to us at info@e2f.com. Let us know where you want to go, and how you want to get there, and we’ll do our best to help you fulfill your goals.