“Think Local, Act Global”: The New Mantra for a World Turned Upside Down

In a world turned upside down, you have to think differently and act differently than you did in less fragmented times.

The mantra of big, multinational, scale-advantaged companies is “Think Global, Act Local”. The idea is to take global products (and services) and sell them into different markets with only a nod to localization. It is supposed that by following this scale-driven, efficiency-focused approach, youcan achieve higher profitability in multiple local markets.

And, of course, it has worked well.

Until now.

In this fast-changing business environment, such an approach is no longer fit for purpose.

We do not subscribe to the view that globalization—the process of ever-closer integration through the cross-border exchange of people, ideas, technology and goods—is coming to a shuddering stop.

But over the past few years, many observers have rushed to administer the last rites to globalization. Back in January 2019, The Economist talked about “slowbalization”, and wondered if “the steam has gone out of globalization”. More recently, as stock markets plunged amid the trade war between the U.S. and China, a British Treasury minister declared that “globalization as we’ve known it for the last couple of decades has come to an end”.

We take a different view. We think that globalization will continue, but it will likely spread out from local markets to the rest of the world—not the other way round. This is why we think the new mantra of big multinational companies should be “Think Local, Act Global”.

We should be clear: this is not a semantic difference. On the contrary, this approach will require business leaders to undertake a radical 180⁰ shift in their perspective.

The idea is to take local products (and services) co-created with local consumers, capture local market share, replicate this success in different markets, and aggregate all the local wins around the world in order to build a dynamic and resilient global company.

How can big multinational companies switch to thisapproach? What do they need to do? In our view, they need to take a leaf out of the playbook of the small, subscale, “fractal” companies that are well adapted to functioning in a fragmenting world.

The reason why these companies are able to thrive in today’s uncertain economic environment is that they deploy three distinct, but interdependent, fractal strategies which follow the “think local, act global” approach.

First, these fractal companies think deeply about what it takes to win in every local market where they compete for business—and they recognize that what it takes to win won’t necessarily be the same in all markets. To do the same, big multinationals should consider becoming more selective about where (and against whom) they compete. Also, they should consider scaling down their operations to become smaller in some local markets (and perhaps withdrawing altogether from some of them) while scaling up to become bigger in some other local markets.

Second, fractal companies espouse a new “profit from the edge” mantra which emphasizes the new high-growth business opportunities emerging where companies connect directly with customers. To do the same, big multinationals should consider combining this approach with their traditional, safety-first, “profit from the core” mantra. Indeed, some of these major companies have started to do this—and they are enjoying the benefits, with their “edge” business growing faster than their “core” business. For instance, consumer products companies such as Unilever used to just sell their shampoo or soap products. Now, they offer these with personalized beauty advice provided on a digital hub. Likewise, agricultural machinery companies such as John Deere used to just sell tractors and combine harvesters. Now, they offer these with a set of services ranging from agronomic and weather analytics to drone field-mapping.

Third, fractal companies make up for the fact that they have not amassed vast proprietary banks of “big data” by utilizingnewly powerful “smart data” computers and remarkable advances in artificial intelligence. With these new technologies, they are able to draw insights from local, fragmentary, and incomplete data that lead to promising business opportunities. To do the same, big multinationals should consider integrating their big data capabilities with newly acquired smart data technologies.

At some level, it is strange that so few big multinational companies have deployed these effective strategies. After all, they evolved as a response to geopolitical, economic and technological disruptions that long predated the latest market turmoil.

But now, amid trade wars and renewed talk of the decoupling of the U.S. and China’s economies, the time has come for big multinationals to use them to build adaptive and resilient businesses that are, in the words of Nassim Nicholas Taleb, “antifragile”: the greater the chaos, the stronger they become.

Our advice: Start by deploying these strategies to win greater share in one of your major local markets. Then, once you’ve done that, replicate and aggregate the success in all your different local markets. If you do this, you will likely transform your company into one of the competitively advantaged global companies of the future.