The New Meaning of Doing Business Locally

Considering that organizations everywhere are busy going global, business can still be surprisingly shaped by local geography. In fact, doing business locally in our supposedly ever-flatter world is in some ways a hotter trend than it ever was before. In the food industry, there's a rapidly growing clamor for locally produced foods. In my industry, healthcare, much of the action across the U.S. is around smaller community hospitals and networks of neighborhood clinics.

But the drive for localization isn't necessarily inconsistent with globalization. Organizations can expand throughout a region or the world, while still addressing the sorts of needs and interests that tend to motivate customers to do business in a local market. Make no mistake, it can be a tricky balancing act. Here are some of the challenges leaders need to keep in mind:

Finding the right mix of global and local. In theory, the best way to drum up business and make customers happy when expanding into new locations would be to built each local unit from scratch around local preferences and conditions. But that could potentially involve jettisoning all the potential advantages of being a global player, including brand recognition, efficient processes, economies of scale, centralized expertise, and more. The trick is to be able to apply as many of those hard-won resources as possible to every local unit, while developing whatever unique or customized elements for that unit will provide the most value. Consider that for many years the Japanese public believed McDonald's was an entirely Japanese company, so good a job did the company do in tailoring its decor and fare to local tastes. If McDonald's can seem local, anyone can.

Creating the right management structure. Again, balance is the key here. If all decisions are left up to independent local management, then an organization will end up reinventing the wheel at each of its units, and some of these units will diverge from the parent organization's strategies and core differentiators. But if centralized management is just handing products and operating processes over to compliant local units, some of those units will struggle to make them work. It's a situation that cries out for a collaborative, semi-distributed management structure. What's more, domestic and international operations should overlap in leadership, strategies and processes, to draw on and support each other's strengths and opportunities.

Identifying the right scale for localizing. You want to adapt your way of doing business to local demands. How do you determine over what scale local demands differ? Leaders often make the mistake of assuming that the business should be tailored country by country. Certainly, national borders can matter, but some elements of a business might need to vary from block to block within a city. Others might remain fairly consistent across an entire continent. To draw on my own field again, an advanced specialty-care clinic might be able to offer highly complex treatments that can attract patients from around the world, but a primary-care clinic the same size might have to focus on the specific needs of a single town. In India, going from one of its 29 states to another can mean different languages, foods and lifestyles. In Brazil, the big distinction tends to be between the north and south. Find that sweet spot in scale.

Localizing the right things. When I first entered the realm of international business a couple of decades ago, one of the first things I did was switch my organization to the slightly larger A4 paper common outside the U.S. for our letters and printed matter, to show we were a global-minded organization. (I’m dating myself all the way back to when most communication were by printed materials.) I soon figured out no one anywhere cared. Just because something differs between regions doesn't mean you have to go through the trouble of making adjustments. First find out what matters. How customers and clients are greeted and entertained? How you invoice them? Signage, prices, fast response, brand cache? Inevitably you'll discover many of these often-surprising preferences and aversions the hard way, but being alert to them up front reduces the chances of quickly getting a local reputation as being out of touch.

No one gets into geographic expansion without making mistakes. But leaders who become attuned the nuances of different markets and cultures, without abandoning their organizations' core strengths, can learn to nicely and profitably reconcile the local with the global.