Enabling The Global-Local Enterprise

McKinsey - Going For GoldIn Winning the $30 Trillion Decathlon, a McKinsey team sets out why emerging markets hold the key to the future for most large multinational firms – and proposes ten essential disciplines for success.

The transformation of the global economy in our times compares, says McKinsey, with the impact of the Industrial Revolution in Britain from the mid 18th century:

“By many measures, the significance of [the Industrial Revolution] pales in comparison with the defining megatrend of our age: the advent of a new consuming class in emerging countries long relegated to the periphery of the global economy… The two leading emerging economies [China and India] are experiencing roughly ten times the economic acceleration of the Industrial Revolution, on 100 times the scale—resulting in an economic force that is over 1,000 times as big.”

Underlying the ten essential disciplines for organizations that want to win in this new world, one theme stands out: the capability to be both global and local.

Being Local drives innovation and responsiveness.  McKinsey quotes, for instance, the case of South Korea’s LG Electronics, which set up in India and realised that many Indians used their TVs to listen to music. So LG swapped out flat-panel displays for less costly conventional cathode tubes to introduce new models with better speakers at the right price point. LG went on to become market leaders.

But being Global can deliver enormous benefits as well, in standardization and procurement, for example.

There’s no right global-local mix.  It will vary by region, by product, by route to market, by market maturity – by a hundred and one factors.

So the real challenge is to blend Global and Local, and to be able to continually re-optimize the blend at every level.

Yet around 40% of global companies don’t even have the most basic means to effectively manage these global-local trade-offs, according to McKinsey research published last year.

In a world forging a second Industrial Revolution, and so creating a $30tn opportunity, it’s difficult to see how any multinational can optimise its global-local mix without an enterprise platform for process management. It’s essential infrastructure, the collaborative framework that best enables global-local optimization.

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