If globalization is the dominant business trend, the cross currents I talked about in my last post are starting to create a re-think on where the future is headed.  Some, like Jeff Rubin have suggested that with the rise in energy prices, the world is about to get a lot smaller as transportation costs move businesses closer to home.  In this year’s WPP annual report, our own group chairman, Martin Sorrell, said that ‘there may be a need to develop more focus at a local level…particularly as (clients) need to cultivate governmental or academic influence or be more locally sensitive.’

Until recently, globalization has been driven mainly by US companies who are seeking to ‘extend their reach into more heterogeneous markets’.  With this often comes organizational attempts to streamline decision-making and to make systems and processes uniform across all jurisdictions to achieve efficiency.

But the high priest of globalization, Thomas Friedman, in his seminal book ‘The World is Flat’ writes that globalization is not about the centralization of (mainly) American culture and authority but the empowerment of local cultures to export their ideas, processes, products and languages usually through the use of technology.  Globalization is not about making everything the same, as it is about encouraging the export of local practices around the world.

For an industry like ours, making the right call on where to put our emphasis on future trends is very important.  While going global appears to be a no brainer, a careful examination of the nature of H&K’s business shows that the majority of our multi-regional business was locally procured.  Very few were the result of a global RFP and even in those cases network assignments had to be locally completed.  At H&K, our strength in recent years has been our regional operations.  The US has driven less than 1/3 of our revenue, with Europe, the Middle East and Africa being our single largest region.  Much of the firm’s intellectual leadership has come from our UK operation. Countries like Canada have proven to be among the most successful adaptors of internationally developed products and services.  While our recent merging of PSI into our US operation is an attempt to strengthen our US offering, our strong multi-national network remains an important point of differentiation.  Where our major PR competitors have networks that service largely US-based clients, H&K has strong local operations who’s business was largely procured locally.  That is the strength of the company today, and should be the starting point in any plan to take advantage of the opportunities that globalization presents.

Freedman talks about ‘glocalization’ as a melding of the best of the local and global.  Maybe that is not a bad starting point for H&K as well as we attempt to build our go-forward strategy.  In my experience it is always easier to execute a strategy that is built on a firm base if you want to expand your corporate reach.

What we will do to operationalize this approach, can wait until my post next week.