Monday, April 21, 2008

Local Success for Global Companies

I recently read a blog entry on ITWorld Canada that discussed some recent personnel changes affecting Canadian leaders of subsidiary organizations. The ITWorld position was that Canadian success can’t happen without local leadership.

I have worked for several large organizations and have to agree that without local decision making capability it is hard to achieve success. I would also add to that, if the organization in question is not committed to success in the local market then it won’t happen. To be committed to success in a market means sometimes making investment decisions that favor that market, one of which might be to invest in having local management.

Take for example the global company with clients around the world. If a project in Dallas or New York will pay $2,000 a day for a Project Manager that fetches $1,000 or $1,200 a day in Ottawa what should the global company do? If putting the guy in Dallas means winning a big job then of course that is what they will do … but if it is just filling a hole is it the right decision?

Obviously one-off decisions are not the issue, and as long as they remain “one-off” then there is not going to be huge damage. The issue becomes when the decision becomes systemic … the great talent in the local market slowly but surely moves out of town.

It seems like a sound business decision … more dollars for the same person. Why not?

What happens is that the local market suffers … whether it is in Canada or Mexico or New Zealand or any smaller market. The best talent is not available and they find it hard to win business. They may even become a “feeder” system for the “big billing” offices.

The people who travel may like it at first, but working out of town can wear you down and is not for everyone. So … some of those great people will leave. Also some of the management team will not want to work for a company that does not commit to their local market. The result is that slowly but surely the presence in that local market will atrophy and “big company” will wonder why they can’t make a go of it in those smaller markets.

So the most successful global companies make a commitment and investment in the local markets that they attack. They want to be successful locally because ultimately it is better to be successful in many markets than to just be successful in the bigger markets.