By Dieter Körner, Partner North America
Implementing a worldwide Operational Excellence strategy means making it work locally too.
*Glocalization, noun: describes the central development and global distribution of products, services, strategies and processes which are simultaneously adapted to the specific needs of local end-users.
Developing operations, maintenance and turnaround strategies at the board level and implementing them worldwide holds obvious appeal to senior managers. A single process, independent of location, language and culture makes comparing standards and best practices significantly easier and allows managers to benchmark performance both internally and against competitors.
However, making global strategies work in practice is not quite so straightforward. Local culture, customs and languages vary widely and have a direct impact on behavior. If they are ignored, managers may face resistance and delays at best; at worst, escalating costs and failure. Developing handbooks, process definitions and tools to streamline practices may make sense in theory, but is only useful when those devices are used by the intended group of people to yield positive results.
As a result, the age old conflict between global and local management methods is being increasingly tackled via a “glocal” approach. This approach demands that any management team who wants to roll out a new product on a global scale must have a profound understanding of the local environment, culture and customs. Achieving the right balance between the two is an ongoing challenge for companies worldwide.
The organizational structure of a company is one of the most common sources of friction when it comes to strategic implementation. The matrix structure in particular causes problems due to its very nature: people report to central and local managers, whose responsibilities are also both centrally and locally organized.
This results in a conflict of interest over who pays for global solutions and to what extent. Global units won’t accomplish much if they depend on local business units for financing: they may be forced to implement procedures paid for by local clients, who have their own, differing requirements and solutions which already function well.
Furthermore, departments tasked with achieving global unity are often small and enjoy even smaller budgets, so obtaining the necessary local support to implement global initiatives is challenging. Typically conceived by centrally-located strategists over a long period of time, these departments tend to be shaped by a top-down mindset. Their managers have usually developed a very high level of specialized expertise over years and produce good solutions, but their communications skills are often rusty and critical information is either not communicated or given far too late. This increases local resistance and results in a correspondingly lackluster approach to implementing central ideas.
The best laid plans
This begs the question of whether the concept of “global” itself can be exported at all. Take the example of business tycoon Henry Ford, who in response to Dutch and English rubber monopolies, bought and developed a tree plantation of almost 4,000 square miles in Brazil so that he could produce the rubber needed for tires himself.
Although Fordlândia contained over one million rubber trees at one point, and the broader export of modern agriculture to Brazil was considered an overall success, Ford’s rubber project was a failure. By ignoring indigenous wisdom about leaf blight and pest control, the trees became diseased and failed to thrive. The plantation collapsed and was eventually sold at a loss of over $20 million.
In a modern context, the over-centralization of planning may cause more problems than it solves, not least because managers responsible for global projects behave differently in different cultures and sometimes go about it the wrong way. Some people get bogged down in cultural stereotypes – believing that the Chinese are quiet but highly disciplined, Americans loud but solutions-focused, Germans humorless and inflexible. In practice, such clichés are obsolete: successful operations depend on the interaction of individuals across varying interfaces, not standardized robots. So when companies decide to implement central functions on a global scale, making the necessary human and financial resources available is paramount.
There are a range of instances when international companies need to apply global standards. The trick is knowing how precise the guidelines should be and when they become disruptive. If a company plans turnarounds according to one, uniform model across all of its sites worldwide for example, then global standards are obviously important. Processes, methods and IT tools will need to be streamlined and the rules a turnaround, contractor strategy or a budget calculation should follow must be made clear.
Nevertheless, a good degree of common sense should also be used: for example, contractor strategies are dependent on specific site conditions such as geography, climate, product mix and market, and therefore don’t lend themselves well to very rigid rules. Management must remember that the quality of results is more important than the methods or tools used to get there. Guidelines or “swim lanes” for global teams should leave the necessary leeway to enable local adaptations.
Ultimately, success is not about toeing the party line but about reaching the right destination at the right time. One of the benefits of an ever more globalized world is the role global structures play in the creation of competence hotspots, which collect and integrate knowledge and skills across borders. But blindly pursuing global targets without due consideration for local ways of working will lead to low acceptance on the ground and possibly failure. Treating each site individually and accounting for its unique characteristics in a project-by-project approach is the most practical way of overcoming these obstacles, but still requires significant managerial skill and strategic foresight. The challenge is to find a way to apply well-thought out global strategy in a locally-appropriate way, carefully balancing the needs of one with the demands of the other.
The days of global or local are long gone: now, the only way is to go glocal.