Going Glocal: Authentically Melding a Global Brand With Local Resources
Nearly 50% of architecture and engineering CEOs plan to increase their international expansion over the next 5 years, according to EFCG. Are you ready?
To help you succeed in the international marketplace, we’re kicking off a series of blog posts about glocalization best practices and recommendations for effectively doing business internationally. Follow along with us to learn how to strategically leverage your resources and fuel your international growth.
So, this word glocal. It is a decidedly English play on words to describe a much broader, global strategy that spans languages, borders, and markets. In fact, the roots of this term glocal come from the Japanese word dochakuka, which can be translated as “global localization”. Multi-national companies like Sony and McDonalds are often cited examples of going glocal, as they have tuned their advertising, branding, and offerings to the local markets they engage around the world.
The Harvard Business Review has written about glocalization, stating glocal organizations have “global scale on technology, production and organization…but communication, distribution and selling customized to local consumer tastes.” McKinsey offers a similar definition, describing glocal organizations as “multinational companies and local businesses developing business models specifically for local conditions.”
To put it more succinctly, being glocal means thinking globally while acting locally.
Here at BST Global, we get to work with architecture and engineering (A/E) consultancies around the world, and see firsthand how many firms are expanding globally or are getting ready to do so. From our perspective, the firms that find success are those that figure out how to meld their global brand and expertise with a local touch and approach.
Later on in this blog series, I’m going to share more detailed insight on what we see successful firms doing, but first I’d like to start with the more fundamental question:
What is driving A/E firms to expand globally and embrace glocal strategies?
The answer lies in some trends that are shaping the world and the A/E industry.
GLOBAL A/E: GLOCAL A/E
Noted New York Times journalist and Harvard lecturer, Thomas Friedman, in his bestselling book The World is Flat, describes today’s world as one that’s becoming a level playing field for commerce. But according to renowned statistician Hans Rosling, in his study of 200 countries over 200 years, this wasn’t always the case.
Looking back about 200 years, we see a world where every corner was facing a short lifespan and low income – that is, being sick and poor was the norm. Fast forward to almost 70 years ago, and we see that after the Industrial Revolution, the Great Depression, and two world wars, the Americas, Australia and Europe have pulled away from the rest of the world towards a healthier, more prosperous standard of living. And then coming up to present time, we see Africa and Asia making huge strides in their lifespan and income.
Despite the many disparities that exist in the world today, the last 200 years have shown remarkable progress in closing the gap between “the west and the rest”. We live in a converging world, where average lifespan and average income are increasing in all corners, with particularly rapid growth - and therefore opportunity - in Africa and Asia.
Looking ahead, we can expect a continued shift to the east and south. Global economic power will continue moving to rapid-growth countries like China, India, Sub-Saharan Africa, the Middle East and North Africa. Indeed, these markets will become increasingly important venues for conducting global business.
And to go along with this, the competition for talent will grow increasingly fierce. Studies show that 60% of the new jobs resulting from this shift east and south will require specialized skills. But only 20% of the population will possess these skills. Furthermore, by 2025, the global South may become the major source of technical talent in the global economy.
All the while, companies can take heart that increased worker mobility and technological advances are improving cross-border collaboration, and therefore the ability to leverage in-house talent on a global scale. Ultimately, though, it’s predicted that greater workforce diversity will provide competitive advantage in the converging global marketplace, so being able to recruit and retain local talent is an important consideration as firms expand internationally.
Against this backdrop of macro-trends that are impacting life and business in general, let’s look at some trends that are more specific to the architecture and engineering industry. From an infrastructure perspective, there are some remarkable things happening.
It’s anticipated that the world’s overall gross domestic product (or GDP) is growing to the tune of possibly doubling by 2030, with the highest economic growth expected in the Asia-Pacific region. One impact of this growth is that the current transport infrastructure capacity will not meet 2030 demand – which means lots of work for firms who can help design and build this infrastructure.
Looking at where in the world this work will be, the Asia-Pac region is the largest transport infrastructure market by far, projected to increase from 557 billion dollars a year to nearly 900 billion dollars a year in 2025. Also of note is that sub-Saharan Africa is expected to have the fastest transport infrastructure investment growth rate, at over 11% - representing another area of opportunity for A/E consultancies.
An even more industry-specific data point comes from an EFCG 2015 survey of engineering CEO’s. A portion of this survey focused on evaluating the most opportune markets in the world. Each CEO respondent was asked to rate each world market in terms of growth and profitability. Only four markets came out with an overall positive rating, with the US leading the way and Asia and the Middle East coming in second and third respectively as the fastest growing and most profitable markets for engineering firms. This presence of Asia and the Middle East in the top 4 markets offers an industry-specific corroboration of that shift east and south we looked at earlier. Indeed, the ongoing shift in global economic power is impacting the A/E industry.
Another interesting finding of this same survey speaks to how the A/E industry has already been impacted by the shift of economic power and opportunity. In the year 2000, there were 41 firms with greater than 100 million dollars in annual revenue that participated in the survey. In 2015, only 15 of these firms still were in existence – in other words, 67% of the largest firms that participated in the survey 16 years ago are no longer around today. The main reason for this? In short, acquisition – most of the firms that are no longer around were acquired by other firms looking to increase their global reach and specialization, and better serve their emerging markets.
So the data shows that we live in a converging world, and that there’s a shift in economic power and opportunity towards the global East and South. We see that the global transport infrastructure market, as one leading indicator for the A/E industry, is pointing towards Asia-Pac and sub-Saharan Africa. And engineering CEO’s are bullish on Asia and the Middle East, while the engineering industry continues to consolidate as firms look to tap into the growing opportunities around the world.
Has your firm started exploring international expansion? Share your experiences in a comment below.
Author’s Note: This is the first in a series on glocalization as it relates to the architecture, engineering, and environmental consulting industry.