Glocal is a combination of the words global and local. It is a best practice in business where organizations conducts business operations globally, but tailor their offerings to meet local tastes and needs.
Essentially doing business glocally means that you are architecting your business to perform operations both effectively and efficiently—i.e. your business is doing the right thing by growing without geopolitical constraints and you’re doing it the right way, by being sensitive to the customers’ specific needs wherever they are located.
The Wall Street Journal, 1 May 2008, reports that “Kraft became the No. 1 biscuit maker in China by tailoring the Oreo to local tastes.”
“The Oreo has long been the top-selling cookie in the U.S. Market. But Kraft Foods, Inc. had to reinvent the Oreo to make it sell well in the world’s most populous nation.”
“Unlike its iconic American counterpart, the Oreo sold in China is frequently long, thin, four-layered and coated in chocolate. But both kinds of cookies have one thing in common: They are now best sellers.”
40% of Kraft’s revenue is internationally-based, so their strategy to go glocal is critical to improving their market share and profitability.
To increase growth at Kraft, the CEO “has been putting more power in the hands of Kraft’s various business units around the globe, telling employees that decisions about Kraft products shouldn’t all be made by the people at the Northfield, Ill. headquarters.”
Similarly, to market the Chinese Oreo’s, one of innovative things Kraft did was to have Chinese university students ride around on bicycles outfitted with wheel covers resembling Oreos and handing out cookies.
The CEO stated this was “a stroke of genius that only could have come from local managers. The more opportunity our local managers have to deal with local conditions will be a source of competitive advantage for us.”
Glocalization, the customization to local markets, is far removed from the original Ford Model T (the most influential car of the twentieth century according to Wikipedia) set in 1908 that was based on standardization and assembly-line production, rather than individually hand-crafted.
From an enterprise architecture perspective, going glocal and customizing (or tailoring) business products and services to local tastes is also quite the opposite of what most enterprise architects try to do, which is to standardize their products and services to increase interoperability, simplify the infrastructure and operations, and achieve cost-efficiencies.
So what is more important, standardization or customization?
I suppose it depends on your perspective. If you’re in operations, then standardization is the dominant factor in order to streamline business processes and achieve cost-efficiencies. However, if you’re in sales and marketing, then customization is key to market penetration and customer satisfaction.
This leads me to the role of the enterprise architect, which is to balance the conflicting needs of the organization and simultaneously drive standardization in business processes and technologies, but customization to local requirements for sales and marketing. So EA serves Oreos to everyone!