The World is Not Flat

And other fantastic predictions that were not really true. We've known it for a few centuries now; it turns out the world is not flat after all. I was reading the March/April issue of Foreign Policy magazine and came across an article by Pankaj Ghemawat who makes a compelling case for why.

We've been talking about globalization for so long that we forget how local our businesses and relationships really are. It's interesting to observe how we're not really as integrated and connected as we thought. Think about how you need to have a passport to travel to countries like Canada when you didn't need one just last year. We'd like to think the Internet has leveled the playing filed, that connections are happening across borders.

They are, but not as rapidly and completely as we assumed or imagined they would be by now.

"[...] more than 90 percent of all phone calls, Web traffic, and investment is local. What’s more, even this small level of globalization could still slip away."

Ghemawat cites statistics to back up his take. For example: "the total amount of the world’s capital formation that is generated from foreign direct investment (FDI) has been less than 10 percent for the last three years for which data are available (2003–05). " If we look at the success of the Indian IT industry, a darling of flat world theory proponents, it is assured by U.S. capital. The country of origin still matters, even for capital.

Geographical boundaries are so pervasive they extend even to cyberspace. As in the case of telephone traffic, Web traffic within countries and regions has increased far faster than traffic between them. The author cites the example of Google hiring regional and local professionals to run their operations abroad, partly because of the linguistic -- and cultural -- barriers.

The article makes a very informative read and I recommend following it with some research through the links provided online. True globalization does not exist now, but it will. Every year we make predictions that turn out not to be true, especially at Internet conferences, it seems. Writer Nora Ephron wrote a candid post about her experience with statements like:

• The Internet is going to set everyone free
• The Dot.com are going to make us rich
• There's no money in the Internet
• There's a lot of advertising money to be made online

Do you see how this list progresses? About in the same way as other predictions have in the past:

• Ideas will spread faster
• Poor countries will have immediate access to information
• Entire electorates will learn what only bureaucrats knew until now
• Small companies will offer services on par with giants
• The communications revolution is profoundly democratic and liberating

When applied to social networks this may look like Shel Israel's research for Global Neighborhoods. All of these things are happening, just not as fast as we think they are. If you're reading this post, you are either a blogger, or someone who is already plugged in on what's happening with social media and businesses that are going online the native way, or trying to.

We like to connect with like-minded people, differences are important, but they are still a barrier to entry. We enjoy spending time with people face to face in the comfort of our local routines. Going to the local cafe' where everyone knows you is reassuring. Doing business with people we know and with whom we have developed relationships over time is still the hallmark to success. Credibility and reputation, even for brands, come from experiencing (I tested, felt, saw myself), not only from story (because they say so) -- as compelling as those may be.

What are the implications for marketing your business? I would be interested in your take, what would you add?

1. Local is the way to go -- global brands have regional and local conversations
2. Focus on what you stand for -- do what you promise and communicate what sets you apart
3. Learn from your mistakes and from your customers -- spreading your story is a journey, invite the people who will support you through that journey along

We may be on our way to becoming global citizens, yet we still live in our neighborhoods. The Web has increased our chances of finding each other, but we're still pretty far from being integrated. Whenever I go back to my Italian home I stock up on locally produced beauty products and apparel -- I cannot find them here, even ordering through the Internet.

Comments

[Robert Hruzek]

Valeria, when you get down to it, a global company's interaction with its customers (at least, the interaction that matters) is on a strictly local level. It can be a good thing for a company to go global, but if they don't have a local flavor at the local level, then who they are gets watered down or even worse, morphed into something unrecognizable. And that path can open the door to local competition taking their segment away from them. Nobody understands the local culture like a local!

[Valeria Maltoni]

Hi Robert -- yes, even the most evolved among us live, work, and are based somewhere. If I had a penny for every company that asked me to "just translate this brochure for this other country"... the culture, the language, the flavor, and how people actually get things done at a local level are indispensable.

There are reference points that become familiar to us only when immersed in that reality.

[gianandrea facchini]

valeria, italy is a country where multinational companies dominate the market. still it happens to see advertising created for one single market, that was successfull in that market, translated for all the others. it happens to see product which are clearly designed for other markets trying their way in a social and cultural environment totally different. the lack of culture in the contemporary business world is amazing.

[Stephen Denny]

Valeria: I think a bit of the globalized dust is settling now, with some businesses going full bore global and others realizing, as you note above, that local works better.

Indian customer service hasn't worked for many companies I've spoken to for US customers. For all the language skills they have, it just isn't good enough.

Many manufacturers are noting that "the China factory" still takes a month to get things over here, which is lost cycle time; the Mexico factory is much faster and therefore better for business.

That being said, I just had two logo's created in Romania -- they took 24 hours and cost $200 each. And they're top notch.

The one thing we marketers know is that unlike programmers, accountants, and manufacturing jobs, we can't be outsourced. No one can market to locals like locals. At least we have that going for us...

[Michael Wagner]

"Credibility and reputation, even for brands, come from experiencing..."

It turns out that the new way of building a brand is the old way of building a brand.

I tell clients one simple truth when they get all excited about marketing and advertising and reaching the world.

A brand is something you demonstrate.

No brand demonstration, no market penetration.

Thanks for stirring my noggin' up this afternoon.

Keep creating,
Mike

[Valeria Maltoni]

Gianandrea -- two thoughts about your comment: (1) multinationals are lazy and hire people with no cultural skills in positions that require them; (2) multinationals think that if they build it, people will come. Both are me-centered way of thinking. The paradox is that the more things change, the more they stay the same. Which brings me to:

Mike -- "It turns out that the new way of building a brand is the old way of building a brand." May not be sexy, but it's doable.

Stephen -- ideas have no boundaries, it's the execution that will get you every time. To act, you need to be aware of what's going on the ground and you can do that only in a close-up situation.

Thank you, you have made this a very stimulating conversation.

[Justin Aoba]

Well, predictions don't come true. That's why they are predictions. Although they should be somewhat accurate...

[Roger von Oech]

My recent "Flat World" experience. The Ball of Whacks was designed in California, manufactured in China, marketed and sold through a website put together in Russia, and bought primarily by Americans and Europeans (and a few Indians). I'm just a single individual who did this, but the experience showed me how easy it is to tap into resources from all over the world.

[Marc Garnaut]

Hope I'm not going off on too much of a tangent with my comment, but I liked this post, it extended my thoughts on something written by Terry Heaton a couple of months ago called "The Local Web" (http://www.thepomoblog.com/papers/pomo64.htm) which talked about the real growth in internet advertising over the next decade being at the local level and how that will prompt the evolution of local media on the web (an evolution from the days of network television and local affiliate stations).

Local scale certainly seems to be making a big comeback (if it ever went away) for a bunch of reasons.

Really thought provoking. Thanks =)

[gianandrea facchini]

Valeria, the above conversation probably shows that you are right about the shape of the world. And that's probably right if applied to the shape of the business, too. But this is where I get mad about: the multinational model is mostly done with some basic rules, the first is everything make us saving money in a short term is ok, in order to customize the world. Same products, same brands, same advertising. Then sometimes troubles happen. The name of a product is offensive in a country, the ad does touch sensitive topic in another one, and so on. Once again, we are lost in translation.

[Valeria Maltoni]

Justin -- welcome to the conversation. As an ancient history buff, I'm sure you are familiar with how history was often surprised by new thinking. There's a balance between holding on to the beliefs that put you where you are and going boldly towards a different future. And some of it is trial and error. We can be certain of this moment alone.

Roger -- yes, technology and connections are fantastic, when they work. I think it is somewhat easier to wrap our heads and resources around a product than a service. The service requires more knowledge of local dynamics to work. However, I've worked for global companies my whole career and have plenty of examples of how even getting a product to market from across the world when you need it can be a challenge.

Marc -- welcome to the conversation. All the way from Singapore and writing at Creative Spark [http://creativespark.wordpress.com/ ]. From the article you shared: Terry touches upon many good points of why we're not done with local -- we live there. For those trying to link to the article, just delete the parentheses at the end of the link.

Gianandrea -- we are human, even multinationals. We tend to want to simplify things. The easiest way to simplify is to think that everyone thinks like us. We know better, of course. Yet with the scarcity of resources and the incorrect allocation of funds some corporations tend to invest in the wrong outputs.

[Joe Raasch]

Hi Valeria,

Three more to add to your marketing list:

1. Research customers who would never even think to choose your business. Find out why. This will create a new market, or validate your current one.
2. Research customers that do consider your business a viable choice, but ulitmately choose a competitor. Find out why. This may change how you approach your current customer base.
3. Read "Blue Ocean Strategy". It is a wonderful catalyst to help move your business from benchmarking against competitors (hey, we're as good as the next guy!), to eliminating competition altogether.

Best,
Joe

[Valeria Maltoni]

Hello Joe:

You are absolutely on: (1) for ideas on new space go to the naysayers, (2) figure out how you are perceived, (3) I concur, that was one of the best books on strategy I read in a long time.

In fact, I just received a free copy from 800-CEO-Read and a thank you for a large purchase I made there. I will be sending that to the next person who continues this conversation on other ways to market your business.