The COVID-19 crisis is exacerbating preexisting trends, leading to a technology “splinternet,” protectionism, and local regulation. “With the rise of US-Chinese tensions, we risk entering a siloed world a bit like during the Cold War, with blocks living in autarky to preserve their sovereignty,” recently warned Jean-Marc Chéry, CEO at STMicroelectronics. Disruptive geopolitical forces will challenge global brands to deeply understand local consumers’ needs and values.

Demand for local products is skyrocketing, and local brands fuel new competition. Consumers increasingly seek brands that reflect their local values, which rely heavily on local beliefs about social issues, politics, and causes. They vary significantly between countries. For example, French and Italian consumers consider climate change as the number one social responsibility for firms. In the US, this is only the seventh most important criteria, and discussions these days focus a lot more on diversity and inclusion, including themes such as gender or racial equality. This phenomenon is just starting in Europe, but here, again, the perception of values differs significantly from one country to the other. For example, this article in The New York Times — “Will American Ideas Tear France Apart? Some of Its Leaders Think So” — highlights the cultural gap between the two countries.

Global Brands Must Enable Local Autonomy And Trust

What does this mean for CMOs? The challenge of creating globally consistent brand messages that meet local consumer expectations is nothing new. But it becomes more important than ever to be open to a truly global mindset and localize your business.

CMOs must anticipate the impact of this new global order on their brands and revisit their marketing in light of increasingly demanding and polarized consumers. Danone, for example, launched a new strategic plan entitled “Local First” to reorganize the firm. Firms such as Starbucks use digital, and especially mobile, to synchronize local offline and online experiences. Mondelēz invests in insights-driven personalization. Leading brands activate emotional content almost in real time to adapt to consumers’ local touchpoints.

The key success factor here isn’t technology but empowering local teams. Local trust is the key to morphing into a truly multinational company.

Multilocal Firms Will Emerge

The next decade will belong to midsize enterprises that expand by prioritizing regional differences and local operations. This phenomenon is likely to happen in several stages:

  • 2021: Societal brands partner with local institutions to solve the COVID-19 crisis. The decline in confidence in traditional institutions and the inability of countries and local governments to solve complex global issues like climate change will increasingly enable global brands to select and express political and societal values. Consumers will expect societal brands to collaborate more with trustworthy local institutions, join the fight against the pandemic, prioritize health and safety, and live up to their multistakeholder promise.
  • 2021 to 2023: The perception that global digital platforms rival nation states will grow. Beyond their economic power, these platforms will continue to have a huge impact on politics and society. Their ability to access citizens’ private data, control the way citizens access and share information, build infrastructure, and even create new currencies will infringe on countries’ sovereignty. Expect other states to follow Denmark’s pioneering approach of nominating a digital ambassador to Silicon Valley.
  • 2023 to 2025: Government regulation and consumer power will pressure the tech titans. Governments will increasingly regulate the global digital platforms that threaten their political foundations. This has already started in the US, in Europe, and in China. Discussions between states and intense lobbying will prevent the full implementation of new laws that limit the power of global digital platforms at a country level before 2023 or 2024.
  • 2025 to 2030: Leading firms will finally morph into true multinationals. These firms will be able to retain the benefits of central technology management while pursuing “hyperlocal” business operating models. Technology (edge computing, 3D printing, etc.) will reinforce hyperlocal operations.

Clients who want to know more can read the new report “Geopolitical Disruption Demands Local Trust” here.