The war with Iran will accelerate the rise of the ‘poly-national’ company

Good morning. Will the attacks on Iran accelerate the drive to decentralize global companies? This year’s Edelman Trust Barometer was discussed the rise of the “poly-national”—a corporate structure that invests in long-term local relationships, dividing everything from talent to supply chains in individual countries. To stay ahead in a world shifted from globalization to national interests, the argument goesthe companies must “act as a network of businesses with a US center, but a local face.”

It’s a variation on a strategy long used by global consumer-facing giants such as Coca-cola and Procter & Gamble, which Prioritize global experience of their leaders and connects with strong regional operations. HSBC its operations are regionalized at the beginning of last year, it split its operations between “Eastern Markets” and “Western Markets.” And years of heightened tensions and tariff wars with China have long forced companies to change what Singapore’s Prime Minister Lawrence Wong called “invented in California; made in China” strategy that has helped companies like Apple so profitably scale.

There are other forces that disrupt the model of a centralized company. I spoke yesterday with Christina Kosmowski, CEO of LogicMonitor, which monitors customers’ technology systems from data centers to the cloud. He had several conversations with CEOs about doubling down on a regional strategy to build strength. “If your systems go down, you can’t move,” Kosmowski said. “The reaction time frame is in seconds, instead of hours and days.”

To be sure, decentralization has risks, especially the duplication of systems, costs, and functions that are streamlined in an efficient corporate structure. as Novartis CEO Vas Narasimhan said to me last year“to navigate the complexity of the outer world, you must remove the complexity within.” That means making a stronger and simpler organization where everyone knows who is responsible for what. It’s possible to have that with autonomous and agile regional operations, of course, but it requires leaders whose teams are aligned on what efforts are localized — and what stays the same.

Contact CEO Daily by Diane Brady at [email protected]

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A $210 billion war

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The markets

S&P 500 futures fell 1.87% this morning. The last session closed flat. the STOXX Europe 600 fell 3.30% in early trading. The UK’s FTSE 100 fell 2.95% in early trading. Nikkei 225 in Japan fell to 3.06%. CSI 300 in China fell 1.54%. Hang Seng in Hong Kong fell to 1.12%. KOSPI in South Korea fell 7.24%. Indian markets is closed today. Bitcoin up to $67K.