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Summary
The ongoing conflict in Iran has led to increased energy prices and cyber threats, prompting companies to consider a “poly-national” corporate structure, which involves decentralizing operations and investing in long-term local relationships. This approach, already adopted by companies like Coca-Cola and Procter & Gamble, prioritizes regional operations and local talent. Other companies, such as HSBC, have also regionalized their operations in response to global tensions. However, decentralization also comes with risks, including duplicated systems and costs.
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The strategy enters a familiar phase.
Companies like Coca-Cola and Procter & Gamble have long prioritized global experience in their leaders and connected strong regional operations. HSBC regionalized its operations last year, splitting its operations between “Eastern Markets” and “Western Markets.” The rise of the “poly-national” corporate structure is a response to the shift from globalization to national interests. As Novartis CEO Vas Narasimhan said, “to navigate complexity in the external world, you have to radically take out complexity internally.” The poly-national approach requires leaders whose teams are aligned on what efforts are localized—and what stays the same. The conflict in Iran accelerates the push to decentralize global companies.
Author: Evan Null
