Telepresence and Wim Elfrink have a connection: They are the new icons of globalization. Thanks to Telepresence, Elfrink, Cisco’s Chief Globalization Officer, stays connected with his headquarters in San Jose and his mother-in-law in Amsterdam. It is the next big thing in communication that uses hi-definition screens to deliver life-like meeting experiences.

Elfrink relocated to Bangalore, India with his wife Katya and sons Max (10) and David (7) along with his office, which comprises six other executives, in February this year.

Elfrink has become a celebrity of sorts since Cisco announced his new assignment and designation — that of Chief Globalization Officer. It has sparked immense interest in Elfrink, Cisco’s strategy and the role of the new office.

Equally, the excitement is because Cisco is a novel experiment toward a flatter world, leveling disparities in living conditions and access to facilities. It is an intensely human story that the corporate world hopes will succeed.

“The fundamental of globalization is equitable distribution; it seeks a win-win for all,” says Michael Anobile, Managing Director, Localization Industry Standards Association (LISA), a Switzerland-based not-for-profit organization. “It is about being a good corporate citizen and respecting local laws that will lead to peaceful co-existence.” LISA started in 1990 to help software companies localize their products; its membership now includes companies from all industries.
Yet, globalization is a hackneyed concept and the call for a chief globalization officer is not new. So what is it that has caused such excitement? Has Cisco in its typical flamboyant style hijacked center stage?

Going Local
Cisco’s experiment is not isolated. Last month Halliburton, the American oil services giant, announced that it will be moving its company’s headquarters from Houston to Dubai so as to be closer to the Middle Eastern oil. In August last year the CEO of Wisden Group, one of the best-known publishers of cricketing periodicals, relocated to Bangalore from London to be closer to “where the future of business is” — a reference to the cricket mania in India. A little later, in October IBM quietly moved its chief procurement office to Shenzen, China. The reason: Asia accounts for one third of IBM’s $40 billion purchasing budget.
Everyone knows doing business in a globalized world is very different from succeeding in the home market. It requires working closely with the headquarters and maintaining proximity to the local market.

IBM’s procurement office, for instance, moved to Shenzen because the company already has more than 1,850 procurement and logistics professionals in the region, many of them at its China Procurement Center in Shenzhen. The company also has relationships with nearly 3,000 suppliers across Asia.

“My mandate is to expand and strengthen IBM’s internal procurement skills in the region and the local relationship with suppliers,” says John M. Paterson, VP and Chief Procurement Officer, IBM who has relocated to Shenzen. “It will require a focused approach to simultaneously transfer knowledge and build the management capabilities to lead the work.”

Balancing the local and global is a delicate path that CEOs have to tread. Ninety percent companies that have successfully tapped foreign markets have had very strong domestic growth, according to research by Boston-based Bain & Company that helps in globalization strategies of companies. Consequently, CEOs have the daunting task of creating shareholder value, while executing a long-term vision for organizational growth.

Appointing Elfrink as chief globalization officer frees Cisco’s CEO John Chambers from worrying about the details of integrating the local with the global, and enables him to focus on his immediate worries of maintaining growth and fulfilling Wall Street’s expectations.

Soon setting up corporate offices away from the headquarters will become a norm than an exception. These early experiments — particularly Cisco’s experiment as it has identified a well-defined role — will be keenly watched by the world as it will provide vital clues on how to consolidate globalization forays.

These companies seem to be clear about one thing: Globalization cannot take place from the ivory towers of remote corporate locations.

Why Cisco’s Experiment Matters
Going global is a double-edged sword that no CEO can ignore. Only a few have demonstrated success while most have stumbled. CEOs have to find the right balance between globalizing fast and showing visible results, at the same time creating true value along the way — an uphill task reflected in the poor statistics of companies’ performances. Bain’s research finds that 60% of geographic moves by corporations fail and only 17% companies achieve profitability in their global moves.

A common reason for most aborted globalization attempts has been the failure to incorporate an organizational culture to think globally. This entails a consistent vision across different groups in the company. The vision should include understanding of the domestic market and imbibing local flavors in the global market.