>“Glocalization” and Enterprise Architecture

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Glocal is a combination of the words global and local. It is a best practice in business where organizations conducts business operations globally, but tailor their offerings to meet local tastes and needs.

Essentially doing business glocally means that you are architecting your business to perform operations both effectively and efficiently—i.e. your business is doing the right thing by growing without geopolitical constraints and you’re doing it the right way, by being sensitive to the customers’ specific needs wherever they are located.

The Wall Street Journal, 1 May 2008, reports that “Kraft became the No. 1 biscuit maker in China by tailoring the Oreo to local tastes.”

“The Oreo has long been the top-selling cookie in the U.S. Market. But Kraft Foods, Inc. had to reinvent the Oreo to make it sell well in the world’s most populous nation.”

“Unlike its iconic American counterpart, the Oreo sold in China is frequently long, thin, four-layered and coated in chocolate. But both kinds of cookies have one thing in common: They are now best sellers.”

40% of Kraft’s revenue is internationally-based, so their strategy to go glocal is critical to improving their market share and profitability.

To increase growth at Kraft, the CEO “has been putting more power in the hands of Kraft’s various business units around the globe, telling employees that decisions about Kraft products shouldn’t all be made by the people at the Northfield, Ill. headquarters.”

Similarly, to market the Chinese Oreo’s, one of innovative things Kraft did was to have Chinese university students ride around on bicycles outfitted with wheel covers resembling Oreos and handing out cookies.

The CEO stated this was “a stroke of genius that only could have come from local managers. The more opportunity our local managers have to deal with local conditions will be a source of competitive advantage for us.”

Glocalization, the customization to local markets, is far removed from the original Ford Model T (the most influential car of the twentieth century according to Wikipedia) set in 1908 that was based on standardization and assembly-line production, rather than individually hand-crafted.

From an enterprise architecture perspective, going glocal and customizing (or tailoring) business products and services to local tastes is also quite the opposite of what most enterprise architects try to do, which is to standardize their products and services to increase interoperability, simplify the infrastructure and operations, and achieve cost-efficiencies.

So what is more important, standardization or customization?

I suppose it depends on your perspective. If you’re in operations, then standardization is the dominant factor in order to streamline business processes and achieve cost-efficiencies. However, if you’re in sales and marketing, then customization is key to market penetration and customer satisfaction.

This leads me to the role of the enterprise architect, which is to balance the conflicting needs of the organization and simultaneously drive standardization in business processes and technologies, but customization to local requirements for sales and marketing. So EA serves Oreos to everyone!

>The Power of Marketing and Enterprise Architecture

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Enterprise architecture is all about planning and governance to enable organizational success. But despite all the astute architectural planning and sound governance, why is it that the better product so frequently loses out to better marketing?

We’ve seen this happen with the more innovative and better functional Apple products losing out to Microsoft. We seen VCRs beat out Betamax, even though at the time Betamax was seen as the superior format. And again, we’ve seen CDMA become the dominant cellular network standard in the USA, despite GSM initially being the superior technology and had 73% worldwide market penetration.

Now once again, the superior product has lost in the market and is no longer being made, the Hydrox chocolate sandwich cookie made by Kellogg Company has lost out to the inferior Oreo cookies made by Kraft Foods Inc.

The Wall Street Journal, 19-20 2008 reports that ”The Hydrox Cookie is Dead, and Fans Won’t Get Over It.”

Hydrox enthusiasts “preferred Hydrox’s tangy, less-sweet filling. Many fans seem to remember that the cookies held together better than Oreos when dipped in a glass if cold milk. Some argue Hydrox cookies were more healthful than Oreos, since Oreos used to contain lard.” In fact, in a 1998 taste test by Advertising Age, 29 tasters voted for Hydrox and only 16 for Oreo. Yet despite these preferences, Hydrox lost out to “the dominant Oreos, one of the country’s best-selling snack foods.”

“For many years, the contest between Oreo and Hydrox was akin to that of Coke versus Pepsi, the Beatles again the Rolling Stones, dog people and cat people.”

In the end, Hydrox lost to Oreo; “Oreo had all the advertising, but those in the know ate Hydrox.” Over the years, Nabisco (now owned by Kraft Foods) had the far larger marketing budget, and Hydrox was discontinued in 2003.

Fans still hope that “Kellog changes its mind, especially since this year is the cookie’s 100th anniversary.”

So is marketing stronger than product, like the pen is mightier than the sword?

This lesson seems pertinent in a presidential election year, where fund raising by candidates and advertising by them is seeing reaching astronomical levels. “After nine months of fundraising, the candidates for president in 2008 have already raised about $420 million. This presidential money chase seems to be on track to collect an unprecedented $1 billion total. By some predictions, the eventual nominees will need to raise $500 million apiece to compete–a record sum.” (http://www.opensecrets.org/pres08/index.asp)

So will the best candidate win to be the next president of the United States or simply the candidate with the deepest pockets and best marketers?

From a User-centric EA perspective, I find this contest of product versus marketing to be akin to content versus design in developing EA information products. For example, an EA program can have wonderful and valuable EA information content, but if it does not employ User-centric EA principles of design and communication (such as using profiles, models, and inventories or information visualization and so on), then the EA program will not reach its potential. Every consumer product has both content and design or product and marketing. The high-end luxury companies have learned this lesson well and often capitalize on this by offering products with superior design, flair, packaging, and marketing and are thus able to develop formidable brands and command superior prices. So a word to the wise, do not ignore the power of marketing, communications, and design as part of your EA or other product development endeavors.