In our book "From Local Champions to Global Masters", we make the case that the slogan "internationalize or die" has rushed many businesses into going global without pausing to think either how or why.

Let us begin with some of the "givens" that underpin thinking on globalization and that have created a climate of "go global or go bust." First, we're told, the volume of trade between countries around the world has never been so great and trade and communications barriers are falling. At the same time, clients want and buy the same products around the world. Companies are stateless, and possess a generic management style, such that it no longer matters where a company comes from.

Fact or Fiction?

But are these facts little more than myths? It has been cogently argued that the world is no more integrated than it was in the 19th century, that globalization is only picking up from where it left off in 1914, that the process is neither new, nor advanced nor irreversible. Furthermore, there is as much evidence of divergence as of convergence in consumer tastes, and that globalization can actually serve to strengthen national differences rather than erode them.

And not only are there still significant differences in the corporate cultures of, say, Japanese, German and U.S. multinationals. The image of companies as "stateless" does not hold up either, not in terms of the composition of the boardroom, the nationality of major shareholders or the "transnationality" of their operations. Companies such as Coca-Cola, McDonald's and AOL are directing theirefforts towards more localization.

Why Go Global?

When companies say they are going global, do they know why? Or what they need to do or how to do it? Our view is that internationalization is a process of change and transformation. There are many symptoms of strategic malfunction among some companies. In many cases, internationalization has not brought growth; profits may be up, but not profitability; local managers complain that HQ doesn’t understand the local market; the organization seems too (de)centralized. Any one of these scenarios suggests that the why-whathow paradigm needs to be addressed.

Many companies today merely employ a variety of slogans, such as: "There is no more growth in our home market, so we have to go abroad,"only a few large, international players will survive in our industry," or "our clients are internationalizing, so we have to follow them."

Is Bigger Always Better?

Even in so-called "global" industries, nonglobal companies will survive and may even outperform the global companies. On the other hand if, like Gillette, you invest $700 million in developing the new Mach3 razor, the only way you can recoup your investment is through global marketing and... the rest is history now, as Gillette was taken over by P&G, which backtracked from a simplistic global strategy towards renewed attention to local markets.

The key is not what type of player you have to be. When you ignore the other strategic, often real bases for success in your business, you risk the syndrome of "internationalize and die."

If you expand for scale reasons, you still have to ensure that the economies materialize to their full extent. A company is a living mechanism, where a lot of things can happen to prevent getting the maximum economies of scale. "Management, not mass, is what matters " It is critical men rather than critical mass that matters." (Financial Times, March 28, 1998).

This notion of being where the market is resembles a portfolio approach to business. You go to all geographies where you think there is a market for your services or products. The question remains: how does it add value for you to be in these different markets? Being there could be nice, but is it crucial? And will it provide you with a true advantage over local competitors over there or over your local competitors back home? Growth and internationalization "for the sake of it" is dangerous and risky. Growth should be the result of doing something right. The trigger, we believe, lies in identifying what it is you can do right or better by entering foreign markets. The list of those who have got it wrong is long and should sound a cautionary note " and many companies that are household names have appeared on this list at some points in time. They include Daf trucks, Saatchi and Saatchi, Marks & Spencer, Procter & Gamble, Coca-Cola, ABNAmro, Daimler-Chrysler and ING.

Nor does the now or never approach to expansion make for clear thinking. The image of the endgame has frequently been used to dramatize developments in the European markets. We saw it with the hype of "Europe 1992": Europe was supposedly going to become a borderless market as of the magical January 1, 1993. But Europe did not change overnight. A climax swelled around the introduction of the euro in January 1999. The expectation was that Europe was going to change into an integrated market because of a new accounting unit and currency. Mature reflections indicate that for many companies, it remained to a large extent business as usual.

Managing Diversity

In conclusion, we contend that globalization has more to do with managing diversity than with standardization. A real globalization of your business will allow you to explore your capacity to manage complexity and to enter new markets conscious of their differences and nuances. Globalization is strategic for the simple reason that it forces you to analyze the essence of your strategy, your management structures and practices, and to ask what are your criteria for success.

Those who reduce globalization to "one-sizefits-all" approaches have clearly missed or will miss most of the message of the global market integration. We believe there are as many opportunities for localization, leveraging diversity, maximizing rather than minimizing differentiation and developing "multi-whatever" strategies. The global masters will be those companies that succeed in managing different degrees and speeds of internationalization and globalization across different units, departments, functions, products, client segments, processes or other dimensions.