It's become fashionable to think that the world is flat and small. Every business can serve the world, Tom Friedman famously argued, and therefore place really doesn't matter any more. But is it true?
Consider these facts:
2% of voice phone calls last year crossed borders; if you include Internet telephony, the biggest number you get is 7%
3% of the world's population is first-generation immigrants
10% of global investment was foreign direct investment
20% of global GDP derives from exports
10% to 15% of Facebook friends do not reside in the same country
These data, from Pankaj Ghemawat, a strategy professor at IESE Business School, don't describe a flat, universalized world but a highly localized one. Place now doesn't matter less--it matters more than ever. His data also suggest that, as far as worldwide markets are concerned, there's still a vast area of untapped opportunity. But the strength of business starts locally.
Real Madrid and Manchester United have become phenomenally successful and wealthy football teams not by eschewing their locale but by emphasizing it.
Italian fashion maintains its luster and its margins not by outsourcing manufacturing to China but by using and showcasing local textiles and intricate handiwork.
Emma Bridgewater ceramics has become fashionable and remained pricey because it is still made by hand in the historic home of British pottery, Stoke-on-Trent.
Or, as The Economist pointed out recently, the unique strength of Scandinavian crime fiction is its setting.
What all of this suggests is that successful brand building has a lot to gain by nurturing and articulating local roots. If you want to become a global business one day, the most important place to start is at home.