Managing Multicultural Workplace

The Globe

L'Oréal Masters

Multiculturalism

A

The cosmetics giant manages

to be very global—yet very

French, by Hae-Jung Hong

and Yves Doz

ABOVE CEO Jean-Paul Agon

speaks at the January 2013

opening of L'Oréal's first research

and innovation center in India.

114 Harvard Business Review June 2013

t the heart of every global business

lies a tension that is never fully

resolved: Achieving economies

of scale and scope demands some uniformity and integration of activities across

markets. However, serving regional and

national markets requires the adaptation

of products, services, and business models

to local conditions. As U.S. and European

companies increasingly look for customers

in emerging economies, both the advantages of global scale and the need for local

differentiation will only increase.

It's easy to get the balance wrong. Some

offerings may feel like commodities—think

refrigerators and washing machines—yet

there are often important variations in the

way people use them. An Italian washing

machine, for instance, has to be made to

rather different specs than a Swedish one.

Others, such as restaurants and cafés, come

across as intrinsically local, yet global formulas and brands do succeed—think Benihana, Wag2imama, and Starbucks.

The tension between global integration

and local responsiveness is especially high

when product development and marketing require complex knowledge. This kind

of knowledge—usually tacit and collective,

revealed only in action and interaction—is

often the mainspring of a company's competitive advantage. The trouble is that tacit

knowledge functions best within national

boundaries, where workers share a Ian-

HBR.ORG

guage and cultural and institutional norms

and can draw on strong interpersonal networks. Without close, face-to-face interaction between knowledge creators and users,

an understanding of how bits of informationfittogether may be lost and the knowledge may become unusable. Further, when

tacit knowledge must cross...