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Larry Emond

Management

How Schneider Electric Stays Both Local and Global

Distributing leadership, decentralizing decisions, and pursuing local talent

Published: Wednesday, November 27, 2019 - 12:01

No matter where you’re located, you might think that Schneider Electric is a native company. It’s an easy assumption to make. The €25.7-billion energy, automation, and software solutions company is officially headquartered in France, but its strategy is to localize to the markets it’s in—and it’s in most of them.

Schneider’s localization strategy requires distributed leadership, so the company spreads its top 1,000 leadership roles around the world. Leaders stay in situ for years, which keeps culture universal and decision-making decentralized. This allows for precision responses in differentiated business ecosystems and attracts talent where it lives.

That helps Schneider Electric weather economic storms that drive competitors out of the market, but being the most local of global companies requires leaders who prize diversity and want to become local experts of the whole world—and Schneider’s chief human resources officer (CHRO) Olivier Blum says it’s a strategy that others may have to adopt. As he explains to Gallup’s managing partner Larry Emond in the following conversation, “People don’t want to work in the old model where all decisions have to go back to the global corporate. So localization? Companies really have no other choice.”

Larry Emond: Schneider Electric calls itself “the most local of the global companies.” Tell me about that.

Olivier Blum: It has always been the strategy of Schneider Electric to be as local as possible for the simple reason that we do a lot of business with local partners; they know the local ecosystem. We live in a global world where more and more people are connected, but most people are not mobile. Their careers and their homes are in their country of origin. We strongly believe that, while there are a lot of benefits to being global, such as our ability to leverage the most innovative and effective technology, at the end of the day, the most successful company will be the most local one. If you look at the way the planet is evolving, how politics are evolving, and with the increasing size of our company, there are huge benefits to our business and to people to be very, very local in our approach.

Emond: How do you execute on that strategy?

Blum: Our story started to be a bit different from others eight years ago when our CEO, Jean-Pascal Tricoire, said that we’d reached a level of revenue that was super well-balanced between the different parts of the world, balanced on manufacturing, balanced on R&D head count. But what will make the difference for Schneider Electric is leaders in different parts of the world who are knowledgeable about their market and really empowered to make day-to-day decisions. We’re a European company by origin with a quite good footprint in the United States. But about 42 percent of our business is in Asia, the Middle East, Africa, South America, and Russia—and like many, many companies, we’ve moved a lot of our R&D from our historical center in Europe to the United States and Asia. We needed to decentralize decision-making not because it gave us more R&D or more manufacturing capacity, but because it allows our leadership to make the right decision for local customers. In the end, we want to be the most local of global companies everywhere. Our model applies as well to the United States as it does India, China, anywhere. That’s why the executive committee is located all over the world, and Schneider Electric’s 1,000 biggest jobs are targeted to all our different geographies. Of course, some jobs are local by nature—the head of sales in China is located in China; the head of supply chain for North America is located in North America. I’m not talking about those jobs—I’m talking about tax, legal, global separation strategy, and so on and so forth. So we’ve done a lot of things that many companies have done, but we’ve done some things slightly differently because we want to distribute leadership as closely as possible to the different customers.

Emond: You mentioned to me once that you believe you’re very effective in China because a large number of your senior leaders have lived there.

Blum: Yeah. China is a great example. For the last 20 years or so, we’ve sent a few high-potential people to live and work in China. Jean-Pascal was in China for six or seven years; the same for me. We’re both in Hong Kong now. At one point, 50 percent of the executive committee had lived in China for at least five years.

Emond: That’s a huge number.

Blum: It definitely creates a very strong knowledge of the Chinese market. You can consider China almost a standalone market—around 90 percent of what we sell in China, we design and manufacture in China. And when you’re a corporation that knows China, your decisions can be much faster and more effective. But if you really want to develop your market in China today, you have to be Chinese in China. We have reached the stage now that to win in China, we have to innovate in China, we have to understand the Chinese market, we have to understand the digital economy in China. To be a very strong local leader, you must employ local teams. That’s why we have such a limited number of expats in China today.

Emond: Does your commitment to produce locally what you sell locally help you during global trade wars and supply chain disruptions?

Blum: Absolutely. The more you are self-sufficient within a given country, the more independent and agile you can be. That applies to China but also to the United States, India, or France, which are our four largest countries.

Emond: Schneider really got the timing right in China. Ten, 20 years ago leaders could be expats. Now they really have to be Chinese.

Blum: Yeah, when I moved to China in 2003, multinationals were the stars from a market standpoint. All the top talents from the best universities wanted to join multinationals. Today, it’s a very different market—you compete with local Chinese companies that are also multinational and also very strong. It’s interesting, though. China, and India, too—those countries are so big that you almost have to make them self-sufficient. If you look at our China journey over the past 20 years, it’s been almost linear. One or two crises, but limited. The India journey has been very hectic, a lot of ups and downs. Often when multinationals invest in India and there’s a crisis, they have to divest and slow down. We have been very patient, and all the credit goes to our CEO. We have been extremely committed, so our investment paid off through good and bad times. That made us probably one of the biggest companies in India today. As far as I’m concerned, probably the best opportunity I’ve had was to spend five years in China and five years in India when those countries were really booming and developing. We all know those two countries will play a big, big, big role in the future, and it was great to have experience in two countries that are very different but play an increasing role in the global economy.

Emond: Was that your game plan in the United States 30 to 40 years ago?

Blum: Well, we acquired Square D in the ’90s, which was a big national company with a large network of distributors, employees, and leaders. So we started with a very solid footprint in the United States, which was very different from China, where we really started from scratch. But our mission to keep building new talent is the same. If you are a global company headquartered in the United States or in France or Germany or wherever, where all decisions have to go back to the headquarters of the company—guess what? You lose talent, especially in the United States, where we compete for top talent with very large U.S.-based companies. People, especially young talent, prefer to work where a decision will be made locally, where they can innovate close to the customer, where they can understand the local dynamics. So localization? Companies really have no other choice. People don’t want to work in the old model where all decisions have to go back to the global corporate. That’s not the way you attract the best talent. By the way, when you are a European company, you don’t go to the United States to tell them that all the decisions will be made in Paris. That does not fly, either.

Emond: Speaking of talent, I feel like you’ve made a bigger investment in acquiring and developing talent in Africa than most companies. Would you say that’s true?

Blum: I don’t know if we are doing better than other companies, but we are really committed to Southeast Asia and to Africa; we do a lot of business there, and those two zones represent huge opportunities in the coming years. We are not at the same stage in Africa as we are in China or India, though, not at all. I think we’re at the beginning of the story in Africa. We need to have more local talent there to take more risk in the market. But we are a global specialist in energy management and industrial automation, and our job, if you will, is to make energy more effective and more efficient for our different targeted segments, home and commercial buildings, data centers, industries, and infrastructures. In the African market, or even the Indian market, Schneider Electric does a lot of business creating solutions for energy efficiency. But in those places, there’s a big part of the market where people don’t have access to electricity at all. So in Africa, the whole idea is to build a local ecosystem where we can train people and develop businesses so we can provide access to energy in very remote places. The setup in Africa is a combination of a CSR [Corporate Social Responsibility program] and our normal business.

Emond: Where does CSR sit in Schneider? Is that under you as CHRO?

Blum: No, for many years it’s been hosted under Strategy, but I’d say we’re a joint team. Social responsibility is a very, very strong element of the strategy of Schneider Electric, you know? Our mission is to make energy more efficient everywhere in the world. Electricity consumption is increasing, and we have to reduce CO2 emissions, so our mission in life is really to use the expertise of Schneider Electric to save energy. Our business mission and our CSR initiative are converging, and that’s why sustainability is completely embedded in the strategy and culture of Schneider Electric. Having a meaningful purpose is the first pillar of our employee value proposition.

Emond: How do you maintain a consistent culture across geographies?

Blum: We share a certain number of values in the way we work everywhere in the world: Customer first. Dare to disrupt. Embrace different. Learn every day. Act like owners. But you know, if you asked me why you should join Schneider, I would tell you first, because we have a meaningful purpose, we are an inclusive company, and we empower people to deliver our mission. We are leading the digital transformation of energy management and automation that empowers all to do more with less. We ensure that life is on everywhere, for everyone, at every moment, and we adhere to the highest standards of ethics. Second, because of our employee value proposition. At Schneider Electric, your job will be meaningful, empowered, and inclusive. We are a very, very inclusive company. There are common behaviors we want to see everywhere in the world, but the best definition of the culture at Schneider Electric is that it’s inclusive. If you want to operate in a global world with a very distributed leadership, success is about having many people with different backgrounds, cultures, nationalities, and genders around the table.

Emond: That value proposition is powerful—you’ve never worked anywhere else, right?

Blum: That’s right. I spent 10 years in Europe, the first part of my career. The last 16 have been in Asia, between Beijing, New Delhi, and now Hong Kong. It’s not unusual to have this kind of journey at Schneider. That’s how you truly localize. And who knows what the future will bring, but I can tell you I’ve enjoyed my 26-year journey so far. And you know? I think you will find most leaders at Schneider would say the same thing.

First published Nov. 7, 2019, on Gallup’s blog.

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About The Author

Larry Emond’s picture

Larry Emond

Larry Emond is the managing director of Global Leadership Advisory at Gallup.

Comments

Schneider Electric

Worked with SE EHouse LOB in Australia and really loved the culture and leadership.

Keep the strong leadership going.

AJ