The need to grapple with the organizational challenge of doing business in several countries is hardly new. People who write about the management of multinational companies have long debated organizational choices such as a geographic versus product focus, the role of country managers, and the pros and cons of the transnational model.¹

This perennial topic in the management literature, however, is now top of mind for senior managers at a growing number of companies that are expanding abroad or seeking to deepen their cross-border integration. These executives are trying to take advantage of increased scale and cross-border synergies while simultaneously protecting the value of steadfastly local activities—separate product lines, production facilities, or supply chains; strong company cultures; or some combination of these. In Europe, among other places, local elements in sectors such as power utilities, retail banking, insurance, and telecommunications represent sizable profit sources that the blanket application of multinational best practices and global processes could easily undermine.

We call these kinds of companies multilocals, to reflect their international and domestic character. Such organizations have strong roots in national or regional companies but often expand abroad because they have the resources to pursue mergers and acquisitions but only limited...