ZohoDay 2021 - post-pandemic business success depends on transnational localism, says Zoho CEO

Phil Wainewright Profile picture for user pwainewright March 10, 2021
Most tech companies set out to change the world. Zoho wants to redefine capitalism, with a philosophy of transnational localism

Sridhar Vembu CEO Zoho electric cart
Sridhar Vembu, Zoho (Screenshot from ZohoDay presentation)

How do businesses adapt to a world where we're all more connected than ever, and yet there's growing fragmentation in social interaction and global trade? One company that's been thinking a lot about this conundrum — and to which it believes it has an answer — is cloud business software provider Zoho. CEO Sridhar Vembu and colleagues set out their blueprint of 'transnational localism' for post-pandemic business success at its recent annual ZohoDay analyst briefing.

Zoho is a company that has grown up alongside the worldwide web and cloud computing through its 25-year history. It delivers its suite of affordable business software from the cloud, enabling over 50 million users globally to operate as digitally connected businesses and workers. But it also aims to use that global connectivity to deliver local opportunity to the underserved. As Vembu says in a video released to mark the company's first 25 years:

Our purpose in Zoho is to create opportunity for people who do not have an opportunity; create really compelling technology for customers who could not afford that before; and create this in locations which have not taken part in the technology revolution before.

Vembu believes that current trends make this mission more important than ever. He points to the social unrest of the past year, in part caused by "a bipolar economy where some people have done very well, and lots of people are struggling." This is causing political leaders to emphasize support for jobs and industries at a national, regional and local level, pushing back on the globalization we've seen in recent years. The tech industry — where a lucky few earn astronomical returns — can't afford to ignore these trends, he believes:

Technologists for so long thought that they are exempt from politics ... We've got to pay attention to how people are living and what they think about all this concentrated wealth.

Zoho believes that businesses must play their part by harnessing global connectivity to redistribute that wealth. Vembu explains:

We have to create sustainable local economies, which are also hyper-connected in terms of the knowledge, all of them. The connectivity is real, it is there. It's not going to go away.

Cohesion of a distributed workforce

It's no coincidence that Zoho's blueprint for achieving this goal also provides a strong common purpose across the company. In doing so, it sets an example of how businesses can maintain cohesion across the kind of distributed workforce that its software enables, and which has become more prevalent as a result of the pandemic.

While some business leaders argue that the only way to maintain their corporate culture is through a return to city-center office towers, Zoho is doubling down on a policy of distributing its workforce across small local hubs, often in rural areas. As it does so, it has to confront the issue of how to keep everyone aligned on shared goals. As Vembu explains:

Tech is the easy part. A lot more complex is how to manage this highly distributed company, and particularly the cultural norms. The key here is nurturing the culture with a sense of shared values, shared purpose and shared experiences.

In Zoho's case, that is helped by a remarkably stable workforce, including over 100 employees who have been with the company more than twenty years. This means that when it expands into a new geography, the expansion can be led by someone who's already steeped in the culture and understands how to adapt it to local conditions. That allows an important degree of local autonomy. Vembu explains:

We have to eliminate that deep hierarchy where everything is centralized. For example, there's no way I can make all the decisions for Japan or Europe or Mexico or Austin [Texas], any of this, it isn't possible now. So we have to distribute.

What I can influence is maybe that philosophy, the culture and all of that. But the local decisions have to be made locally.

Ingredients of transnational localism

The Zoho blueprint of transnational localism combines global connectivity with putting down local roots. The transnational element is the shared knowledge and culture that everyone participates in, while the local component aims to support local economies. An important element of this is the vision of a rural revival that Vembu presented at last year's ZohoDay. It is expressed in a number of different ways:

  • Creating hub offices in rural towns with smaller 'spokes' in neighbouring villages. Zoho has already established around ten in India, two in Texas, two in Mexico and one in Canada, with a target of reaching a hundred around the world by next year.
  • Recruiting talent out of cities to bring their expertise and skills into local hubs to support rural revival, along with incubation programs to train local talent. Similar to the existing Zoho Schools of Learning (formerly known as Zoho University), the latter will focus on high school leavers, with an emphasis on aptitude rather than paper qualifications.
  • Building with construction techniques that are based on local materials and sustainable practices, even adding farms so that employees can reconnect with the land.
  • Partnering with local organizations and civic initiatives, even to the extent of funding local schools, which Zoho has already done near Vembu's home in southern India.

There's also a growing ecosystem of Zoho partners and other businesses founded by Zoho alumni that share its values. As customers get to know the company, Vembu hopes its example will rub off on them, too. He says:

We want to see a flourishing ecosystem of smaller companies. That's important for regional economies, that's important for the world.

My take

Despite a steadfast refusal to conform to mainstream norms — particularly those of Silicon Valley — Zoho's philosophy of transnational localism seems remarkably in tune with today's zeitgeist. The notion that businesses exist solely to make money for their shareholders was already under fire from proponents of 'stakeholder capitalism' before the pandemic took hold last year. But stakeholder capitalism has flaws of its own, too prone to collapse under the weight of competing stakeholder claims without a guiding vision to set priorities. Vembu's definition of capitalism sees those stakeholders as a single community with shared goals. He says:

I do believe in capitalism. But with the right definition of capital. Finance capitalism is not the end of all of it. Capitalism means we create local assets, we create knowhow, we create capabilities, we create resilience. That is capital.

It's clear that the world has changed as a result of the pandemic and new patterns of behavior will set in. One of the dangers is that communities will retrench behind barriers in the face of a flight from cities, while governments and businesses will seek to reduce the vulnerabilities in global supply chains that were revealed last year. But it would be a mistake to lose the global connectivity and co-operation that, for example, has enabled the rapid development and distribution of vaccinations against COVID-19. Getting the balance right between the local and the transnational is therefore crucial.

The vision that Vembu and his Zoho colleagues set out seems to map a credible path. Will others follow its example? The company and its spokespeople are not as strident as other tech leaders who have set out to change the world, but their calm, quiet leadership by example has a compelling resonance.

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