Where should localization live organizationally? There is no “right” or “wrong” place for localization to live on an org chart, but there are certain strategic objectives that most localization leaders want to accomplish at various points within the overall evolution of a tech company. Where you live organizationally can shape how much you can get done, and how fast. What is best will vary from company to company, and might even change over time at the same company.
In this article, I’ll outline four options for organizational “homes” for localization teams at software companies. I’ll also share how these different options can help or hinder a team’s progress toward their own strategic objectives to advance the international cause.
Six Strategic Objectives of Localization Teams
What your strategic goals are with any localization initiative really depends on your team’s mission. At HubSpot, our company mission is “to help millions of organizations grow better,” and our localization team’s mission by extension is “to help millions of organizations grow better across markets and languages.” If you have a mission like this that is pretty expansive, here are some of the six strategic objectives you’ll want to consider when it comes to positioning your team organizationally:
1. Ability to influence international growth
You want localization to be seen as the strategic lever for growth that it is, not for it to be an afterthought or a by-product of decisions made elsewhere by others. Where you position yourself and your team organizationally can make a major impact on your ability to help drive growth.
2. Ability to Support the local customer Experience
You also want to ensure that localization can help ensure a high-value and consistent local experience, through every part of your customer lifecycle. If you don’t do this, your customers might have a disjointed experience where they have a great local experience in some interactions with your company but an inferior experience in other areas.
3. Potential for centralization
You need to make sure your team is positioned organizationally in a way that you can also drive centralization from as early as possible. Otherwise, you won’t be able to help the company achieve cost savings and efficiencies in the long term.
4. Alignment with financial targets
You want to ensure that your team has the ability to know and align with financial targets, both on the revenue generation side, and related to cost savings over time. With cost savings, this shouldn’t be narrowly focused on just reducing cost per word, but rather, on using localization as a strategy to reduce human costs and obtain leverage in other areas of the international business.
5. Access to engineering resources
In order to scale and truly drive improvements and efficiencies for localization over time, you’ll need to gain access to engineering resources, either by funding them yourself or having direct access to them within an engineering organization.
6. Ability to influence product roadmap
To make the biggest impact for your customers in other locations and languages, you’ll need to be able to work with product leadership to ensure they understand local needs and nuances.
Traditional Homes for Localization
Historically, ever since software companies emerged and started to localize, the most common place for localization to be found was under Product and Engineering teams. This is still a very common scenario that makes a lot of sense. Localization depends directly on internationalization, and the two often work hand in hand. Also, one of the first moves companies make aside from hiring an international salesperson is looking into offering their product for other locales outside of their home country and language. Typically, the internationalization teams will report into localization teams when this is the case. From a financial strategy perspective, it can be beneficial sometimes for Localization to be housed under product, which will usually be classified as an R&D expense that grows alongside product and engineering investments..
At many of the newer software and ecommerce companies, with more products being delivered as web apps and websites being an important source of acquisition, localization can increasingly be found positioned under Marketing. With content marketing becoming more popular and international traffic pouring into websites from all over the world, many digital marketing teams have started to budget specifically for localization and sometimes even spin up teams within their departments. One possible downside of having a localization team within marketing is that it can position it under Costs of Goods Sold (COGS), or under Customer Acquisition Cost (CAC). If your company is in growth mode, this can be very beneficial as localization will naturally get some of that investment. However, as your company matures, or when COGS or CAC need to be cut for some other reason, this can limit the team’s ability to grow.
Depending on the type of company, and the phase the company is at, localization is also sometimes found on the Operations team, specifically within the purview of international operations. This is a model that has also existed at many large tech companies during different phases of growth. However, from talking to localization leaders who have found their teams within operations departments, the teams don’t stay there for very long. Part of the reason may be that companies like to keep these types of expenses fairly lean because of how they are categorized as a cost center for financial reporting purposes. From a financial strategy point of view, it doesn’t make sense to put localization in Operations forever, but it can be a good place to house it temporarily.
An Unconventional Approach: The Flywheel Model
Outside of these three areas, there is another model that’s worth sharing, even though it’s pretty unconventional — to position localization as part of the Flywheel team. You might be asking, “what on earth is a flywheel?” Well, to understand this, you need to know a little bit about marketing and sales, and the traditional view of both team’s roles in the customer experience.
In the past, the idea of the marketing funnel was popular. According to common wisdom, companies would bring strangers into the top of the funnel where they become prospective customers, then hand them off to sales, whereby a certain percentage would come out on the other side as customers. That model was inadequate on a number of levels. It was very focused the customer as an “end product,” as opposed to the reality that customers still interact with your brand and company long after they become customer.
However, the relationship with your customer if you want a successful business model doesn’t end. And if you’re a SaaS company, you live and die by retention, so it’s even more important to view the customer<>company relationship as something continuous. A more appropriate visual to convey the perpetual nature of the relationship is a flywheel that keeps on spinning, not an outdated funnel model. This notion has been popularized and evangelized widely as a new way of thinking about business relationships. If you want more details, I highly suggest this video of HubSpot CEO Brian Halligan explaining it much better than I can. 😉
What this means for organizational structure and how you organize the teams at your company is that the concept of a Chief Revenue Officer evolves naturally into a Chief Customer Officer who oversees the core Flywheel teams of Sales, Marketing, and Customer Success. In other words, a Flywheel team encompasses all three of those revenue-focused teams. This forces them to operate as part of the same overall system within an organization and brings them closer together. This is also appropriate, because revenue is a key indicator of the exchange of value between a company and its customers.
What this means for localization at a company like HubSpot that operates using the flywheel model is that localization can basically be found surrounding the international customer experience, but interfacing with all of the core teams that make up the flywheel. I was asked recently, for a profile of HubSpot’s localization program by Nimdzi Insights, where localization would fit into the flywheel concept. I explained that it would look something like this.
Which Organizational Home Works Best? It Depends.
So, now that you understand the typical organizational homes for localization at most software companies, along with the notion of a flywheel and what it means for how a company can organize its teams internally, here is a simple chart that shows the value of each organizational home option as it relates to each of the six strategic objectives mentioned up above. This is debatable, of course, and purely based on my own experience from talking with other localization leaders and from running localization within most of these areas. Different companies will yield different experiences, of course.
I’m weighting these strategic objectives all equally for now just to keep it simple. However, depending on what your objectives are, you could choose to eliminate some of these or weight them differently to come up with your own score. For example, if influencing your product roadmap is really key to your objectives based on the type of company you’re at, perhaps you weight that twice as much as another objective listed here.
As you can see, if all six of these objectives matter equally to you, then the Flywheel (Revenue-focused) model offers the most advantages, beating Operations by a slim margin.
But, it really depends on how you weight each factor. If, for example, I were to weight “alignment with financial targets” as extremely high due to an economic downturn, then perhaps one model will appeal to me more than another. Or, if access to engineering resources is incredibly important due to the company’s desire to scale in order to move into more markets, perhaps this is something that should have more weight. The scores are not important here — what this provides is merely a way of looking at your options, so you can determine what matters most to you.
Flexibility Matters More Than Anything Else
Nearly every localization leader I’ve ever met has told me that organizational fluidity is pretty natural when it comes to their teams and software companies they’ve worked at. Moving around organizationally tends to be a way of life for localization teams. Fortunately, we attract people who tend to be pretty open-minded and willing to change. Maybe for the same reasons we all decided to move to other countries or learn other languages at one point — tolerance for risk, a growth mindset, and just enough humility to speak like a cavewoman in a new language until we somehow practice enough to speak it fluently.
Each time you change organizations, the same skills tend to apply. You have to master a new language of different teams and functions. You have to be willing to learn new data and different acronyms. You also tend to learn that each team has its own culture, and how to interpret those signals as well. And, this also applies when your team is highly centralized, and you work with every team in the company.
This isn’t easy. It requires not just supporting revenue growth but stretching in every direction at the same time. On localization teams, you’re often upgrading your skills just by virtue of interacting with so many different teams! That’s when you move from “organizationally bilingual” to becoming a an “organizational polyglot.” It’s a lot of work for sure, but pretty rewarding when you manage to achieve that.
The moral of the story? What matters more than which organizations you report into internally is which organizations you align with internally. Your team’s reporting structure might offer some strategic advantages of course, as outlined above. But when you have strong alignment with internal teams, you can overcome nearly any disadvantage of the organizational structure you find yourself within.
I hope this view of organizational positioning possibilities helps you to think about how you can best support international growth at your own company.