It’s a variation of a strategy long deployed by consumer-facing global giants like Coca-Cola and Procter & Gamble, which prioritize global experience in their leaders and connect strong regional operations. HSBC regionalized its operations at the start of last year, splitting its operations between “Eastern Markets” and “Western Markets.” And years of heightened tensions and tariff wars with China have long forced companies to alter what Singapore Prime Minister Lawrence Wong called the “invented in California; made in China” strategy that helped firms like Apple to scale so profitably.

There are other forces disrupting the model of a centralized company. I spoke yesterday with Christina Kosmowski, CEO of LogicMonitor, which monitors customers’ tech systems from data centers to the cloud. She is having more conversations with CEOs about doubling down on a regional strategy to build resilience. “When your systems go down, you can’t operate,” says Kosmowski. “The time frame to react is just within seconds, instead of hours and days.”

To be sure, decentralization comes with risks, not least of which is the duplication of systems, costs, and functions that get streamlined in an efficient corporate structure. As Novartis CEO Vas Narasimhan said to me last year, “to navigate complexity in the external world, you have to radically take out complexity internally.” That means creating a leaner and simpler organization where everyone knows who is responsible for what. It’s possible to have that alongside autonomous and agile regional operations, of course, but it requires leaders whose teams are aligned on what efforts are localized—and what stays the same.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top leadership news

All eyes on oil prices

Oil prices rose a muted 6% as the Strait of Hormuz—the world's biggest chokepoint for energy flows—essentially shut down. Oil markets are holding steady for now, but an average of 20 million barrels of oil flow through the strait daily, representing roughly 20% of global petroleum consumption. Analysts warn that calm won't last if tankers aren't moving again by week's end.

Iran’s cyberattack capability 

CEOs worried about cyber attacks have good cause for concern. Iran ranks among the world's most capable cyber powers outside the major players (the U.S., China, Russia), and AI is raising the stakes, Fortune’s Sharon Goldman reports. “It would be surprising if they weren’t using AI to advance their offensive cyber capabilities,” says Bob Kolasky, senior vice president of critical infrastructure at AI supply-chain company Exiger.

A $210 billion war

Four days into the joint U.S.-Israeli military campaign against Iran, the fiscal reckoning is starting to take shape. Penn Wharton Budget Model puts the likely direct cost of the conflict to U.S. taxpayers at $65 billion, with total economic impact potentially reaching $210 billion. 

The markets

S&P 500 futures are down 1.87% this morning. The last session closed flat. The STOXX Europe 600 was down 3.30% in early trading. The U.K.’s FTSE 100 was down 2.95% in early trading. Japan’s Nikkei 225 was down 3.06%. China’s CSI 300 was down 1.54%. Hong Kong’s Hang Seng was down 1.12%. South Korea’s KOSPI was down 7.24%. India’s markets are closed today. Bitcoin was up to $67K.

Around the watercooler

Tech giants see a cure for cancer in AI. But Eli Lilly’s CEO finds it ‘not particularly good’ at solving biology or chemistry problems by Jake Angelo

Anthropic’s Claude overtakes ChatGPT in App Store as users boycott over OpenAI’s $200 million Pentagon contract by Marco Quiroz-Gutierrez

Goldman Sachs vice chair on the hidden trap of senior management: ‘pretty soon the bosses are no longer watching you’ by Nick Lichtenberg

Want to live forever? Meta patented an AI model that would keep your profile active after you die by Jacqueline Munis

CEO Daily is compiled and edited by Joey Abrams, Claire Zillman and Lee Clifford.