Management fundamentals for expanding overseas
05 June 2018
Manton Townend, business consultant, discusses the important things to consider when taking your office to a new location overseas
Having worked in some of the world’s largest staffing companies during the past 30 years, and having the last 18 years in Asia, managing and opening new businesses, new countries and new service lines from India to Japan, I have been able to notice that there are many similarities in management approaches to say that of the west, but some stark differences.
Vision, mission, strategy
As obvious as it may sound, not all companies have a vision, mission and strategy (V, M, S), or even if they do, they are not always embedded into the day to day business. Having your V, M, S, aligned and articulated clearly and consistently will help your narrative. It will also avoid confusion in a new market and with new employees.
You do not need to dilute your company values because of the location and culture. Too many times I have been told that certain values will not translate in some countries because of cultural reasons. Deep knowledge of that market/region will quickly debunk a myth that is based on nothing more than, ‘we (I) have always done it this way’. Cultural sensitivity is needed to translate them, so they can come alive and breathe.
Countries, such as India or China, can appear on the outside to be an obvious place to be located, just because of their sheer size and your need to expand. The opportunity may be there, but these markets have grown more sophisticated over the years, so any entry needs to be carefully considered. Additionally, technology is disrupting businesses and start-ups can gain market entry very quickly. Thorough due diligence, by doing a PESTLE (political, economic, social, technological, environmental and legal) analysis and directly linking it back to your V, M, S, will help you go through a robust thought process. Understanding your competitors’ offerings versus your intended offering, aligning it to that of your known clients – before you decide to enter – will shape your expectations and that of your shareholders.
Networks and relationships
Whether you are choosing to do a joint venture, merger and acquisition or start up, never underestimate the value of the personal relationship built around trust and fairness. Spending time upfront in a new market building your network and relationships will pay huge dividends later. Balancing that with any head of that location (who has the local market knowledge and network) will give you more insights and a more balanced view on what can and cannot be achieved.
In a desire to fulfill expansion deadlines, this can be glossed over or felt that it is acceptable based on experience in your home location. I would say that when entering any new market, leadership needs a much higher degree of emotional awareness, probably 80 per cent emotional quotient (EQ) versus 20 per cent of intelligence quotient (IQ).
Operational readiness and compliance
The myth can be, ‘well if it works here, it must work there’. This is not so, and the timeline to achieve the result may vary widely. Local knowledge and cultural awareness well help you manage costs and expectations of your return on investment (ROI). A ‘yes’ does not mean it is understood or can be achieved.
Everything from regulatory, accounting processes through to how to imbed the Anti Bribery and Corruption act (ABC) into a new location will form part of the business case, but also will be detailed in any implementation plan. Review carefully local legislation for any associated complexity, the allocation of resources and capital expenditure for the integration of any systems and practices.
Consider carefully who you parachute or promote into a new location. Success in one part of the business does not necessarily transfer. I have seen this where high-performing individuals have subsequently been pulled from new locations or left the business, because they were not suited to the new role and hindered expected growth. In Asia, local working experience (where you are not seen just as a tourist) is a bonus for quick adoption. For new hires, comprehensive vetting in terms of capability is probably more essential in emerging markets where a candidate’s eagerness to join an international company and your desire to move quickly can lead to delays in billings and missed budgets.
Metrics and communication
KPIs and metrics, whilst essential in any business, need to be viewed in the wider business context in a new country, i.e. what is essential to begin with, versus what is nice to have. Being tough on some specific key indicators will help acceptance of your best practice, whilst not disrupting or confusing a team who may not be used to them. Staged introduction of additional wider metrics can come later whilst you bed in the new business. Clearly if you have a common global platform then it is easier to integrate.
Explaining the ‘why’ in detail and then linking to their personal benefit (career advancement, salary increase etc.) is critical, especially when English may not be their first language.
Opening a new office in a new country/location is still management 101. The component parts are essentially the same wherever you are, however, the devil is in the detail and if not thought through and planned for carefully, can easily derail your plans. The depth of challenges in a new country can be compounded by language, local culture and regulations. Don’t underestimate the time that it takes and the importance of planning thoroughly, as overlooking these issues can result in missed targets and timelines, which can all impact the wider company.