International strategy

Objective

You face what might be called the ‘international development fallacy’, the notion that increasing wealth and globalising habits can be combined in an international development strategy with nearly limitless possibilities to expand. Yet anyone who travels from Washington to St Petersburg to Kuala Lumpur to Sydney will know that tastes, practices and cultures remain resolutely varying.

The lesson is that in an internationalised market customers want products and experiences that often link them emotionally and practically to a global culture, while retaining key aspects of the identity that makes them who they are – customers want the benefits of scale while retaining the values of their community. This is an ambiguity (and opportunity) that requires a leadership-led learning approach.

No leader can do this learning for a team – you can only convey some key messages through words and actions that demonstrate that the learning must happen.

• Business visions, strategies and plans should have clear definitions of market opportunity so that market learning is focused.
• You should be seen to visit key markets regularly to demonstrate that real learning is done there and not from the familiar perspective of HQ.
• You should constantly reiterate the significance of the value of difference and indicate, for example, that terms we often use (out of familiarity and convenience) to bring people and markets together (like ‘Europe’ and ‘Asia’) contain at least as much difference as they do similarity.

A key international leadership objective is to develop a culture in which as much emphasis is placed on future learning as on current knowledge.

Context

Your team is likely to meet an international dimension in its activities in one of four ways – via customers, via suppliers, via partners or through internal operations in other countries. This will immediately present the challenge of dealing with different business cultures, and fundamentally you have a choice of only two approaches:

• you display the mindset that the ‘home’ approach to doing business applies everywhere;
• you believe that successful international relationships are based on a respect for and an acceptance of difference.

This is the core cultural value you must demonstrate when it comes to international transactions. It can be argued that this is a matter of choice, especially if the business has a dominant domestic market. But there can be few businesses that are entirely domestic – even if the focus is on domestic customers, an organisation should be investigating both ways of reducing its cost base by using international suppliers and also the likelihood of new entrants to its market from other countries.

The bottom line is that in a globalised economy this should no longer be a choice to make. But it is a real choice because you will still meet colleagues, whether through inexperience or sheer arrogance, who believe that a key element of doing international business is the application elsewhere of their chosen domestic business model. They also believe that it is not only the specific product or service that they are delivering in other markets but also their culture, their assumptions and, above all else, their achievements. They assume that whatever it was they think they did to be successful at home, will work elsewhere.

Challenge

Positioning your team or organisation internationally, you should always put first what you do not know. Much debate about international business will focus on the strategic business model.

• Export – an organisation finds markets for a standard product, with no changes to tailor it to local markets; making limited investment in local market structures.
• International – investment locally in markets already developed via export. This will include a limited refining or developing of products to suit local tastes.
• Global – the delivery of products across many countries, with a standard core tailored to specific market requirements, supported by local company structures, where globalisation has created standardised demand (e.g. computer software).
• ‘Glocal’ or globally local – the reverse of ‘international’, the organisation is positioned effectively as a local business blending global resources, products and competencies with products specific to the local market.

The challenge of choice between these models, or changing from one to another, is a legitimate consideration. Your organisation will already be acting on the assumptions underlying at least one of these models. Yet implementing or operating one of these models assumes a level of knowledge that should not be taken for granted, a certainty about international market conditions that should never go unchallenged. What you should do therefore is be contrarian:

• challenge the way international markets are addressed;
• challenge the way your team thinks about international markets;
• provoke ongoing debate about international market dynamics.

Being contrarian is vital – if ever an organisation needs to develop its intellectual capital it is in the international arena, where it must come to terms with a sometimes dazzling array of economic, social, political, cultural, legal and competitive factors. In this quest for knowledge, you are the intellectual leader – not in asserting a model, not in asserting knowledge, but in asserting ignorance. It is this assumption of ignorance that can make a sophisticated organisation the intellectual leader. Such is the constant contrarian challenge to the status quo; it accepts that a position of complete understanding is never reached.

Success

The combination of asserting the value of difference, and a contrarian approach to understanding, is volatile, powerful and potentially hugely insightful. It enables you to instil in your team an approach to international business development based not on transactional models (albeit these ultimately have to be implemented for practical and operational reasons), but instead on an overriding sensitivity to international diversity and change. This is as demanding a task as any leader faces, not least because the increasingly and obviously globalised nature of the twenty-first-century economy, with many shared products and tastes, can lure business teams into the assumption that convergence of customer behaviour is inevitable. So it falls to you to:

• prioritise – always ensure that your international priorities are clear and manageable, and are not seduced by the scale of opportunity into ambitions which cannot be supported by resources (how to prioritise is covered in the next section in greater detail);
• learn – constantly remind your team that everyone always knows less about their international markets than they think they do;
• take time – never cease investing personal time in key markets – you lead by setting the example that improved understanding comes from engagement;
• think international – never assume that what works in the home market is right for any other country as it’s never as simple as that!
• be humble – always expect to be wrong and to have to change tack.

Pitfalls

I have already described the risks associated with entry into markets based on domestic market assumptions. These are obvious risks, but no less significant are the risks arising from a committed but possibly over-zealous advocacy of international market development.

• Paying lip-service to international development – where commitment and even learning are not matched by the commitment of resources; half-hearted investment in a targeted market is probably worse than none.
• Knowledge is superficial – where inadequate research has been undertaken and visible and invisible entry barriers are underestimated.
• Lack of commitment to local experience – where commitment is undermined by a lack of investment in sufficiently senior and empowered local staff who can bring to bear their specific market knowledge; where learning is subservient to a residual expat management culture.
• Operating in too many markets – where enthusiasm about opportunity leads to ‘overreach’, and an organisation tries to undertake too many activities at once spreading its resources thinly over too many geographic locations.

Leaders’ checklist

• Focus on learning – you must ensure that staff who have international responsibility know that learning about international markets never ends.
• Be clear that it is flawed to assume that what works in one environment necessarily represents best practice everywhere.
• Lead by example and visit key markets regularly to demonstrate that the best learning about a market takes place in the market itself.
• Stagger your investment in new markets to ensure that you approach each thoroughly and effectively, rather than tackling too many at once.
• Prioritise investment in local staff with local knowledge.
• Watch your own and your organisation’s language and adapt it with the times – say ‘Asia Pacific’ for example rather than ‘the Far East’.