The sage advice of 19th Century journalist and politician Horace Greeley about seeking out new territory and opportunities for growth has become a popular phrase and driving vision for many young individuals and for many businesses in today’s global marketplace.
The opportunity for a successful business to expand globally has never been easier and with the rapid development of a number of potentially huge emerging consumer and B2B markets, established businesses everywhere are making plans to pursue more international business. And it’s not just the Western companies, but many Asian corporations are expanding globally in the search for newer markets and growth.
The Grass is Greener, But Watch The Landmines!
While the markets are there and many companies have mountains of cash available to fund global expansion, success is not easy or straight forward. Even some of the best known and best run companies have failed miserably in their international growth pursuits. WalMart’s dismal failures in South Korea, Germany and Japan, despite millions invested is both expensive and humiliating at the same time. Mattel’s failure to introduce its Barbie line of dolls and toys into China was fraught with marketing and cultural barriers. On the other hand, while Home Depot failed in China, IKEA is experiencing explosive growth.
The bottom line?
Globalization is not plug and play!
There are many invisible forces that can spell success or failure. Here are my top three:
1. Understand National Cultural Differences:
Ignore national cultures at your peril. While Home Depot and IKEA both cater to do-it-yourself lifestyles and since the middle class is a huge potential market in China, both saw growth and riches, and took their mega-store strategy into China. But middle class Chinese mostly live in apartments, without garages or places to store tools, paints, etc., but they do desire the Western lifestyle. Thus Home Depot failed. But IKEA, pushing self-assemble and not DYI, made it easy for customers to purchase western home decor, without the DYI hassle.
WalMart failed in Germany partly due to the German national culture clashing with the American culture. German employees resisted the morning team exercises while chanting WALMART! WALMART! WALMART! American managers didn’t really listen to employee suggestions. And the Green-conscious German customers resented the excessive use of plastic bags and packaging.
2. Tap Into Aspirations:
Many products sell well not just becasue of their functionality, but becasue of the lifestyle or social aspirations customers attach to them. Apple sells phenomenally well around the world, even with a much higher price tag, because it fulfils the buyers aspirations to “be cool” and part of the “with-it crowd”. The cache and lifestyle prestige of Harley Davidson motorcycles and 1st Growth Bordeaux wines are another good example of international success.
3. Improve Lives and Wellbeing: Be a Good Corporate Citizen
My favourite ingredient for success in international markets is to pursue a noble purpose, along with profits. And one of the best gifts a company can make in a foreign market is to seek to improve the lives and wellbeing of its employees and customers.
Here is my favourite example, in the words of David Schoch (a former client), now President of Ford Asia Pacific and a veteran Ford CFO on many continents:
In 1925, Henry Ford took out the attached ad in the Saturday Evening Post. It was not your ordinary automotive ad. It was an ad about Henry’s vision of opening the highways to all mankind – he was selling a dream.
Henry understood how mobility could contribute to the economic value of a society and thus contributing to a Better World. In the last sentence – “The Ford Motor Company views its situation today less with pride in great achievement than with the sincere and sober realization of new and larger opportunities for service to mankind” – in other words, contributing to a Better World.
Throughout my 36 year career with Ford, I have been continuously inspired by Ford’s Better World initiatives. It is not just about making great, high-quality products for our customers, making a sustainable profit, etc., but it is about giving back to our communities where we work and live.
It was this aspiration that motivated us in 1999 in South Africa at SAMCOR (South African Motor Corporation – partially owned by Ford) to do something radical and pro-active against the HIV Aids pandemic.
There was little understanding or education on what HIV Aids was? How it spreads? And what precautions could be taken to protect against being infected?
Nobody wanted to talk about it in open forums – not even the SA government. We knew that our workers were dying of HIV Aids. We also knew that we could not solve South Africa’s HIV Aids problems, but we could do something to help our own workforce.
So we developed a plan to educate our entire workforce and the community about HIV Aids (in 1999).
Initially, there was a lot of push back on the plan – from both the salaried and the hourly workers. We persisted, however, because we knew it was the right thing to do for our employees, their families and our business.
We set up education classes for the entire workforce; offered free and anonymous HIV Aids testing; offered free condoms throughout the site so our employees could protect themselves; we started a HIV Aids center on site at Silverton where the community could come and learn more about the pandemic and prevention.
Over the years, this program has grown and has taken on a life of its own. We have been able to successfully reach out to more communities with training, etc. When I was back in South Africa about 2 years ago, it was so gratifying to visit the center and learn more about all of the great work they are doing.
Engrained in Ford’s culture is the spirit and aspiration to contribute to a Better World.
Want to succeed in going global? Make a positive difference in the people and the communities you enter. Be a good citizen. It makes dollars and sense!
Thanks for joining the conversation.
John R. Childress
Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid
+44-7833-493-999 uk mobile
Just published: LEVERAGE: The CEO’s Guide to Corporate Culture
PS: John also writes thriller novels