By Mona Pearl
Business leaders today have the skills and finesse to identify and execute great deals globally. It’s the soft issues that surface on the international stage that cause unanticipated and disastrous problems. Most of the challenges occur when executives don’t understand the business culture and customs of the target market and don’t do sufficient due diligence.
Seeing opportunities in the global marketplace requires the right perspective. Acting on those opportunities requires the right skills and entrepreneurial instincts. These take time plus experience to develop and mature. They also require intentional learning and curiosity to explore.
How can corporate leadership look into the global marketplace to discover and assess new opportunities and new avenues to generate future growth?
The Challenge is Mindset
It starts with a whole tweaking of the mindset: The U.S. is a huge country, but it’s not self-sufficient anymore. Executives in charge of operations and growth need to look at the global market as an opportunity. Going global is no longer an “option.” Ready or not, almost every U.S. company competes with foreign enterprises right here on U.S. soil. In a technologically connected world, the United States can no longer afford the luxury of global isolation, but must learn to play in the sandbox and launch successful international ventures.
American businesses fail at three to four times the rate of other countries in their ability to expand globally. Even worse, the majority of U.S. businesses never make an attempt. Our entrepreneurial drive, vision and expertise just don’t compensate for our lack of global perspective. In less than 10 years, 95 percent of consumers will be outside of the United States, and 73 percent of the purchasing power will be outside of the United States.
Avoid Top Three Costly Mistakes
The opportunities for global expansion are infinite. However, attaining success demands a well-conceived global expansion plan that is grounded in accomplishing specific corporate goals through the careful formulation of business development strategies.
Mistake 1: Lacking Clear Objectives
The reason to go global must come from a legitimate need based on accurate data, starting with the present and looking into the future. It begins with asking the right questions and researching the market and the competition. Then set clear objectives, timelines, milestones and metrics and use this research to create a roadmap to success. And of course, all this information has to be analyzed and interpreted in context. Data alone will not suffice. Make sure you define the right target markets for your product or service and choose the appropriate mode of entry.
Mistake 2: Forgetting the Importance of Cultural Differences
Ultimately, a successful global expansion is dependent on a company’s ability to view the world in a new way and adopt appropriate polices and strategies to cope with different cultures: These are the sensitivities that can make or break a deal. Consider language, negotiation styles, gender issues and local business practices.
I’ve witnessed many business transactions that come to a screeching halt and fall apart due to cultural misunderstandings and cultural ignorance. Don’t assume anything, and do your homework. Many times the way to handle issues are counter-intuitive to the American way. Business people in an international business environment must be sensitive to differences in culture and languag and learn to adopt appropriate policies and strategies for handling these differences.
Mistake 3: Underestimating the Time-to-Market for Your Products and Services
Don’t put expansion plans at risk by budgeting too short a timeline. When this happens, inevitably, the business depletes available capital and the upfront investment of time and money is wasted, while your international reputation is blemished. Resist the temptation to be overly optimistic. Look at the “Ease of Doing Business” index for planning purposes, and focus on interpreting that information correctly. You cannot put a time frame on building relationships and trust.
Get in The Global Game
In this increasingly complex and competitive global environment, exceptional skill is needed to evaluate the options, manage the risks and execute a winning expansion strategy. Winners will reap the benefits, while expanding and executing growth strategies more quickly and more effectively than their competitors. What was won’t return. There are new players and new rules, and it is a global economy.
The new frontier is that there is no frontier, and how middle-market businesses respond to this reality may have a significant impact on the economy as a whole. Savvy entrepreneurs will likely see opportunity where others see impasse. Be fast, flexible, innovative and motivated — and enjoy the adventure.
This post includes excerpts from “Grow Globally: Opportunities for Your Middle-Market Company Around the World.” Copyright (c) 2011 by Mona Pearl. Reprinted with permission of John Wiley & Sons Inc.
Mona Pearl is a global strategic business development expert as well as the founder and chief operating officer of Beyond A Strategy Inc., a Chicago-area company providing expertise to plan and implement cost-effective and sustainable global growth. Pearl also has founded and operated two additional businesses and sits on the board of several organizations.