Reasons why Internationalization Fails - 1 (Introduction)

"Let's build internationally!" It sounds like a great idea, but not all companies report the same success 10 years after trying. Why do some succeed and grow, while others fail? Even more perplexing, why do some appear to grow rapidly for a couple of years and then fail? I believe many try to expand to "use" others, and this motivation becomes clear in any number of ways. Secondly, we often underestimate the impact and the cost of effective internationalization. However, if we do this right, we can experience healthy growth at a very encouraging rate, along with much international goodwill.

We can start by asking, "Why do we want to build internationally?"
There are many answers, and some are the following:
1) We can get cheaper labor
2) We will have cheaper raw materials
3) We will have a new market
4) We could build our market while building another country's infrastructure
5) We could gain influence in a country
6) We need the experience workers in that country provide

Now let's look at another question. "What price am I prepared to pay to make this a success?"
This is more tricky to answer as many organizations have never considered some of the costs they will have to pay to make international expansion permanent and healthy growth.

Here is a list of some of the costs that many organizations have not previously considered. I believe each of these items must be considered seriously to ensure success:
1) Motivation. All for "me", all for "them" or a partnership?
2) To what extent will I allow "foreign influence" into my leadership structure?
3) To what extent do "they" need to "adapt" to our existing organization?
4) What resources will I deploy to help "them" communicate with "us"?
5) What resources will I deploy to help "us" communicate with "them"?
6) To what extent will I "lead by example"?
7) What metrics will tell me if we're succeeding?

I'll discuss these questions in future blog posts. Please email with any additional experiences, observations and questions.

Intonation - Deal Clincher or Deal Breaker?

Not many of us think of the intonation we use when conversing in our native language. We take it for granted that our sentences are understood the way we want them to be. Those who have studied psychology and communication recognize that even in our native language our communication can be received very differently than the way we intended. That’s why a basic maxim in sales is to ensure the person to whom we are talking has really understood the content and intent of what we are saying. Similarly, we need to be careful to truly understand what our client is saying to us.

While emotions and personality change with every individual, culture can also create big misunderstandings. Even within one country, there are “generic” culture differences. A person from one culture which is direct and emotional may be perceived very badly by a person from a culture which is reticent, and in which any show of emotion is considered negative.

This challenge is greatly exaggerated when communicating in different cultures. For example, a study was done in the UK about 20 years ago interviewing natives from the Indian subcontinent, living in a part of London, and “ethnically English” inhabitants of the same suburb. Several bank workers of Indian origin said that the “English” customers were impolite and very abrupt with them. Ironically the “English clients” said they found the native Hindi, Urdu and Punjabi speakers very disrespectful with them. The study finally showed that intonation and literal translation were to blame for this damaging situation. The Hindi speakers were speaking their English sentence exactly as they would have spoken it in Hindi. In Hindi they were using the most respectful and friendly greeting possible with the most polite and respectful intonation. Unfortunately direct translation sounded somewhat direct and impolite in English. For their part those “English” clients who were upset, did not once seek to communicate further to understand the the real intent of their bank clerk. They chose to immediately react as if mortally affronted. This left the bank clerk wondering what on earth they had done to deserve such a reaction.

The lesson from this short example is to never act on first impressions. If we sense distance, upset or anger, first take the time to understand the person more. Ask questions. Be humble. Ask how communication works in that culture. Ask if there’s any “golden rules” to know. Should I be direct? Should I be indirect? Should I ask a lot of questions? Should I take the initiative? Should I wait to respond? Should I look serious? Should I put a smile in my voice? Those of other cultures are more than happy to come at least 50% of the way towards us. It’s good to make sure we are willing to go at least 50% of the way towards them.

The "Bail Out Plan" and Me

There's a lot of hype about the state of the economy and the impact or non-impact of the 'Bail Out Deal'. We all have our political ideas, and most people's default reaction is to focus on "the ones to blame". The truth however, even if we get to it, and even if we correctly ascribe blame, only leads to lessons learned for the future. It doesn't help us personally in the short-term; we need some personal plan of action.

We can also question the extent to which individuals will benefit from the 'Bail Out Deal'. While it is evident some major action is necessary, bailing out a ship does not make it more seaworthy if it still has holes. And sitting back and hoping our future will automatically improve because others make decisions for us, is not going to help anyone in the long-term.

So what can we do to help ourselves? I believe the answer is to ask what can we do to help others. Ethically I prefer this model anyway, but even if we are completely selfish, we'll still find it's the best way to benefit ourselves. 'Others' are potential partners, resources, entrepreneurs and clients. Wealth still exists, even if its location changes. This is the time to look for new strategies, new frontiers and new business models. More importantly, I believe this is the time for new partnerships. The only way to 'think outside the box', is to connect with those whose worldviews are different - those who come from different communities and from different countries. Those who seize the opportunity first, will be those who gain most. This crisis should force us to be more forward-thinking. It could even turn out to be the starting point for the greatest progress yet.

To find out more about connecting with internationals and new markets, or to discuss further, email me.

Jonathan Bernd - Developing New Markets.

Why dream big, when you can dream small and get bigger?

The break-up of the former Soviet Union and the Eastern Block saw a rush of Western organizations eager to capitalize on new markets. Many were less than ethical. Others were unable to work successfully in a "foreign cultural environment". Many were ready to invest considerable sums of money hoping for massive return, but then got entangled in the messy politics, organized crime and lack of infrastructure which the previous system spawned. Most of these initiatives were designed to increase profit in the West and not to increase quality of life in the new host countries. The end result is a lack of sustainability and goodwill for future growth.

What is the answer? As with any issue there is more than one answer, but one answer with incredible potential is micro-enterprise or micro-finance. This sphere of business shot to prominence with the award of the Nobel Peace Prize to Muhammad Yunus of Grameen Bank in 2006. But the larger organizations had been practicing this discipline for a couple of decades. CCT in the Philippines developed from a small micro-finance organization to a juggernaut. It has provided sustainable profitable growth affecting thousands of previously extremely poor Philippinos, transforming society. Now thousands have income, health insurance and pensions. CCT has also founded a Costco-type wholesale franchise, a hospital system, an education system and a charity dedicated to street people - and this is a "For-Profit".

If you like the idea of tapping into an incredible growth market, while at the same time enabling lasting beneficial change in societies across the globe, perhaps micro-enterprise and micro-finance are fields for you to explore.

Please connect to know more if you are interested.

What does your company need when facing a recession?

The news isn't good in the US. How does your company survive and thrive when faced with problems in one country? The answer is simple - internationalize your market, without threatening domestic success or survival. The internet in particular has brought the countries of the world closer together. International conference calls are free. Webcams allow us to see one another. Graphic design can be drafted on one continent and completed on another - all within 24 hours if necessary.

But much as technology has brought us together, ease of connection has caused many to blunder into new communities and countries, often worsening their image and ultimately failing in their designs for expansion. There is no substitute for understanding. Technology cannot transmit the life experience and filters of those who grow up in different cultures and countries.

Here are some short tips on understanding a new culture:
1) Tell yourself you don't understand at the outset.
2) Identify community figures to interview. (E.g. the leader, the gatekeeper, the rebel, the "average joe" etc.)
3) Remember they are your teacher. You are not their teacher.
4) Don't try to put their descriptions into your cultural box for judgment. Instead try to get inside "their cultural judgment box". (This is the essence of being bilingual and bicultural).
5) One two week trip will make you more liable to jump to conclusions than no visit - especially with little experience.
6) Start by interviewing nationals from your "target community" who live in your country.
7) Reflect conclusions back to interviewees for review.