Tuesday, September 30, 2008

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.

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