Crossing the chasm that is the Atlantic
THE ACADEMY OF BUSINESS STRATEGY
BUSINESS INTERNATIONALIZATION BLOG
Crossing the chasm that is the Atlantic: using the ‘special relationship’ as a springboard into major new economic blocs: part II
AUTHOR
Luis da Silva (CBS) MA BSc BA
In the previous part of this article, we probed how the close relationship between English-speaking countries on either side of the Atlantic, created opportunities but contained some challenges. In this second part we will look more specifically at a few key aspects need to be considered seriously prior to any leap, to avoid making some obvious mistakes
As mentioned elsewhere, the choice of senior management is fundamental. Many international companies look to appoint an ‘insider’ to a senior position in either the USA or the UK, to faithfully represent the ethos of the company and relay and implement its processes and procedures in the new land. Often the motivation is not so business-led but rather a matter of ensuring an ‘insider’ with all the connotations of the term, is appointed to ensure that a key group is not distanced from a new and potentially lucrative step.
Whatever the motivation, real or implicit, it cannot be overstated how important the appointment of a fluent English speaker to the key business management role is. Normally this would not be an issue for any organisation with the aspirations of leaping the Atlantic, but on the odd occasion that this occurs, it is futile to attempt to do any business (except perhaps for pockets, such as the Spanish-speaking southern US) other than in English;
Whether it be to complement the ‘insider’ or to find a leader who knows their own market, a local senior executive is perhaps one of the most important investments that a business can make. In the first instance it buys instant credibility (assuming the right individual is employed, of course) with the local market. Unless the business can explain why a foreign individual can add value to such an exceptional level that no local talent can match it, the business and its foreign management will spend an inordinately significant portion of its time defending its decision not to employ senior local management. This is particularly the case in the US, where to motivate reason that among a population of one quarter of a billion people, no suitable individuals can be found to fulfil the role, is difficult. I cite an example of one of my past businesses, the German management consulting firm Plaut. A global partner of SAP, it had an exceptional record of implementation of technology- driven solutions to mid-market companies. In particular, at a stage when SAP, the global software powerhouse, was a solution accessible only to large companies, Plaut had proven solutions and expertise for the middle market. Sending out a CEO who not only understood the company, its roots, and additionally, despite being German, had also been involved in the successful start-up of a UK operation, was one of those exceptional occasions when a foreigner leading a US (or a UK) company made perfect sense. Importantly, to ‘compensate’, a significant number of senior management was recruited from the pool of experienced talent available locally;
No business could ever run the risk of placing too much emphasis on business generation. Some call it simply sales, some would term it managing a complex sale, others would even say sales and marketing – whatever name it is given, the business of seeking, developing and closing new business, leveraging both existing corporate relationships and opening new doors to new clients, is business critical. For the purposes of this article, I have separated out sales from marketing. Investing in sales cannot under any circumstances be overemphasised, and this statement is transversal to both products and services. In particular, the importance of generating sales in the new country is one of the activities which can be conducted, even if on a speculative basis prior to the start-up of activity. By contracting a sales team on a temporary basis with the possibility of then integrating the full-time staff, the risk can also be limited. It is also an excellent opportunity to gauge which of the resources show entrepreneurial spirit;
An investment into marketing. Here there is a significant difference between a move westwards or eastwards. Any business looking to penetrate the US must be ready to spend fairly significant sums of money on marketing activity, ensuring among other things, that either a concentrated regional or consistent national strategy is followed. Guided by the conclusions of the market research that compulsorily has been conducted, the marketing investment must always be targeted and consistent;
Market research. Ideally at the head of the list and often taken so much for granted, understanding why the company is looking to move into the new market, quantifying and qualifying the opportunity, and in particular as regards the US, defining the ideal location for the headquarters of the local firm and the first market to address, cannot be underestimated. It will involve a financial investment and the time of a senior executive of the company, probably one of the, if not the, candidate likely to take up the senior local role;
And perhaps the one thing that I have learnt over time (sometimes at my cost and sometimes the company’s): manage costs in the early phases of any business, whether it be a start-up or an expansion, very closely. Any expanding business should avoid the usual traps that can erode profits and consume the limited funds available: excessively lavish or even unnecessary premises, whether too large or requiring the spending of an unnecessary amount on refurbishment; employing too many admin staff, costing not only money but also senior management time; employing too few admin staff, especially bearing in mind that there will be significant travel and meetings, and the need for proper organisation and control of the back office will be essential; losing control of the detailed costs, by focussing only on the ‘strategic’; not concentrating on the mission critical by focussing excessively on the detail and losing contact with clients and other important business partners – after all, it is senior management’s responsibility to be the face of the organisation to the outside world, and this cannot be achieved by being introspective alone.
In every business that aims to expand, the question of balance is of critical importance. Achieving an equilibrium, between the use of internal resources which are well prepared for the transition into a new market and possessing the characteristics that will enable them to confront the challenge and success, and the use of local talent to quickly entrench the presence of the company and the loyalty of its staff, is a hugely important consideration for any business looking to cross the pond. In markets where personality, flair and empathy with staff and clients alike are so often differentiators, it is critical that the most basic of rules are not ignored when a company is looking to make the leap across the pond, or for that matter anywhere else.
ABOUT THE AUTHOR
Luis da Silva (CBS) MA BSc BA is an approved Certified Business Specialist (CBS) with the Academy of Business Strategy and his specialist subject is business internationalization. He has achieved an MA, and BA from UNISA and a BSc from the University of the Witwatersrand. He has been employed as a CEO and board member of a listed company with a turnover of €250 million and value of €1 billion and has experience within the Manufacturing, Electronics, Banking, Agribusiness, Travel/Airlines and real estate industries. His clients or employers have included Fractional Villas Inc, Invest CV Limited, BGR Ltd, API Undercliffe Ltd, DMS Lda, Emeritis, Quillion Ltd, Datanomic Ltd, E-business Partners, PLAUT and Andersen Consulting. He has geographical working experience in the USA, UK and Brazil. His language skills include English, Spanish and Portuguese. His service skills incorporate business management, business expansion or turnaround and people management.
To contact Luis da Silva, please contact the Academy of Business Strategy by forwarding an email, or visit Luis’s CBS Blog.
