Domestic priorities and global expansion have always been at loggerheads in the corporate boardroom. While new market entry is perceived as the hallmark of a truly successful company, decision makers in most companies tend to inordinately use a home country lens. Meanwhile, local and regional teams, frustrated with the lack of support from headquarters, may at times, drive individual successes but detract from a unified global strategy and drag down overall profitability.
Companies growing globally need to provide visibility at the highest levels to international operations with a nuanced understanding of local execution challenges.
Here are four strategic enablers:
Strong executive sponsorship
Orienting a company towards international growth requires senior leadership to adequately assess the opportunities and empower the organization to execute. An effective leader should have credibility in the boardroom and the strategic acumen to define capability adaptations to succeed outside the comfort zone of the home market.
Typically, credibility in the boardroom derives from a deep track record of success and the ability to forge relationships of trust with key decision makers. In addition, a necessary attribute for global success is the ability to challenge long cherished norms of the business and be willing to adapt them to diverse geographies.
"A necessary attribute for global success is the ability to challenge
long cherished norms of the business and be willing
to adapt them to diverse geographies."
After decades of setbacks both through hyper centralization under Roberto Goizueta and extreme localization under Douglas Ivester, Coca-Cola has now become a towering example of how to succeed as a global enterprise. Senior executives have often earned credibility through the company’s marketing, distribution and bottler franchising capabilities, and are well versed at adapting Coke’s core global strengths in differing market dynamics. The current executive team has experience across all their major regions of operations.
Organization-wide mindset shift
Setting up for long term success requires a global perspective to be honed beyond the boardroom at multiple levels of management, across functional leadership and General Management. A detailed audit of the company’s home country leadership may reveal inherent home country biases.
In the turn of the century, Walmart was heavily hamstrung with a largely suburban, value player mindset cultivated in the United States that failed when entering markets lacking the infrastructure enablers of an everyday low-price strategy. In the last decade or so, Walmart has started succeeding with a mega-city approach compelling decision makers to shift from supercenters and mega-marts into neighborhood small format stores.
Incidentally, one of the chief architects of this success, Greg Foran, currently the Head of US Operations, previously led the Walmart China business and spent his early career at Woolworths, the top retailer in Australia and New Zealand. Walmart has also increasingly cultivated an international mindset across its executive ranks. Across multiple levels of management, Walmart facilitates cross-pollination of ideas through rotation programs across Bentonville, Arkansas and its many regional hubs. Strategic initiatives with an international focus are staffed globally, hence ensuring global priorities and local nuances are freely exchanged.
Coaching for culture
The business world is replete with companies underestimating the cultural challenges of international expansion.
"The business world is replete with companies underestimating
the cultural challenges of international expansion."
Companies can cultivate global literacy by requiring such perspectives from new hires and instituting cultural fluency training for existing management. Beyond merely etiquette skills, it is imperative to coach for nuances in non-verbal communication and decision-making approaches, including team hierarchies, gender/age dynamics and cues of dissent or approval. Such training should be a two-way street with both regional and global headquarter teams given exposure to each other.
One approach is Citibank’s Global Engagement Management Program that rotates high potential managers across multiple continents and facilitates significant cultural immersion, often in consumer facing roles. Global cosmetics manufacturer Estee Lauder incentivizes managers to seek out global positions outside their home countries, often requiring international exposure for promotion eligibility.
Measuring the intangibles to optimize for scale
A global organization has to set in place validation mechanisms to test what is working well and correct for what is not. This means identifying tangible variables such as market share and revenue growth but also intangibles such as management cultural fit. Measuring the intangibles, while hard to do, can be a true competitive differentiator since a business can build scale on what works well.
"Measuring the intangibles, while hard to do,
can be a true competitive differentiator
since a business can build scale on what works well."
One approach currently in use in the food industry is to identify market clusters by intangible cultural variables and then quantify their impact on tangible variables like category growth. AB-InBev, the Belgium, US and Brazil based beer company, maker of iconic brands such as Budweiser, Corona, and Stella Artois, approaches its brand strategy based on cultural indicators such as gender sensitivity around the world. The cultural attributes of each market cluster help define tactics such as brand messaging, targeted consumer segments, occasions of consumption and even pricing. Needless to say, it is one of the most sophisticated global enterprises in the world.
As with all truly transformative efforts, creating a successful global organization requires management buy-in, dedication and disciplined follow through. However, once unlocked, the ability to seamlessly scale globally is a strong competitive advantage.
Hari Sripathi, is a strategy consultant for the consumer packaged goods and technology industries. His specialties are helping organizations grow profitably in emerging markets. Opinions are personal and not reflective of companies he works for. He can be reached at firstname.lastname@example.org