The best businesses without borders

Checking the research

Professor Elizabeth Maitland, ex UNSW and now Associate Dean, MBA Programs at the University of Liverpool Management School, spent much of her career studying the skills required to make successful cross-border business plays.

During her time at UNSW, Maitland co-authored a paper titled Managerial cognition and internationalisation. In it she identified seven knowledge domains important to those whose job is to manage globalisation projects. The domains represent a map of the global mindset.

They are:

• Location: deep knowledge around what territory/ies we are considering;

• Value proposition: deep knowledge around what’s in it for us;

• Operational aspects: deep knowledge around what we need to do to make it work;

• Overall opportunity: deep knowledge around why it is important;

• Firm-specific advantages: deep knowledge around what we are very good at;

• Capacity: deep knowledge around whether we have what it takes; and

• Governance architecture: deep knowledge around how everything must be structured

Each, in its own way, is obvious. But as a group the domains highlight the enormous level of research, expertise, experience, resources and local knowledge that must be in place before a tilt at a new territory is considered.

Model business

Research by Dan Caprar, a senior lecturer at The University of Sydney Business School, warned managers heading into foreign territories against the assumption all of their local staff will fit an expected model of belief and behaviour.

He identified four distinct cultural profiles of locals working in a business’s foreign offices. They are:

• Infatuated. These employees hold a favourable point of view toward the business/brand, and may have an idealised perception of what it is like to work in a multinational. They’re likely interested in anything that offers them status over employees of local businesses.

• Converted. Still boasting a healthy attitude toward their employer and the lifestyle represented by its home country, this employee is slightly more detached than the infatuated one. This is not a negative – it means they tend to be well adjusted in their perception of the employer. However, they may somewhat limit interaction with their own culture, preferring their employer’s culture.

• Reconciled. Here is the employee of choice. They are comfortable with the differences between their own culture and that of the organisation’s home country and appreciate the positives of both.

They’re knowledgeable about both cultures, either through the education offered by the business, or from their own research. Most importantly, they retain a powerful connection to their own culture whilst working in the foreign-owned business.

• Conflicted. This staff member is typically dissatisfied and feels somewhat exploited by their foreign employer. Interestingly, they feel shame about their own culture, too.

The recipe

At some stage, every growth business has to look to foreign markets. Depending on the level of preparation, this can either be a powerfully transformative experience or a painfully expensive lesson.

There is no single set of ingredients in the recipe for success. Lessons learned from businesses that have made it internationally include deep research into every aspect of the foreign experience, from local culture to government regulations and governance. Setting up a test bed – a market that is big enough to provide valuable lessons – is an excellent way to start.

Also required is a clear vision of the types of personalities required to make the foreign office a success.

Finally, seek advice from other businesses that have already broken into your market of choice and from local consultants. There is no substitute for experience.

Chris Sheedy is a contributor at ANZ Institutional