So you want to launch your product in Asia, Europe and North America. Simple, just hire a small bilingual customer team and launch a new version of your website and product in the local languages, right?
Not quite. Don’t forget the hidden problems, like bureaucratic red tape, and the need for a knowledge of local business culture, and effective local marketing tactics. Hilka Klinkenberg founder of Etiquette International estimated in Entrepreneur Magazine that less than 25 percent of U.S. business ventures abroad are successful.
Although it might seem counterintuitive, if you’re hoping to launch globally in the future, the best plan of attack is to do it on day one. While international teams pose organizational and communication challenges, they allow you to develop networks and consumer bases in different parts of the world. It also allows you to bring on core members from different backgrounds and cultures organically, and take advantage of larger hiring pools.
Here are three reasons why you should grow your company globally from the outset.
Instant global insight
Most founders launch and develop a company in one country or region. Once the business has market verification and has scaled to the extent that expansion is financially feasible, they may then decide to expand into foreign markets.
However, this process is slow, risky and expensive. Poor preparation is one of the most common reasons that companies fail in their efforts to launch abroad. Many don’t succeed because their directors are ignorant of foreign business culture, they execute their ideas weakly, and also fail to put enough resources into local marketing efforts.
Nevertheless, many of these factors become redundant if a hub and spoke model is adopted. This is where a number of international centres connected to a larger central hub are launched simultaneously.
This business model was championed by the airline industry, but it can be adopted by companies in any industry, with any budget. Ten years ago, this model would only have been viable for well-funded companies, but now thanks to affordable communication and organizational tools, the doors have been opened to companies of any shape or size.
At its core, this model involves building a network from a central hub, which branches out to several different centres, or spokes of a wheel in other countries. By choosing talent from all around the world, you can leverage the in-depth knowledge of local markets, business practices and laws — allowing you to scale globally much more effectively.
Although such a move might sound ambitious, communications and project management apps like Slack and Trello –among many others– iron out many managerial issues – and help keep teams engaged and up-to-date. And thanks to constant interaction with the centralized headquarters — or the “hub” — external teams play an essential role on a global level.
When it comes to the C-suite and higher management, a well-balanced company that can effectively scale globally should have at least half of its board of advisors based in foreign companies. By bringing on an international team of high-level employees, a company can excel in a global market, leaning on the team’s experience of local markets, local customs and knowledge of local competitors.
More access to affordable talent
Companies that launch around tech hubs like Silicon Valley or New York have lots of benefits to enjoy, such as an active local ecosystem, abundant funding, and a network of experienced mentors. On the downside, they also have to deal with higher competition from hundreds if not thousands of other companies, and huge expenses for rent and wages.
There have also been whispers of a ‘tech talent shortage’ emerging in built-up startup ecosystems. This is forcing startups with limited resources to widen their nets when searching for new talent, especially for development teams, data analysts, and engineers. In a 2016 survey, an astonishing 65% of decision-makers in 3000 tech companies in the U.S. said that hiring challenges are hurting the industry.
Many companies are turning to outsourced workers to contribute remotely. Unfortunately, managing individual remote workers who are not 100 percent on board with the company culture or mission, poses some serious organizational challenges for managers.
However, a key benefit of spreading your company internationally from day one is that it widens your employment pool. This gives a company the chance to bring on talent in various centres around the world, as static –rather than outsourced– teams.
A skilled developer, for example, is likely to know, and have trained with other developers too, so once you bring one amazing new team-member onboard, it could increase the flow of new talent.
In the U.S., high talent demand has made salaries skyrocket. While it is important to pay staff fairly, providing these levels of wages is difficult for many early-stage companies, and limits the number of development staff they can bring onboard. This money which is being saved on Silicon Valley-level wages can be invested in setting up global centers and hiring local teams.
Even some of the world’s biggest companies like Amazon — which recently set up a new base for 250 new tech employees in Johannesburg, SA-– have been forced to set up new centres to gain access to affordable talent such as skilled engineers, network specialists, account managers and other technologists.
Develop stronger networks
Many companies fail when they expand abroad because they haven’t developed strong networks.
Developing a network of trusted vendors and clients is a time-consuming process. Networking is especially important in Asian countries like China, where guanxi — or business relationships — need to be cultivated in and out of the boardroom before any deals are made. Having international centres with local employees from the outset facilitates the growth of organic relationships over time. It means that employees can use their own personal networks and reputation from previous jobs.
Building networks of loyal customers is important too. The ‘network effect’ is a phenomenon by which a service or product becomes more valuable and useful as more people use it. The product can be constantly improved based on feedback from the ever-expanding user base. What’s more, a community grows around the brand and its social media, community and blog offerings, and the brand’s reputation is bolstered by positive user reviews, shares, and referrals.
When launching in a number of different countries, it is easier to create local networks or communities which contribute to the global community as a whole, and it is much simpler to market to, and interact with these various communities if you have a centre-based near them, and customer service and marketing staff who speak their language.
The global platform model is the perfect match for the ‘hub and spoke’ system allowing companies to quickly scale, create multiple networks simultaneously, and access wide talent pools. Having your teams spread across different countries is only suitable for digitally transferable businesses, but once you take the leap, ‘the world is your oyster’. With every new centre you launch, you open the doors to a whole new network of potential employees, partners and, of course, customers. So take on the challenge: Think global from the get go.
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