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The International Entrepreneur – Globalization Bashing and other Populist Pastimes

Globalization

Globalization and the lowering of trade barriers has been a defining force for more than a generation. Freer trade has meant expanded business opportunities for large and small companies alike and an expansion of wealth that has reach from the richest to some of the poorest people on the planet. From centuries ago when Adam Smith originally wrote about why bilateral trade benefited both countries involved to today where exports raise the standard of living for many, the overall effect of globalization is a net positive for human kind.

As a free trade advocate, I feel like I should have seen this latest populist anti-globalization movement coming. When Congress cut funding to the U.S. Export-Import Bank, this was a proverbial canary in the coalmine, an omen of bad things to come. There was literally no legitimate policy reason to do this. The ExIm Bank provides services to American exporting companies both large and small. It guarantees some foreign transactions that benefit US business. And it provides loans to bridge the time between shipment and payment from foreign markets. It acts as oil to grease the wheels of trade.

In the last American presidential election, major party candidates are vocally protectionist instead of actively looking for ways to expand markets for American products and services abroad. It’s a populist notion without a strong basis in the facts. It plays on people’s real pain of losing jobs and whole factories in parts of the country, then blaming China or Mexico instead of technology gains and shifts in global competition. Instead of looking forward into the future full of evolving technology and market needs, populists of all stripes look to the past for some nostalgic sunny version of a bygone era. They pine to bring back jobs that no longer make sense in today’s technology-filled world. There are no longer rooms in companies filled with secretaries typing letters. There are no longer factories teaming with workers performing repetitive functions. Many other countries are experiencing their own populist backlashes against globalization in favor of protectionism.

So how do we prepare ourselves for this future that by all accounts is already here?

  1. Education. Yes, that’s right. We need serious retraining for those most affected by the shifts of globalization. Smart governments provide these programs for free or nearly free. For those still in school: get a college degree of some type, do at least one study abroad program to better understand the world, learn technology, languages and critical thinking skills. We don’t know what jobs will be created tomorrow, but we do know that they all need these skills instead of the ability to manually tread a tire or transcribe dictated business memos.
  2. Look Outward, Not Inward. It’s easy to get focused on one little corner of the world. But globalization compels us to look to other markets for customers. That means understanding culture and languages. The American-first orientation market puts unnecessary trade barriers in our own way.
  3. Learn about Big Trends and Keep Focused on the Future. When I meet with a new company, I can usually tell within minutes if they are more focused on their own past history or on the future. Those in the past tend to get stuck in the past. Those looking forward watch for industry and global trends to leverage their company’s strengths to take advantage of trends in their favor (ex. Exchange rate fluctuations or a fast-growing country’s economy) or prepare for a coming threat (ex. Presidential candidates espousing populist rhetoric to buy a few more votes from scared citizens).

Before anyone chooses to warm up their keyboard with an angry rebuttal about globalization’s impact on the environment, please let me confirm that globalization is far far from perfect. There are products created and shipping overseas that truly have no value to most people. As a human race, we need to make smarter decisions about what we choose to consume. We need to keep production in many cases closer to consumers to avoid unnecessary ocean and air shipping. Nowhere is this truer than in our global food supply. Working within this imperfect system still allows us to balance politics, economics and the human condition around the world.

With free trade, we allow each country, each company to find their markets and create jobs to support their society. As a wise futurist recently shared with me, technology may eventually mean that there literally aren’t enough jobs to sustain our capitalist-based economic system. He suggests that we may as a world eventually move beyond the need for money, where people will have more leisure time to pursue other non-work interests and projects.

I don’t know if such a world will exist in our lifetime, but I do think that trade helps to improve the standard of living for many. Open trade encourages sustained peace over long periods of time. And it encourages innovation in the face of competition. Let’s be smart and globally move forward.

Onward and upward,
Becky Park

The International Entrepreneur – Why Globalization Needs to Survive and Thrive

International Entrepreneur - Why Globalization

This is the year when Globalization Backlash is reaching a fevered pitch. It’s been building for decades as whole groups of workers are excluded from the windfall profits of trade. As a Midwestern girl, I have seen my region of the United States come to be known as the “Rust Belt” for all of the abandoned factories and displaced low-tech manufacturing jobs sent overseas to lower-paid workers.

All the while, company CEO compensation has increased on the whole to obscene levels and Wall Street barely skipped a beat during the Financial Crisis of their own making. Income disparity is now at levels not seen since the Robber Barons in the early 20th Century. American culture demands some level of fairness and access to opportunity. Politically, we see the wave of anger fueling Brexit, Donald Trump’s candidacy and the backlash against trade agreements.

But Don’t Write an Obituary for Globalization Yet!

Business Insider reporter, Ben Moshinsky, recently wrote an article: Globalization is slowing dying. Trade has been part of commerce for centuries. There have been other time periods when trading has shrunk. Protectionism and rising tariffs are normally associated with troubled times. When U.S. leaders heeded the calls for protectionism in the early 1930’s, they helped to deepen what in the U.S. is called the Great Depression.  Eventually cooler heads prevailed and the U.S. swung back towards more open trade. Now globalization is fueled by technology, communications and capitalism. We won’t see globalization die except in an extreme scenario, like a zombie apocalypse.!

Time to Speak Up for Trade

Never has it been more important for business professionals around the world to speak up for the net positive benefits of trade AND to fight for fairness and to assist those who globalization leaves behind.

  • Opportunities for Companies of All Sizes. The reality is that the U.S. enjoys relatively high employment rates and that is part due to globalization. Selling goods and services to customers in other countries means jobs back at home. According to the U.S. Small Business Administration, over 90% of American exporters are small businesses. Trade agreements and globalization mean that companies of all sizes have access to world markets.
  • Globalization is NOT a Zero-Sum Equation. Many populist politicians today treat trade like it’s a zero sum game. That means that for you to gain, I have to lose the same amount. The reason why globalization is such a powerful force is that the net gain is positive for all. I sell you my tomatoes and you sell me your radios and we both gain something we want and don’t otherwise have. This production specialization is the foundation of globalization.
  • World Economic and Political Stability is Not a Trivial Matter. The world has not experienced a global-scale military conflict since 1945. One factor in this relatively peaceful period in history is globalization. There is greater motivation to work through conflicts when countries would lose trade. It also gives us a greater interest in working together on economic issues. Mark Zuckerberg and Facebook are actively working to increase global access to the Internet for billions of people. Those people could become Facebook users and also consumers of a variety of online products and services.
  • Going Backward is Not an Option. A few years ago, there was a big “Buy American” movement. I think they largely gave up and realized that consumers and businesses were less interested in where a product was made and more interested in the value received compared to relative cost. For all of those interested in “bringing jobs home”, it would come at a tremendous price and still not achieve what you want. Those jobs are gone. The good news is that there are new quality jobs in their place for those willing to learn new skills. I don’t mean to trivialize this – it’s a daunting task to radically change your career. But it can be done (I know because I need to do this).
  • Globalization Allows for Sharing of Knowledge and Ideas. By doing business in other countries, companies gain new perspectives on how to approach a challenge or opportunity. Sometimes smaller strategic partners will share technology and resources in order to go after larger deals. There are of course risks in sharing, but also gains and insights to be had.

A Final Few Thoughts on Fairness

The negative effects of globalization need to be much better managed than they are today. Displaced workers need training for new in-demand jobs. The environment has paid a heavy price for our increased consumption, leading to many damaging and potentially irreversible effects. I think that a carbon tax on goods (based on the energy and other resources needed to produce them) is a step in the right direction. And finally, executive pay needs to better align with the rest of the company. Capping compensation on the top side of the company as a reasonable multiple of the lowest pay rate may be a good place to start. With some smarter policies, globalization’s negative effects can be tempered.

A Manifesto to International Entrepreneurs Everywhere:

I encourage you to continue to go forth to:
Invent new ways to make the world a better place
To find opportunities wherever they may be in the world
To build strong, ethical companies to support your families and the families of your employees
And to learn from new people and places things in order to gain insights and wisdom.

Onward & upward,

Becky Park 

The International Entrepreneur

The International Entrepreneur – What’s Missing Globally in the Connection Economy?

International Entrepreneur Global Connection Economy

A few years ago, Seth Godin famously introduced the Connection Economy into our lexicon to describe how connecting people, companies and resources was a source of increasing value creation in our world.

Since you’re reading this article, that means that you are part of this global technology revolution and probably interact with it frequently. Here are just a few of my own examples of engaging this Connection Economy from this past week:

  • I collaborated via email with my client’s Malaysian country manager to reach her target leads using calls, emails and social media.
  • I took a call from a company in New York looking for an Uruguayan business culture expert. They found my website through Google. I referred them to an Uruguayan contact whom I have never met face to face, but regularly network with in social media.
  • I Skyped to mentor a Canadian rising star in the international marketing field, who is building a consulting practice.

On a personal level:

  • I sent my teenage son, Nathan on a foreign exchange with AFS Intercultural Programs. That means that he will stay with a host family in Italy for 5 weeks whom we have never met before, but were vetted locally by AFS.
  • My Brazilian exchange student, Matheus came home safely from a gathering with friends via a ride from an Uber driver.
  • I took a few daydreaming moments and surfed AirBNB for a nice house rental near the beach in San Diego for Labor Day Weekend in September.

 

When Seth Godin originally described the Connection Economy, he said that it required four pillars:

  1. Coordination. This may be coordinating between people as in the case of Uber. It could coordinate the exchange of money as is the case of crowdfunding. And often it’s the coordination and exchange of information.
  2. Trust. The parties involved need to have a reason to trust each other. Trust is normally built on a foundation of consistent words and actions by people and companies. Now we are trusting partners and vendors whom we may have never actually met before in person.
  3. Permission. In the Connection Economy, we voluntarily surrender our information, but only after trust is established.
  4. Exchange of Ideas. This blog (and everyone else’s blog) are part of that exchange of ideas. So is a review site that tells me what current and past employees think about working for a company I’m considering as a partner.

 

Without these pillars, companies like Amazon, Google, Facebook, and countless other Connection companies including my own would not exist. But let’s get out of the American-only point of view and expand to…

 

Bringing a Global Context into the Connection Economy

This may seem confusing to some. After all, isn’t the Connection Economy by its very nature borderless, allowing for seamless access to markets and resources from anywhere in the world? Ideally – yes, but in reality – no. Here’s some context:

 

Access to Connectivity is Far from Universal

 As of 2019, 4.4 billion people in the world had access to the internet.  This still leaves  almost half of the world population still without access.  There are some sizable barriers to improving access to conduits of information and opportunities that include education, disposable income to buy the necessary tools and services, and even interest.

 

Language and Culture Create Information Silos

The Connection Economy had the perfect solution to bridging language gaps and reaching new markets: Google Translate and other translation widgets that could quickly convert English content effortlessly into dozens of other languages. How clever! Those who tried it soon learned that language is much more nuanced and complex than first thought. Literal translations yield some major mistakes that have cost companies dearly.

Culture is even more complicated. It underpins what determines whether a company or person is worthy of Pillar #2: Trust. Cultural rules run deep and when someone unwittingly violates these rules, the business relationship might never resume. Think of it another way. For all of the interactions you have had over the years with international contacts where you thought the other side was being unreasonable and disagreeable – 90%+ of those negative reactions were probably cultural misunderstandings. The solution is to hire a culture coach to help navigate the norms in key markets and relationships.

 

Regulations Often Protect Entrenched and Local Interests

The Connection Economy has displaced more than a few cab drivers and telephone book printers. It has upended whole industries. In many places around the globe, those who profit from keeping things as they are have invested in supporting laws that protect their interests. Before doing business in a new country, be sure to consult with country specialists who can advise you of any problematic restrictions.

 

Expect the Next Great Connecting Concepts to Come from Anywhere in the World

While we tend to see many Connection companies rise out of industry clusters like Silicon Valley, London, Boston, Santiago, Mumbai and Tel Aviv, ideas can come from anywhere. As part of the exchange of ideas, we need to encourage and support new startups with great concepts with our patronage and investment capital – regardless of location.

 

As the beneficiaries of the Connection Economy, it’s important to keep in mind that there is no global standard. We need to increase overall access to the Internet worldwide, providing new opportunities to billions of people. It’s important not to mistake your home market’s perspective, language and cultural rules as the world’s norm. Be prepared for reactions to change in various corners of the world. And watch for the next great advancements in our technology revolution.

Onward & upward

Becky Park 
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The International Entrepreneur -The Globalization of American High Tech

international trade, information technology, globalization, international entrepreneur

This week I wrapped up a 3-week project researching American IT companies that expanded into international markets. Normally my clients hire me to focus on markets outside the U.S., so it was interesting to study the industry I serve.

Honestly, I thought I knew all about the American IT industry. I have spent the better part of the last 22 years working for American IT companies as an employee and contractor. What I learned about my home market and industry surprised me and I wanted to share it with my readers.

 

Market Insights from Studying American IT Firms

I identified 200 American IT companies that had less than 1,000 employees worldwide and were actively internationalizing into new foreign markets. Most of the companies picked for my study were recruiting staff both in the U.S. and in overseas offices. I did not choose any companies that were clearly locked in a 2-country model for outsourcing or similar purposes, with no plans for global domination. I did not target specific states or metro areas. I understand that this is not a study with full academic rigor, but still it was hard to ignore the trends.

Here’s what I discovered:

  1. Not all American IT industry clusters are producing internationalizing companies. Almost HALF of the internationalizing IT companies were based in 2 metro areas: Silicon Valley/Bay Area (68) and Boston (26).
    Then came Tier 2 Clusters of internationalizing tech companies: Los Angeles/San Diego (18), New York City (16), Seattle (8), and Chicago (6).
    What was just as interesting were the metro areas considered to be strong in IT companies that are disproportionately low in internationalization: Denver/Boulder, Phoenix, Portland (Oregon), Philadelphia, North Carolina, Twin Cities and Washington DC.
    Two notable additional bright spots were Manchester, NH and Salt Lake City, UT both coming in with 4 internationalizing IT companies apiece. Here is a map showing where the U.S. high-tech markets are. Clearly the internationalizing clusters are a subset of the whole.

  2. Internationalization seems to take place between 100 and 200 employee counts across a wide variety of IT markets. This includes companies doing everything from developing gaming platforms to offering SaaS business processes to security networks to storage technologies. There are 2 noteworthy exceptions: healthcare IT and B2G (business-to-government) industries. After reviewing dozens of both types of companies, neither internationalize until much later in their product cycles. It’s a shame, really, since both government and healthcare technologies are bought and sold all over the world.
  3. IT services offshoring companies rarely made the list of 200 companies even though their entire business model is based on globalization. The truth is that these companies may have Indian or Mexican operations, but they don’t sell into any market except the U.S.. Opportunities are being missed.
  4. There is no standard international expansion market pattern. Companies literally had a patchwork of offices and operations around the world. While there are definitely popular overseas office locations: London, Singapore, Toronto, Sydney, Amsterdam; companies seem to be weighing options in various markets instead of following a predetermined step-by-step rollout. In my option, that’s proactive and positive.

What is internationalization?

For quick reference, here’s my practical definition of company internationalization:

  • A company that is PROACTIVELY entering new foreign markets to sell products and services. This also applies to the supply management side sourcing materials and services from around the world.
  • A company that is actively engaged in understanding the market potential in various parts of the world.
  • While many companies begin their international expansion using in-country local representatives or distributors, I think true internationalization is when companies begin to expand directly to new markets with new offices and hiring in-country staff.

Why is internationalization important?

Globalization is a defining force of our time. Its momentum rides right along with the other primary drivers, technology and entrepreneurship, as changes that will affect our grandchildren’s grandchildren.

For companies, internationalization is a game changer. It means:

  • Having the choice to expand into international markets (internationalize) at much earlier stage than ever before.
  • Increasing your overall market size by somewhere between 100-500%.
  • Learning industry advances and operational efficiencies in one market that can be applied to the rest of the company’s markets (called “arbitrage”).
  • Access to investment funds and other resources not necessarily available in your home market.
  • Country portfolio risk reduction. Not all markets go through downturns and upturns at the same time. Multiple markets balance out the risks.
  • Access to the global talent pool to help drive smarter decision making and better leadership and management.

As I often discuss with IT company leaders, internationalization is like your planet developing “warp drive technology” on the TV/movie series Star Trek. Pre-warp-drive planets have a single planet view of what is possible. But once the planet’s scientists and engineers develop this high-speed capacity for travel, Star Trek sends an envoy to meet your leaders and welcome you into the larger intergalactic realm. Internationalization in a similar way opens up the business environment to the other 95% of our planet?s population.

So if you are an IT company leader or someone invested in a local IT cluster’s success, what does all of this mean for you?

  • It means that clusters like Silicon Valley and Boston have investors/VCs who expect internationalization as a company’s “Warp Drive” when they reach their growth stage. These industry clusters cultivate available resources to help make that happen. This can be developed in other markets as well.
  • It means that if your company has a headcount of 200+ and you don’t yet have international operations in at least 2 foreign markets, you may be late to internationalization and should actively be researching the advantages and risks involved. To expedite this, hire outside international business expansion consultants.
  • It means there is no one best way to expand internationally. Use your own competitive advantages and market research to optimize this process.

Now, in the immortal words of Star Trek’s Mr. Spock: Live long and prosper!

Becky Park, The International Entrepreneur

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The International Entrepreneur – 5 False Assumptions That Can Hold You Back from Global Success

international assumptions, international business, international marketing

 

I have been fortunate these past 10 years to mentor a promising international marketing professional. “Quinn” recently went back to university to complete his international MBA. He just accepted a position in Tennessee where he will be building international channels from the ground up in B2B & B2C markets. It’s an exciting opportunity for anyone in our field of international marketing.

Quinn knew where to start when he was hired last month. He worked with engineering to define the product changes required in order to meet international standards (CE, etc.). He developed a selection criteria to pick the right early international markets where the company would focus resources (UAE, Mexico & Australia). He identified a freight forwarder who will provide the right kinds of logistic support. And he started to identify opportunities to meet the right kinds of in-country partners to facilitate business deals and new client acquisition. Quinn seems to be on the right track towards providing a solid foundation to his international expansion.

But others are often not so fortunate. What is much more common to find are one or more of the following false assumptions underlying early-stage expansion decision making. A failed international expansion can scare a company’s leadership for years away from what should be lucrative international markets.

 

Assumption #1: We are focusing on the right markets.

To get to the heart of where this assumption can steer leaders astray, ask the question: How did we come to decide on which countries to expand to first? In Quinn’s case some of the main factors were: one or more hot weather seasons and markets that could serve as a gateway to a larger region. Mexico is a great entry country to Latin America and the Caribbean. The UAE is closely economically linked to the rest of the Middle East. And Australia has New Zealand and Southeast Asia as neighboring trade partners.

Often companies instead choose countries where they have a contact or is a key staff member’s country of origin. Companies might follow a language to markets that really don’t make sense based on a more strategic criteria that focuses on long-term profitability.

 

Assumption #2: Our staff is ready to engage with international clients and partners.

To find out if your staff is ready, start with questions like: Who on staff has experience working with international clients? How does staff feel about taking on international clients? While the international expansion leader may be excited about his role, this does not mean that others share his background or attitudes.

Be sure that staff hear about the importance of the international expansion from company leaders. Informally, the international expansion leader should be having conversations to hear any concerns or questions from colleagues. After all, there is nothing worse than generating international sales leads only to have sales reps quietly leave international calls unreturned.

 

Assumption #3: Business moves at the same speed everywhere.

In my home country, the U.S., we typically create partnerships and close sales deals faster than in other countries. Now before you pat yourselves on the backs about our superior business skills and efficiency, please understand that this does not mean that ours are always well-built deals. In fact, misunderstandings and untrusting partners are far less likely to yield the same long-term profitability.

You can ask yourself, Does my entire leadership team understand that the international expansion will move slower than we may be used to in our home market? Am I willing to invest in direct professional relationships including in-person visits to solidify and maintain strong and successful business ties?

 

Assumption #4: The same rules apply everywhere.

Definitely no. This is one of the biggest challenges in international business. The rules most definitely change based on country and local market. Rules that change include product standards, packaging requirements, forbidden marketing tactics, expectations of gifts, and how local businesspeople conduct themselves.

To prepare for these new rules, definitely do your research before that first contact. There are many sources of culture and legal information available online. There are also consultants who specialize in a particular region or country who can help.

 

Assumption #5: We already have all the answers.

There are international business professionals who spend a great deal of time staying current on how to do business effectively around the world. And they don’t even have all of the answers. What the great ones have is a strong network of resources who specialize in areas of international business and geographic regions.

As a company leader, ask yourself: what do we need to know in order to be successful and lower our exposure to risk? What areas are we already experiencing challenges? Again, you can save budget by doing online research with reputable sources or else hire competent international expansion specialists.

Either way, your company will be much better positioned to reach its full global potential!

 

I hope you found this article useful. For more Tips and Tools from Becky Park, The International Entrepreneur, sign up here.

The International Entrepreneur – Improving Agile International Project Management

agile global project management, international trade,
This week I caught up top global IT project manager, Sean Hull. Sean leads global teams on enterprise system implementations. His latest project involved a U.S.-American company implementing a customized system for an Australian customer that was developed by a South Korean team. I wanted to hear Sean’s insights about how agile management practices are used in global project implementations.

Like Sean, I have spent much of my career in and around large-scale technology industries. I know that any company selling enterprise-level customized software or other technologies needs a high-performance professional implementation services team – the company’s competitive edge.

I recently worked with a tech company that did not yet have such a team. Projects lost money instead of providing much-needed profit margins. Fulfilling the contract meant commandeering product development resources away from core product (that was already late to market) in order to write custom code. It was a first-class mess. Any improvements to project management methods literally hit the bottom line for the company.

“Software is worthless until it is used by a customer.” ~ Sean Hull

Sean went on to say that, in Agile Project Management, software is delivered in iterative code and documentation. Feedback from the customer is built into short “sprint” cycles. This requires vendor and customer staff to have instant contact. Tight delivery cycles and collaborative communications need to be exceptionally managed for all of this to be successful. One of the benefits of agile project management is that the customer helps to discover any issues much earlier in the implementation process. This saves time and resources overall.

 

Here are some of Sean’s tips for effective global project management:

Tip 1: Enforce your project management processes and tools. A project manager can choose from any number of processes and online tools to manage the project. Enforcing that nothing happens on the project unless it is communicated and documented according to the project rules is especially critical when the team is spread out geographically. One of Sean’s favorite project collaboration tools is Basecamp, which scales from small to very large projects.

Tip 2: Get to know your team. Meet in person, if you can, even if that means traveling to the same location. Be sure to draw up a process that would work for all involved. It is extremely helpful to know how your team members currently approach their work. Together with his team Sean likes to define: What does the baked pizza look like? It’s also a great idea to look for ways to make life easier for all involved.

Tip 3: Know how to collaborate with all cultures involved. In some cultures, the boss tells his or her team exactly what to do. In others, team members are expected to take more initiative and share their expertise openly within the team. Incorporate the various styles into how you work with your team. Sean recommends using the SCARF Model.

Tip: 4: Take advantage of the tactical tools from Agile methodologies. This includes how to run meetings, monitoring progress, etc. These work well as long as you take into the variation needed for culture and personality.

As global project management competency grows as a critical factor for business success, these skills will be critical to securing profit margins and loyal customers. I hope you find these tips useful in your company and projects.

For more information about how to expand your company internationally, please contact me for a 30-minute complimentary consultation.

Becky Park

The International Entrepreneur

The International Entrepreneur – Maximizing Potential in Your Multicultural Team

ConfidenceEntering the room, you can feel the tension. Your multicultural team, representing different company interests, is sitting around the table. One confident young man boldly answers your first question and others look blankly ahead. How can you possibly get this team to accomplish anything if they can’t work effectively together?

One of the greatest challenges in international business expansion is bridging the cultural gap. Team members have to understand how their approach to group dynamics affects others in order to avoid alienation and everyone counting down minutes until the meeting ends.

The multicultural team is one of the most underutilized aspects of international expansions, mergers, and partnerships. In fact, on more than one occasion I have heard frustrated managers refer to their team as “performing” and their role as one of “babysitting”. The challenge for both the team leader and members is to leave behind assumptions and find the unlocked potential of the team’s productivity and usefulness. Here is my advice:

 

Know the Likely Points of Contention Between Team Members

When various cultures mix, there is likely to be friction. One important issue is how to deal with conflict. A German team member may want to articulate the issue and how it occurred, including assigning fault. Those from indirect communication cultures find this rude and disrespectful. A key ingredient to high-functioning teams is trust, and for most from Asia, Africa, Latin America and the Mediterranean area, this directness just lost the trust.

The important thing is to know who is on the team and what can be learned about their native work culture ahead of time to anticipate some of the obvious flash points.

 

Create a Common Goal

This is especially critical for multicultural teams. The goal helps to create a common set of terms around what needs to be done and what the outcome will be if successful. The clearer the goal, the more likely it will be that the team will perform to reach it.

 

Establish a Framework for Team Norms

Team leaders often default to the social norming for teams in their home culture. And often little thought it given to how this style is received by team members. A leader from Chile may use storytelling to emotionally connect with team members. But the Canadian may be annoyed by how long it is. The direct communicators in the team will likely tune out many anecdotes. There is middle ground, but it must be defined in order for both direct and indirect communicators to speak and interpret for the same situational understanding. Perhaps this means limiting the amount of anecdotes or explaining that this is a useful tool to understand perspective.

It is also important to establish a way to make decisions as a team. Must decisions be unanimous? Is there a point where discussion will be stopped and the team votes? Or does the team leader take the input and make the decision? Never assume that other cultures make decisions in a similar way.

 

Head Off Issues Early

If the team is underperforming, then it is better to investigate the root causes sooner rather than later. Issues may have an easy fix such as clearing up a misunderstanding. A common problem is a team member that stays quiet. It may be helpful to forewarn this person that you will be calling on them and to be prepared to share their perspective. It is also helpful to give this person permission to give an answer contrary to others in the team.

A word of caution: if there are indirect communicators in the team, DO NOT bring up team communication issues in an open team meeting. Indirects do not like discussing issues in a group setting (again, it’s considered rude). Ask questions of individuals in private instead.

 

Take Advantage of Diverse Perspectives and Strengths

This is why a multicultural team can be so powerful! Instead of seeing an issue or opportunity from a limited set of assumptions, those from a diverse background can bring ideas and solutions from more varied experiences. There may be a best practice from Brazil that no one in Italy has ever heard of before. In confronting similar issues, there are infinite ways to approach solving them. When an unexpected solution is presented, be sure to ask questions to understand the underlying assumptions that led to that conclusion.

 

Stay Positive & Focus on Progress (Patience)

Multicultural teams may be more challenging to manage. But as the team leader, it helps greatly to encourage participation and stay positive with the team about any progress. That doesn’t mean sacrificing results or progress towards results. Building the team’s effectiveness may take a little more time.

Overall, building an effective multicultural team is much better than languishing in frustration. Instead of underestimating the contributions from collaboration, focus on maximizing team’s performance. This means balancing the interests, communication styles and cultural assumptions. If you need help getting more from your multicultural team or staff, please contact me.

Onward & upward!
Becky Park

The International Entrepreneur – What You Really Need to Know to Ship & Finance Exports

There was once a large, expensive customized motor that was being loaded onto an ocean freighter. As it was being loaded, the crane holding the motor’s crate swung back out over the rail and accidentally dropped the crate into the water. The Incoterm (shipping term) was FOB (freight on board), so who was responsible for the lost shipment?

Ocean Freighter

I think this may have been a test question in my International Trade and Finance grad school class. The answer is: the Buyer. The reason is that with FOB, the responsibility for the shipment passes from the seller to the buyer when the shipment crossed the railing of the ship. Now hopefully the buyer insured his shipment. Otherwise this would be a costly lesson in international trade. Here are some basics that will help keep you out of trouble in
exporting:

Incoterms

There are 13 Incoterms that help define where responsibility passes from seller to buyer. They range from Ex Works (EXW) where the buyer picks the product up from your loading dock to Delivered Duty Paid (DDP) where the seller takes full responsibility for the shipment up to the door of buyer. A lot of first-time exporters assume that EXW is the best Incoterm choice because it shifts responsibility to the buyer immediately. But that is rarely the best choice based on how much control you need to have over the delivery of your product. Please also keep in mind that several Incoterms, including FOB, cannot be used in air freight (FAS, FOB, CFR, CIF, DES, & DEQ). A great book on this topic is Managing Exports: Navigating the Complex Rules, Controls, Barriers, and Laws by Frank Reynolds. Another excellent resource is International Trade and Banking Consultant, Roy Becker (http://roybeckerseminars.com).

Payment Terms

There are four main financing options for exports. First is for the buyer to pay cash up front. This is more common for highly customized products in high demand and for first-time buyers with no credit history in your company. Many exporters use the second option: Letter of Credit. But LOCs are very expensive and if written incorrectly can cause all kinds of complications to the sale. International bankers normally draft a LOC. They are best used for large item purchases and are less frequently used today because of their cost. The third option is Documentary Collections. In this option, the buyer cannot obtain the shipment until they have certain documents. The documents are sent to the buyer’s bank and instructions are carried out to pay the seller. Instructions usually include payment conditions. Finally there is the Open Account payment term. Open Account means that you’re extending credit to your buyer. This is a good payment term for long-time customers with good credit and fairly stable currency. Payments can be made through the SWIFT electronic payment system.

So which Incoterm and which Payment Term should you use? As with most questions in international business, the answer is- it depends. It depends on the type of product, the mode of transportation, how well you know and trust your customers, the level of involvement you have in installing the product, and your ability to repurpose your product to another customer should the original customer change their mind. To navigate these choices, I highly recommend talking with your international banker or your freight forwarder, if these are professionals you feel you can trust to act in your best interests.

Additional words of advice:

  • Match your Incoterm, payment term and insurance coverage (yes, insurance!) so that the point that responsibility for the shipment passes between buyer and seller is the same point that payment is triggered (even if it’s to be paid in the future by the buyer’s bank) and seller insurance takes over.
  • Find an experienced freight forwarder with small-enough operations to take your account seriously. A good FF can save you a lot of shipping expenses and help you navigate the documentation needed.

 

Best of success to you in all of your international business!

Onwards and Upwards,

Becky Park

The International Entrepreneur: Born Global or No?

baby techIn many parts of the world technology start-ups are expected to become global companies from their inception. Companies like Skype launched into international markets right from the start. The reason why these “Born Global” companies are a worthy topic in start-up technology circles is that they

  • Grow faster than domestic-only companies
  • Hire more local staff in their home markets
  • Succeed in greater rates than their domestic counterparts.

But is Born Global a realistic expectation for most tech companies?

As is the standard answer for most international business strategy questions- it depends.

Here are circumstances that make Born Global a more likely choice:

  • Small Domestic Market. If your company is located in a country like Uruguay (3.3m), Finland (5.4m), or Israel (8.2m), everyone expects you to plan for international expansion right from the start. It is no surprise to see small country tech companies competing effectively in world markets. Entrepreneurs have already cultivated their international market connections. Government and industry resources support this Born Global expectation as well.
  • Small Global Niche Market. It is much easier to globalize when your market is small. With fewer potential buyers there is pressure to find the customers no matter where they are located. For instance, if your company develops some measurement device specific to copper mining then you’ll quickly want to expand to places like Peru and Zambia.
  • Differentiated Product. If your product is valuable enough compared with the available in-country alternatives, local customers can overlook your product and company’s foreignness. They also are more likely to pay a premium, which helps defray any exporting-related costs.
  • Internationally-Minded Company Leaders. This is probably the biggest factor for Born Global companies. I’m not talking about the leader who likes to take his or her spouse occasionally to Paris for a holiday. These are professionals with deep connections in another country. Often they are either immigrants or former exchange students or both. IT outsourcing started with Indian, Pilipino and other immigrants connecting developers in lower-cost markets with software development needs in high-cost markets. An international orientation brings a completely different set of solutions to a start-up.

Going Global Criteria

To be effective in global markets a company needs to have a competitive product, financial stability, and infrastructure that support a global reach. I’ve spent the past decade in and around start-up companies and it’s a rare company that has even two out of these three criteria in its earliest stages. So rarely will there be a company that can start its business ready to be completely global.

On the other hand, all young technology companies should be planning for how they will enter and compete globally. This focus should influence hiring decisions, building capacity and potential partnerships. The timing on when the company actually enters international markets will depend on when international opportunities are worth spending the time and energy to make the final adjustments internally for global launch. At that point, the company can finally take advantage of the vast opportunities in the global marketplace.

Advice for Big-Country Tech Start-Ups (U.S., Brazil, Japan & China)

I often hear particularly in the U.S. that international markets come later in the company’s plans. I rarely hear one of our technology industry gurus touting the benefits of early international market preparations. Instead of having the domestic market act as a benefit to growing the company, it can actually slow down long-term growth. For tech markets, often 80-95% of total markets are outside of the home market. To delay preparing for the whole potential market will slow growth. Even if you delay international market entry, start preparing by making connections and researching your market.

(“Born Global or No” is a play on Walter Kuemmerle’s famous Harvard business case published in 2001: “Go Global or No”)