Expanding into another country – aside from an acquisition – yields the highest figures in most strategic planning or budgeting spreadsheets.

It energises the team as it sends many positive signals to the organisation. From validating the international attractiveness of a concept or service, to exciting the team with the prospect of overseas visits, or even opportunities for longer term ex-pat experiences.

There are also endless stories of missteps where the CEOs and the Board were blindsided by the potential glory of capturing a new market. The list of challenges is long. Some are obvious, and there are those that only the savvy international executives would consider:

1. Distraction from the core country or business.Your investors may be interested in the overseas opportunity, however, they will be extremely disappointed if it leads to missed opportunities in the market where the majority of your income arises.Your most limited resource is the mindshare of capable leaders, who can only work so many hours in a day. They need to focus on the highest return opportunities.
2. Ability to compete in markets where competitors may be less concerned about labour law compliance.Often on the initial scoping of a market, it may appear as though the playing field is level. However, when looking closely at local firms, and sometimes international firms (unknowingly to the overseas HQ), they may compete using market practices that are contrary to local laws but not enforced. Or, worse still, the customers (sometimes even respected global companies) are not prepared to pay for compliance. This is a complex area.
3. Reconfiguring the business in countries where government regulations can change with limited industry input or in unreasonably short timeframes.An example is the accelerated implementation of GST in India in 2017, that was approved in a rare midnight session. Rapid, unforeseen law changes in some countries is quite normal and could significantly impact your business’s profitability.
4. The inevitable control issues and the consequent reputational fallout in the market, and with your investors, is significant.

Categoric success overseas is rare, but it is achievable, with the right talent and a thoughtful approach being more important than the quality of the concept in that country.  Some actions to increase the probability of your success include:

• Understand the dynamics of doing business in that country. Cultural differences exist in how different country leaders do business and being narrow minded in your approach and the type of leader you think is needed, may miss the mark.
• The number one decision is recruiting the best leader possible.Use all avenues to find them; your trusted search partner, contacts in the market, and personal recommendations.  Extensive reference checking is a must and use multiple interviewers, including those whose first language is the same as your potential leader.Meet with the candidate at least three times in different situations. Anyone can be a good first date; keeping it up over three sessions is more challenging.
• Use the “grandfather principle” for any recruits by the Country Manager.  All direct reports to the Country Manager must be interviewed and approved by the supervisor of the Country Manager, likely to be you.  For success in the market, you will need a diverse leadership team. Your involvement should be to firstly validate the recruit’s competencies, but more importantly to ensure the individual has the strength of character to speak up and debate key issues.
• Once recruited, over-invest your time with the leader and their team in their market.  Your relationship with them is a consequence of respect which comes from time together.
• Place a trusted ex-pat from your home office on the Leadership Team. They will assist the local team in knowing how business is performed in your company and who in HQ can best help when issues or questions arise. This person also provides an extra set of eyes to ensure compliance.  As Ronald Reagan said to Mikael Gorbachev during Russia’s disarmament, “trust, but verify”.
• Finally, do your research, to understand the history of the government changing laws that could impact your proposition or cost structure.

The above is the “short list” and generally people focused. There are many additional initiatives that can be put in place to increase your probability of success. Reach out to “Impactful Leadership” to leverage the founders 20 years’ experience of leading international businesses, into new markets and old.

Credits: featured image – Photo by Courtneyk on iStock.