I had the pleasure this past week to be in Ho Chi Minh City to support Tieu Yen Trinh, CEO and Founder of Vietnam’s largest and most respected Human Resources Services company, Talentnet Corporation, in their workshop on “Expanding to New Markets.”

Below is a summary of my keynote speech that I shared on Tuesday with some outstanding Vietnamese CEOs and Chairs, and on Wednesday with a range on MNC CEOs and their People and Culture Leaders.

LEADING ACROSS BORDERS

The attraction of expanding into international markets is exciting for many reasons:

• Your product or service may be performing well in your local market and so you logically anticipate success in similar markets.
• International markets offer significant potential and the chance to multiply your existing revenue and profit.
• Your leadership team, board and investors have confidence in your expansion plans and the forecasted returns.

However, the path to achieve success in international markets is often massively underestimated:

• Consumers/customers can be similar across markets but are generally more different than similar.
• The business model in your local market may not be the appropriate model for this new market.
• The competitor landscape is often underestimated as they will have close customer relationships and may not be as compliant to labour laws as your company would be.
• The time to becoming cashflow positive is generally two to three times longer than forecast.
• The current team does not have the time to support an international market when things go wrong (which they will).

There are four major areas for leaders to focus on when expanding to multiple countries:

1. Understand the market, business and customer dynamics … then “do less to achieve more”.
2. Find the right leaders and develop trusting relationships.
3. Don’t underestimate how you structure and organise the business.
4. Build in approaches to ensure consistent company culture, and compliance.

Insights into finding the right leaders and building strong relationships:

Start with a very small, low-cost team … your cash burn rate will impact the board’s patience to stay committed to a new market. Initially consider recruiting only a Business Development Leader or Expansion Director. You need to see significant potential in them to grow: Target one or two levels down in a similar business/industry and they need to earn the right to grow into a Country Manager role. You will need problem-solving, free-thinking, proactive leaders which are difficult to find and challenging to validate in an interview … Be careful of your own confirmation bias due to urgency to find a leader.

To find great leaders:

• Use your or trusted partner’s networks and trusted “search companies” who have strong reference-based networks in the country.
• Target executives in similar companies who have “explainable” tenure, a track record of success and importantly, internal promotions … ensure you validate their claims with deep questioning … ask the same question in different ways to validate consistency of response.
• Over-invest in spending time with them prior to making offer (3 meetings as a minimum), seeing them in different situations. Probe deeply to understand their values, seeking examples.
• Extensive reference checking and referrals from tenured, capable and credible local leaders.
• Invest early in their tenure spending considerable time with them; relationships are a consequence of time spent together.
• For important issues, challenge three times in three different ways as their first response may not be correct … they may not have understood you or they are telling you what they think you want to hear to not disappoint you.
• When visiting the country, spend time there to get below the surface … speak with employees (leadership team dinners, talent sessions, site visits) and always visit customers that you suggest, not just theirs … Build multiple points of contact into the business.
• Put a trusted expat into a key leadership team role, ideally CFO or Strategy & Transformation. Language is a challenge but there are ways around this. This leader will assist in embedding your “Group Values and Culture”.

Finally, in leading leaders in other countries, be careful applying too much pressure to your leaders or over-reacting when they provide bad, or good, news:

• Things go wrong every day, such as compliance issues, a key staff member leaving, losing a major customer, or worst of all, a natural disaster … How you react will impact how the leader shares information next time.
• The desired result may be achieved in ways that compromise company values or local laws.
• They may tell you what you want to hear; “yes” is often the first answer to most questions.
• Compliance is an ongoing, and daily challenge … The gap between right and wrong differs in some countries.
• Always trust but verify; ensure you have strong reporting systems and audit regularly but not predictably.

Dane Hudson is available for keynote speeches to share further insight into this important topic, or through his business, Impactful Leadership, can assist your leaders in their expansion plans.