With the rise of the Internet, growing competition from other markets, and increasing pressure to work faster, quicker, and cheaper, the appeal of breaking into new markets is high. Foreign markets seem like an obvious answer if going global is perceived to be as simple as finding foreign vendors and hopping on an airplane, passport in hand.
However, companies looking to expand their presence globally more often fail than succeed; a grasp of market intelligence and local customs is no longer enough in a competitive market. If companies are not prepared to properly enter a global market, it could threaten their brands and financial stability at home. Cultural agility, the ability to perceive and interact in a way that is thoughtful and relevant, is the key to becoming a truly global company, from the inside out. Becoming culturally agile makes you easier to work with; in turn, this paves the way for long-term business partnerships in crucial markets.
It’s not uncommon for companies to fail before they realize how deeply rooted cultural preferences are – and how difficult it is to speak to them. Even though we’re becoming more similar on a surface level, deeply ingrained cultural preferences still affect peoples’ comforts and biases – and, most importantly in this case, who they do and don’t want to work with. Cultural gaffes throw up huge obstacles to people’s ability to work together, and they’re often the reason that global expansion fails. Here are four common mistakes made by emerging global organizations:
1. Trying to make a quick buck
Globalization isn’t simple or easy. The barriers to entry are much higher than the cost of an airplane ticket. Somehow, though, a modernized version of the archaic myth still exists: if you show up, natives will shower you with riches. Two words: Not true.
Success in a global company requires team development, both at home to incorporate new, foreign influences, and abroad since employee retention is a huge issue in developing markets. It’s essential that companies institute plans for not only recruiting employees abroad, but investing in, and retaining, them as well.
2. Using a home market strategy
Companies cannot just expect to use the same strategy in international markets that made them successful at home. Best Buy blithely moved into China, believing that the demo showroom strategy that made them successful in the U.S. would apply to China. It didn’t. Instead, shoppers tried out the devices at Best Buy and then went to make their purchases at Chinese shops, where they could bargain for a better price.
Additionally, Best Buy ignored the local purchasing season for electronics and appliances – wedding season – and set up their locations in places that would add hefty delivery charges that Chinese consumers weren’t accustomed to.
3. Being blinded by opportunity euphoria
Too often, the enormous potential posed by selling to a foreign market creates a kind of “opportunity euphoria” that can blind a company’s solid decision-making.
For example, Mattel missed out on the American Girl phenomenon and the enormous profits engendered by a luxury doll line in the United States. When they considered China, they saw an opportunity to turn their Barbie brand into a luxury brand there. They built an outrageous presence pursuing that dream, but it didn’t fly. Applying a home market strategy to a vastly different market with the goal of besting the competition created opportunity euphoria that blinded their decision-making.
4. Approaching cultures inconsistently
Groupon’s Super Bowl ad blunder – turning Tibet into the punch line of a joke promoting a restaurant discount – is a prime example of failing to acknowledge that a company operating on a global scale is always in the global eye. Even though Groupon operates under a different name in China, the ad became instantly notorious in the Chinese blogosphere – and undermined millions being spent to enter the China market. (Read more in my article for Fast Company.) It’s a mistake that every company that doesn’t consider its global development holistically is doomed to repeat.
A financial disaster in a foreign market isn’t just bad for your bottom line. It’s also a lasting, missed opportunity for growth. By diverting attention with an impulsive, under-planned effort, companies divert valuable resources from their main objectives as a business – and tarnish their brand in a new market permanently.
Cultural Agility in the Global Space
In order to master cultural agility, all employees need to make connections across cultures effectively and understand the global impact of their decisions. The responsibility does not fall on one department or leader. At its heart, cultural profit is not about making it easier for you to work with people from other countries or cultures; it’s about mastering a core set of skills that make it easier for those people to work with you.
To accomplish this, there are six skills every employee needs to master:
- Attaining awareness of your own cultural biases,
- Attuning to other cultures,
- Adapting to other cultures,
- Exhibiting authenticity and staying true to where you’re coming from,
- Acquiring knowledge and doing research on other cultures, and
- Assessing your progress and evaluating yourself regularly.
The more employees who develop these skills, the better positioned the overall organization will be to succeed in a global market. Signs of a strong cultural profit mindset can be seen in businesses that have increased their track records of success when launching in new markets. IBM has been successful in creating a global company by providing solutions the local market wanted and needed. They hired and invested in local employees to leverage developing economies and opportunities. In turn, they committed to being a part of many countries’ economic growth.
There’s a common myth that people are all the same, and culture only makes us seem different on the surface. We’re not. Our commonalities go only as deep as the suits and ties we wear to conduct business in. The culture we come from makes us very different at our core – and the sooner companies recognize that, and embrace ways to interact that bridge these differences, the faster they’ll begin to succeed on a global scale.