2 Truths And A Lie: Why Executives Should Reevaluate Their Global Growth Strategy
Let’s play a game. That good ol’ game, two truths and a lie (international expansion style).
As you are building your business, you are always thinking about which growth lever to pull - adding products, customer segments, or markets.
When it comes to new markets, exploring global opportunities is both exciting (the potential) and intimidating (figuring out what you need to do or invest in to capture the opportunity). This article is a guide on how to think about and take advantage of global growth opportunities.
Truth #1:
If you are already in the midst of global expansion, you already know this, and if you are in the early stages of your international growth journey you will soon find out that global expansion is hard and if you don’t approach it the right way, you will waste a lot of time and money.
Most companies lack the vocabulary and frameworks for how to think about all the important aspects of global such as team building, localization, supporting scale, navigating culture, and beyond. In writing our #2 WSJ bestselling book, Global Class, we interviewed 400+ executives from 50+ countries who led global growth for the world’s fastest-growing companies and found that even the top brands who have reached global scale reinvented the wheel, making costly mistakes.
Zoom’s Head of International, Abe Smith, said this about Global Class:
Aaron & Klaus have literally written the book on international go-to-market… this is the book I wish I had 15 years ago.
Even experienced global expansion executive Troy Malone, who led international for Evernote, Weebly and other growth stage companies professed that the book equipped him with the vocabulary and frameworks to teach others what took him a couple of decades to learn the hard way.
Whether you are already in multiple markets and hitting that wall we often see companies hit once entering market 5, 7, or 9 - leading you to stall growth because the right foundation for global scale wasn’t built, or are just embarking on their global growth journey, we can offer some great insights and case studies to help you avoid the top 10 things that make global growth initiatives fail.
Before and during expansion, teams need to ensure alignment around the “Four Commitments for Successful Global Scale” and build the right teams to guide global growth. We found there was a specific type of person who is the catalyst for helping companies reach global scale (“Interpreneurs™”) and companies need to actively identify and nurture this talent while at the same time, being mindful of purposefully creating an overlap of company knowledge and local knowledge in new local markets, as outlined in the Global Class Team Building Model.
Structures and processes are required to support global scale (which we call, “Momentum Builders”), and are core drivers that help companies go beyond product-market fit in international markets to attain what we call, “company-market fit,” which layers on having the right operational and cultural models to deeply penetrate new markets; from org structures like the Localization Resource Team, to playbooks for sharing best practices, all are important enablers for an organization expanding globally.
Truth #2:
This is a truth that many companies, especially those who attain product-market fit in the US as an initial market, overlook. There is a ton of global opportunity, but you need to approach things the right way. The population in Sub-Saharan is 3x the size of the US and more than three-quarters of global population growth over the next 80 years is expected to take place there, where the population is projected to double by 2050.
It used to be that having a cool product (or being an American/Silicon Valley/[fill in the blank] company) was enough to captivate global markets, but no longer. Customers in each local market are now requiring you to localize for their unique use cases and cultural context. But the opportunity is there for the taking - many markets don’t have the legacy infrastructure or government control of certain sectors like in the typical countries companies focus expansion on.
There is less legacy baggage. For example, in many countries they didn’t go through the desktop-laptop-mobile progression, they leapfrogged right now mobile. Since many countries don’t have the same banking regulations as the US and EU, fintech companies can go-to-market much faster and have a greater impact.
We are starting to see companies take advantage of this. Silicon Valley-based medical supply drone delivery company Zipline focused on Rwanda and other East African nations early in their growth. There wasn’t as mature of a transportation network for medical supplies and you are free to fly drones almost anywhere, which is not something the US Air Traffic Control would stand for.
The challenge is that most companies whose initial market is the US hard-code their business for the US market, making it painful to make the changes required to get traction and scale in global markets.
To succeed, you must do Localization Discovery the right way, as Troy Malone learned with Evernote’s expansion into India. We built the Business Model Localization Canvas to help you take the validated model from a market the company has product-market fit and adapt it for new global markets.
Then, you need to manage complexity (which we call, “Localization Premium”) by looking holistically at what needs to change to reach product market fit, not just at the standard go-to-market aspects (language translation, changing pricing to the local currency, and localizing marketing messaging), but also operational elements (from navigating differences in local culture, localizing infrastructure, and adapting a number of administrative elements from corporate entities). The Localization Premium Analysis (or LPA) helps you look below the tip of the iceberg to the below-the-surface and often overlooked items required to build a global presence.
The Lie
Note: Please check your ego before reading this.
Your “Company Way” of doing things won’t work globally. Yes, your company culture and awesome team led you to success in a big market, but it won’t automatically translate to global markets, especially if your business is hard-coded for the US market.
In fact, a chasm exists between success in one large market and global scale. And the game is no longer about disruption, it’s about learning how to contribute to local ecosystems. Oh, and just because you have users in 100 countries doesn’t mean you have actually localized for those markets, pay no mind to the fact that in most of those markets you probably only have a few thousand users.
And for your B2B companies, we know you may have clients in other countries, but our guess is most of that was driven by clients headquartered in your primary market that have offices/employees in these other countries. In both cases, this isn’t true traction.
Uber as an example
Despite its near-endless resources, Uber company failed in becoming a market leader in China, Indonesia, and other large markets. Companies in these markets understood the local context, how to solve local problems, and how to appeal to a local customer base. Customers in these markets didn’t want things done the “Uber way,” they wanted them done the “Local Way.” The Uber team learned its lesson too. If you look at how they approached growth in the Middle East, the acquisition of Careem used a very different strategy than in earlier global markets.
The Global Class Mindset and all of the tools mentioned here can be a competitive advantage to help you reach global scale faster and more efficiently. Here are a couple of bonus lies and traps that we want to make sure you don’t fall into.
Bonus Lie #1: Organic growth should dictate where you expand to.
While organic growth is great, it can also be risky. Just because some customers want your product in that market does not automatically mean the mainstream in that market wants your product. In fact, in many cases, the work you would need to do to change your business to find scale in that market may be extensive.
Bonus Lie #2: The best countries to expand to speak the same language or are geographically nearby where you have already scaled.
We call this the “Familiarity Bias.” The American example is “Hey, let’s expand in the UK and Australia and Canada. They speak English there.” More often than you think, this type of growth strategy could be a bad idea. Just because you won’t have to translate your product/website/market materials doesn’t mean other localizations you need to do will be easy. On the translation front, don’t forget about how translation to fit local colloquialisms is still needed for other English-speaking countries, just like choosing a market based solely on a large market size can be a losing strategy.
You need to take a more nuanced approach, that factors in both your organization’s capability to expand and the amount of localization, along with market potential. Our Global Growth Opportunity Matrix (or G-GO Matrix) can help with this, as can being mindful of what we call “Linked Markets” that can help make localizations more scalable.
Our goal is to make global growth a shared experience and help your company on its global growth journey. Take our free assessment to get their Global Capability Score, highlighting where gaps may exist in your approach to global growth. Check out all the free tools available to help you on your global growth journey, and a self-paced video Master Class (coming soon!) for your team at GlobalClassCompany.com, and feel free to set up a free call with us to share more about the challenges you are facing in your global growth journey.
We are also happy to engage more formally with your team, providing a Global Capability Score assessment. This is a deliverable that explains where you are on track, at risk, or in the danger zone across 10 key areas crucial to reaching global scale successfully.
About Global Class
The Global Class team has developed THE playbook that teaches organizations the right mindset, culture, and strategies to successfully build global businesses. Through consulting engagements and practical tools (+ case studies built from conversations with over 400 executives from the world’s fastest-growing companies), we help executives with companies valued at $1B to $100B reach global scale. From market entry to global scale, we help companies build the foundation for successful global growth through management consulting services, customized platforms, and more. Contact us for support by visiting the Get Help Scaling page.
