Read the full script of Module 4, Episode 5 of the Global Growth Master Class below. Want to get certified on global expansion? Simply click here to access the complete course today.

The next important question to answer when considering how to effectively run international operations is: 

How much of what happens in local markets should HQ control?

One of the major obstacles your teams will face during the expansion process is finding a balance between duplicating the successful strategies used in the first market and giving local teams the freedom to adapt and tailor the business to the new market. This requires providing a solid foundation of support and fostering trust between HQ and the local team while maintaining an appropriate level of independence.

The local team must have the freedom to modify the business model to fit the needs of the new market, and HQ must have faith in their ability to do so. In return, the local team must trust that HQ will be there to offer support, address issues, and guide them through difficulties.

We have heard our clients and interviewees point out that trust deteriorates when there is no agreement on how to report progress between HQ and local teams. Working together on shared goals and agreeing on how to communicate are simple ways to build trust, which can then enable HQ to feel comfortable with granting autonomy to local teams. We have found that often not enough time is spent between HQ and local teams building a bond and ensuring alignment on how to work together.

However, trust must first be established before HQ feels comfortable granting autonomy to local teams.  This trust can be facilitated by using the Global Class Team Building Framework discussed in the last module - where, If you intentionally help the local team accumulate enough company knowledge, while HQ learns about local nuances (gaining local knowledge), then both parties begin to have a shared understanding and alignment. 

Balancing autonomy with support is crucial for HQ to efficiently manage its expanding global presence and progress from market entry to growth

Giving local teams the freedom to adjust the business to fit the new market will lead to more rapid success. According to Scott Coleman, formerly of Pinterest and Google, local teams don't have to start from scratch. 

Resources such as a Global Growth Playbook (described in a later module) and processes can help guide teams towards more effective methods, without creating unnecessary complexity. However, HQ must also allow local teams to pursue small-scale initiatives quickly while providing support through established best practices. This balance of support and autonomy will empower local teams to effectively tailor the business to succeed in the new market.

On the flip side, excessive processes and bureaucracy can hinder the flexibility of local teams, leading to frustration and impeding growth. The bureaucratic nature of certain organizations can pose a challenge, as seen in the case of Japanese clients whose local offices are bogged down by excessive administrative procedures, leaving them little room for engagement with the market. 

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Excessive micromanagement and bureaucracy can cause teams to focus on the wrong things, hindering their ability to achieve global growth. Empowering individuals is crucial for success in new markets, as trust and autonomy drive the sense of empowerment that leads to traction. Local teams need the freedom and resources to make decisions without seeking approval for every little thing, while HQ must trust that these decisions are the right ones. Building trust begins with the proper hiring of individuals in both the local market and HQ, Interpreneurs, as discussed in the last module.

The Autonomy Curve is a useful tool for managing the balance between local autonomy and centralized control during global scaling

It categorizes the process into three stages: market entry, market growth, and market maturity, each requiring a different level of autonomy. The Autonomy Curve takes into account various factors such as industry and company culture, which may impact the degree of autonomy. However, it provides a general guide on how much autonomy to grant local teams during each stage. Each local market follows its own path on the Autonomy Curve, as they may be at different stages of growth or entry. At the same time, it’s important for HQ to assess the scalability of its efforts across regions during market growth, considering the entire worldwide growth initiative and not just what is happening in one country.

During the market entry phase, autonomy is crucial for the local team to concentrate on determining the best model that suits the local market. At this stage, autonomy should be high (but never completely unrestricted), as there still needs to be some level of alignment. If HQ is hesitant in granting this level of autonomy, it may indicate a lack of trust in the local team, unpreparedness for expansion, or a failure to adopt a global mindset.

During market growth, while autonomy is reduced, it doesn't reach a level of complete control by HQ. Instead, the focus shifts to managing complexity and ensuring consistency across multiple markets. This is why extra processes and structures may be put in place to support this growth. These processes will inevitably limit autonomy to some extent. The organization's priorities at this stage are to maintain momentum across multiple countries and ensure a balance between individual market fit and multinational scale.

At the stage of market maturity, autonomy increases again. While it may not reach the same level as during market entry, the local team should be given more independence to become a market leader in the local market. During market entry, companies usually only scratch the surface of market opportunities, but during market maturity, the organization can capture a stronger position by further customizing its offerings to meet the local market's needs. The use of processes and standardizations adopted during market growth enables the team to operate with a higher degree of autonomy

Having a clear understanding of the company's values, mission, and goals is critical in striking the right balance between support and autonomy

This ensures that both HQ and the local team are aligned in their approach and are working towards the same objectives. Establishing clear lines of communication, regular check-ins, and a shared decision-making process can help facilitate this balance.

In the meantime, strategies and key performance indicators (KPIs) follow a similar trajectory. During the market entry phase, the KPIs and strategy must be adapted to the local area and cannot be compared to mature markets, as the local market conditions, necessary localizations, and company-market fit can vary. During the market growth stage, KPIs and strategy become more in line with headquarters and other regions at a similar stage of development. Finally, in the market maturity phase, some KPIs and strategies become more specific to the local market to align with the goal of deeper market penetration, which are enabled by the organizational processes established during market growth to foster momentum.

Keys to Success

• Build strong relationships between HQ and local teams in-market.

• Give local teams autonomy to discover the unique model required to be successful model in that market.

• Build a culture of trust through open communication. Share successes and failures along with lessons learned.

• Establish processes that give HQ some level of visibility and influence on local operations without jeopardizing the goal of achieving company-market fit and required localization.

• Ensure that local teams internalize company culture and core values and that HQ understands the unique culture and market dynamics of the local market.

• Balance priorities by allowing the level of autonomy to change over time. Let the local team take the lead in finding company-market fit in their individual market, but simultaneously create processes and cultural norms that enable HQ to manage the company at scale across many markets. Utilize the Autonomy Curve to find the right balance at the right stage of expansion.

NOTE: Don't miss out on the next episode! If you want to continue learning about global expansion strategies and dive deeper into the course material, simply click here to access Module 4, Episode 6 of the Global Growth Master Class.