Read the full script of Module 6, Episode 6 of the Global Growth Master Class below. Want to get certified on global expansion? Simply click here to access the complete course today.

After running your validated model through the Government & Regulation filter, there is one additional layer to consider. Global Class Companies that are expanding into new markets are mindful of the local nuances, which include language, local traditions, customs, rituals, historical context, trust-building processes, unique decision-making criteria, purchasing practices, distribution practices, local attitudes towards money and payments, and interactions with the local community, among others.

It's worth noting that being perceived as an international (outside) brand can have positive or negative connotations in certain markets, which can vary from industry to industry within a given country.

Adjusting to local culture is crucial for product adoption and for effectively maintaining a local presence in the market. It enables your target customers to communicate with your business and connect with your product enough to want to use it.

Culture can even influence the product offerings or core functionality of a company

Prior to targeting Asian markets, Slack's messaging platform did not have a "Send" button; instead, users were required to hit the "Enter" key on their keyboard, 

Did you know that the business messaging platform Slack didn’t have a Send button? Originally, to end a message, users simply had to click the Enter key on their keyboard - this stemmed from Slack’s mission to make communication as frictionless as possible.

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However, in some parts of Asia, business people tend to send very detailed instructions/narratives rather than quick messages. Not having a Send button created anxiety in Asian users, since being prepared, detailed, and lengthy in communications is part of the local business culture, and they were fearful of accidentally hitting the Enter button and then having to edit a message they sent prematurely, being thought of as unprofessional. 

This was in contrast to Slack's objective of improving the speed of communication, and it presented a tough decision for the Slack team. After observing an increase in inadvertently sent messages by users in Asian markets, a "Send" button was added. The product team also set default preferences for the "Enter" key/Send button based on the user's geographic location, while still offering both options to users worldwide.

Let’s look at an example that resulted in Google not being successful in Korea

Despite Google Search's significant market share in many parts of the world, it has struggled to gain traction in South Korea. One of the primary reasons for this is cultural. South Koreans place a great deal of value on democracy and upholding their freedom, and Naver, a local search engine, has positioned itself as the search engine of the people. 

Unlike Google Search, Naver doesn't have a paid advertising system and prioritizes search results based on their relevance to local customers, rather than who pays to be at the top of the list (like Google's "sponsored listings"). This approach has resonated with the local customer base, enabling Naver to maintain a strong market position in South Korea.

Contrasting Google’s failed expansion to Korea, Airbnb was more successful in many Asian markets

By gaining a solid understanding of local cultures, the company was able to connect with its target customers by highlighting specific experiences that would appeal to them.

For example, customers in certain Asian markets were drawn to unique places to stay, such as castles and tree houses, while others were more conservative in their preferences. Concepts like seeking new ways of traveling and considering relative risk also varied across different markets. This foundational understanding directly influenced the experiences featured on the app and customer communications. In some markets, more detailed information was provided to reassure potential customers.

Japan was particularly noteworthy in our interviews, as cultural differences were pronounced and localizing efforts were crucial to achieving company-market fit. To build up a sufficient inventory of rooms to meet early demand in the country, Airbnb had to overcome the reluctance of Japanese hosts to post a room listing if the space they were offering wasn't deemed "perfect,” since that was often a prerequisite in the mind of Japanese hosts for offering their space to a guest.

Cultural values and local market trends can also drive growth

In Japan, one of the main concerns is the aging population, and DocuSign capitalized on this trend by highlighting how Japanese corporations needed to adopt digitalization technology to prepare for the upcoming labor shortage. The company effectively demonstrated how its digital signature solutions could enhance productivity, aligning with the Japanese government's no-paper policy and accelerating digital transformation. This resulted in DocuSign modifying its value proposition. Klaus/I (depending on who reads this module) personally observed the impact of the government's no-paper policy during a visit to a client's office in Japan in 2014, where he saw piles of papers on every table. However, after the policy was implemented, the stacks of paper disappeared almost overnight.

Moreover, the DocuSign team understood the cultural context in Japan. In Japan, instead of handwritten signatures, the system was built on a stamp system called Hanko. A company adopting the “Company Way” would have thought, let’s disrupt the market, and show how Hanko is an ancient way of the past and we are the future.

Instead, the team understood the importance of the hanko tradition and partnered with a non-tech company, a company that makes stamps and inks for Hanko, Shachihata, to create an e-hanko. While giving away economics to a partner you are attempting to disrupt may seem counterintuitive, if not weird, it was the key to DocuSign’s success. The cultural credibility of this partnership led the company to scale rapidly and become a market leader.

To enhance the speed of adoption, avoid cultural mistakes, and establish the organization as one that values and respects local culture, Global Class teams should run all aspects of their business through a cultural filter when considering entering a new market. This approach helps to position the company more effectively and improve brand equity.

Once you’ve run your validated model through these two filters, it’s time to translate your findings into an outline of hypotheses for the go-to-market and operational models in the new market as they correspond with each of the Localization Premium categories. We have a tool to help you accomplish this and in fact help capture key insights during the Localization Discovery and Localization Hypothesis Development processes, the Business Model Localization Canvas.

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 6, Episode 7 of the Global Growth Master Class.