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

There are two flavors of research to conduct during the market readiness process, one is in office, the typical process of market research companies undertake, but there is also the in-market, process of gathering insights in person as well. As previously mentioned, besides gathering data, it’s important to gather qualitative information about the market, and while some of this can be done through calls or video meetings from the comfort of an office, conducting this research in person, in the market is crucial. 

This is part of Market Readiness & Market Selection (perhaps the more important part) - must be done before choosing the market

As discussed, many companies choose a market and then go into the market to learn more after the choice is already made, but it’s important that you conduct this in-person research before finalizing a market selection decision. While research at HQ can provide valuable insights, it is not enough. It is essential to validate the data on the ground before deciding on a market by obtaining the voice of the customer and speaking with a number of other key stakeholders. This entails direct communication with stakeholders to help avoid biases or over-indexing on a certain internal person’s opinion, valuing their opinion because of a strong internal reputation versus a validated market insight. 

This in-person research, which we refer to as Localization Discovery is a process where you speak with key stakeholders to understand what is happening in a local market from a ground level and finally arrive at a set of hypotheses for how your company’s model needs to change to be successful in the local market.

This process is also about validating the information you gathered during your more qualitative research. Many of the learnings are cultural insights that are difficult to glean from desk research. This process also then leads into the Business Model Localization Canvas exercise, a core part of the Global Agile Methodology that we will detail in the next module where you take these findings and turn them into hypotheses for how you will operate your business in the new market.

👉 Click to Get Certified on Global Expansion 👈

At the end of the process you not only can make a more educated market selection decision, but you also have a deeper understanding of the degree of localization needed to succeed in the market, helping you budget, prioritize what localizations to focus on in what order, and you have built the foundation of local relationships that will be crucial if you decide to enter the market. Visiting the target markets is a common ingredient in the analysis of many Global Class Companies that have successfully expanded. 

So you are probably wondering, what should I do in-market to evaluate a potential new market?

Let’s investigate. 

Similar to the customer development process that companies undergo to identify product-market suitability using the established agile methodology, localization discovery is a method that should not be contracted out. To ensure that the localization discovery process is fruitful, an individual who will be involved in the expansion initiative (such as the individual responsible for global growth at headquarters or part of the leadership team in the local market) should participate in the localization discovery process. As mentioned, Mercari did exactly this in Germany and avoided a big failure by not just trusting the research and recommendations provided by the consulting firm.  

The first step of localization discovery, which should occur even before stepping foot in the target country, is to outline the key questions you need to answer by speaking with the stakeholders you speak with. These questions should be formalized and tracked and will be part of a framework called the Business Model Localization Canvas that we will use during the localization hypothesis development step later. 

Next, make a list of all the stakeholders you want to speak with and map the questions to answer to roles on this list.

While talking with potential customers is a core part of the process, it’s important that conversations go far beyond target customers. We recommend you include the following within the scope of your localization discovery process:

• Target customers (and current customers already in the target market)

• Investors

• Entrepreneurs and connected business leaders

• Prospective partners

• Potential new hires

• Local government agencies

• Local trade associations

• Universities

• Potential suppliers

• Thought leaders and market analysts

• Banks and financial system representatives

• Local media

• Everyday people

Besides the obvious customers, partners, suppliers, and investors, don’t overlook connecting with government organizations, who have resources to help you both enter their market and expand to additional international markets. Trade associations also can help you enter ecosystems, Roku, for example, leveraged the Internet Advertising Bureau (IAB) to become a thought leader and get a seat at the table with European Union officials during GDPR discussions along with larger players in the market like Google. 

We intentionally listed “everyday people” on the list of stakeholders to talk with during localization discovery, in part because the category is counterintuitive and often overlooked, but more importantly because it’s incredibly valuable. When talking to everyday people during your localization discovery, even at random, you get the most accurate insights about the market you are targeting.

No spin like you might get from a government agency attempting to gloss over economic issues in the market, no embellishments from potential partners attempting to sell you on collaborating with them; just honest, unfiltered opinions. Every driver, restaurant server, receptionist, and shop owner you interact with—all of them hold potentially valuable insights. This is particularly true for consumer products and services.

The process of Localization Discovery is an extremely important step that should not be underestimated

Even seemingly trivial details, such as the size of mail slots, can have a significant impact on packaging and distribution decisions. Other factors, such as alphanumeric zip codes or the need to invoice in multiple currencies, can also pose challenges for legacy systems. In fact, a well-known payment processing company experienced a delay in entering the South Korean market because they did not account for the size of the mail slot.

This led to the team having to consult with the local post office and redesign the packaging to fit the standards, ultimately causing delays and additional costs. It is crucial to understand these small nuances ahead of time, as they can lead to failure if not accounted for in the operating model for each market. The best way to approach localization discovery is by conducting in-person visits, where key members of the team can talk to local stakeholders and experience the market firsthand.

Conducting in-market localization discovery is crucial for gaining a deep understanding of the local market nuances

Elise Rubin, who is the Global Head of Program Management, Internationalization, and Product Launch at Google Nest, discovered that even the meaning of “fresh air” can differ depending on the local market. During her market research, Elise discovered that in Japan, fresh air meant opening up a window and letting the outside air in, whereas in South Korea, fresh air meant keeping the windows closed and using an air conditioner due to concerns about air pollution caused by "yellow dust." The local teams' input is essential in this process. Troy Malone, the former General Manager of International for Evernote, emphasized the importance of on-the-ground research in creating a coherent strategy, stating that "getting to the point of understanding a market enough to execute a coherent strategy is the toughest thing about expansion. You can't do it from HQ."

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 5, Episode 5 of the Global Growth Master Class.