Read the full script of Module 7, Episode 1 of the Global Growth Master Class below. Want to get certified on global expansion? Simply click here to access the complete course today.

Maintaining a balance between implementing the necessary localizations to gain traction in a new market and the challenges that come with making these changes is crucial. Companies that excel on a global scale use the Global Agile methodology to achieve this balance. This equilibrium is captured by the term Localization Premium, an aspect of the Global Agile Methodology that captures the complexity required to gain traction in new markets, enabling organizations to manage their localization strategies while effectively handling complexity as they expand globally.

In this module, you will learn:

The next steps in the Global Agile Methodology, which is still part of the Market Readiness & Strategy Development Stage are Complexity Mapping, Market Selection, and Market Entry Strategy Creation. In this module, we will detail each. These steps build on the Localization Hypothesis Development step that uses the Business Model Localization Canvas, as described in the last module.

• What questions will this module answer?

• How do you map out and organize the localizations for a new market?

• How to determine the level of complexity a market has?

• How do you build a localization plan and budget for these changes?

Why does what is discussed in this module matter?

This is the single biggest step in the global expansion process where companies get it wrong. Things are misunderstood, overlooked, and underplanned. Companies are generally able to uncover necessary localization, albeit in an unorganized and non-comprehensive way, but when it comes to using the info to select the right markets to enter and building the right strategy to enter these markets, companies waste time and money because they lack the structure to navigate the process. Learning what is taught in this module provides leaders with the structure and insights they need to accelerate global growth.

Here is what we have seen with companies on their expansion journeys

Generally, companies will have already chosen what markets to enter, either because of an executive’s decision or after hiring a consulting firm to conduct market analysis. Then, they will research a market, realize there are some things they need to change to get traction, and then implement some of the localizations. The localizations that get implemented are often sub-optimally prioritized, with certain departments getting priority and resources because of internal relationships or because they were more involved in the Localization Discovery process. Localizations are implemented in unstructured ways, on different timetables. Then, somewhere in the middle of all this, there is less traction in the market than expected and a myriad of other issues occur.

What risks exist if you aren’t mindful of this aspect of global growth?

One of the mistakes companies make that lead to global expansion failure is:

#6. Not Managing Complexity [image: a poorly managed marionette]. Company leaders focus on what needs to be localized, but they don’t consider the complexity making that change to the model will entail. Furthermore, leaders often don’t think about how a series of multiple changes, across multiple Localization Premium categories, across multiple countries – and all the complexities that come along with operating an organization amidst all these different models.

Most business leaders understand the need to localize when expanding to new markets, but beyond that high-level recognition, there is little structure below to understand or measure what should and shouldn’t change, and how to prioritize what localizations should be done, and which are not worth it.

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Then layer on determining the go-to-market for each individual market and determining the right order to expand into them, and we have the makings of a convoluted environment perfect for mistakes to be made.

Chief among the mistakes is prioritizing speed over doing things right, or insisting that the company way of doing things that worked in the initial market will work in new international markets. We often find that companies bring an ego with them when expanding to new markets - they think that success in one market will directly translate to success internationally.

 This is especially true for companies who validated their model in a large market. They don’t realize the chasm between success in one market and success at global scale. Often, we find that companies will rapidly expand to 3, 5, or 7 markets and then hit a brick wall upon realizing they localized for each of these markets independently and didn’t think about building the right foundation for global scale - this then requires the company to stall growth and go back to rebuild this foundation.

Another problem discussed further in this module, is the myopic view each member of the leadership team has and how that affects their outlook on global growth and preference for which markets to enter and what strategy to implement. You need a common language among the leadership team to ensure alignment and speak the same language when it comes to localization. The Localization Premium Analysis, step 2 of the Global Agile methodology can help, and is what we detail in this module.

Finally, besides not minding complexity and not ensuring alignment around localization, communicating what localizations are required to succeed in new markets and outlining the strategy in a cohesive manner can be very difficult, especially at a board level. What we outline in this module can help.

After you complete this module, you will be able to:

• Organize and map out all the localizations required for a new market.
• Select the right markets to enter, the correct way, not just relying on the size of the market opportunity.
• Create and get buy-in for a market entry strategy

But quickly, before we dig into each of these topics, let’s take a deeper look at complexity, returning to a topic we introduced you to in the last module, Localization Premium.

Localization Premium, the 6 categories of complexities broken into Go-To-Market (Marketing Premium, Sales Premium, Product Premium) and Operational (Infrastructure Premium, Organizational Premium, Administrative Premium) segments, matter because Every decision and change in a business has downstream effects that can lead to localization premium. To prevent this, it is essential to understand and track localization premiums from the beginning. Failure to do so can result in slowing down growth, wasting resources, and even jeopardizing the core business in the initial market.

You can think of Localization Premium as how many standard deviations away from the current model you would need to go in order to find fit in the new market. Making localizations is inevitable, but you must navigate the process while keeping the ultimate goal, Company-Market Fit, Company-Market Fit not just in 1 market but in many markets in view – this is where you need a framework to make decisions on what can change and what can’t. The Localization Premium Analysis, introduced later in this module, helps with this.

Despite some of the perils of too much Localization Premium, it’s important to note that some Localization Premium is necessary, and in fact, good

Without making some changes to your model, you won’t be able to capture any opportunities in the local market. What’s important is determining which type of localization premium is most essential to your success. This requires identifying areas of your business that cannot be altered due to their connection to the company's core values, as well as those that can accommodate additional complexity and those where changes should be minimized. By doing so, you will need to make trade-offs, such as sacrificing speed to maintain a core value or granting some autonomy to the local market in exchange for operational or go-to-market changes that create localization premium.

When considering localization premium, it’s also important to understand the interdependence of different types of premium. Therefore, it’s crucial to implement strategies and systems to minimize the premiums and their impact. It is worth investing time and effort in developing structures and processes surrounding Localization Premium. We will detail processes that can help in the next module. 

It is important that leaders understand these Localization Premiums and actively manage them to control complexity. 

There are three primary ways to accelerate your knowledge of these premiums:

1. Engage in Localization Discovery. Talk to key stakeholders in the markets you are entering to truly understand how things are different in each of these key areas, and let that lead your corresponding localization strategy

2. Bring in experts to help. From market analysis firms to BPOs, PEOs, and more, they can bring you expertise and perspectives you don’t have in-house

3. Finally, it is crucial that you have internal alignment and feedback loops. You must set up processes for communication and make these premiums part of the conversation when you build your localization strategies and when you actually implement them

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 7, Episode 2 of the Global Growth Master Class.