Read the full script of Module 4, Episode 3 of the Global Growth Master Class below. Want to get certified on global expansion? Simply click here to access the complete course today.

One of the primary questions leaders consider when evaluating whether to go after global growth opportunities is: How do I determine the amount of resources to dedicate to global growth, and when? 

For companies to be successful in their global growth efforts, they must allocate adequate resources. This includes funding for staffing and marketing campaigns, as well as support from the executive team, HQ functional resources, or strategic partnerships. A high level of commitment from leadership is critical to the success of these initiatives and can be demonstrated through the resources dedicated to these initiatives.

The other important aspect to be cognizant of is that these resources shouldn’t be spent all at once, in some large scale market launch initiative. Resources dedicated to global expansion must be sustained over time, being available 2 or 3 years after launch, not just in the first 12 months. 

One strategy we have seen Global Class Companies implement is to use metrics and milestones to unlock additional resources

For example, once a local team is hired, or once an important channel distribution partnership is set, than additional resources become available to a local team.

In fact, many international growth failures can be attributed to a lack of focus and inadequate resources. Sending executives from headquarters or hiring a few new employees with the expectation of quick results does not deliver a significant impact on your business. 

Companies must be prepared to invest time and resources into their global growth initiatives, even if it means incurring losses for a couple of years before seeing a return on investment.

Interestingly enough, we have advised many fast-growing companies that expect immediate results and ROI, despite the fact that even the business in their initial market is still not profitable… One would think that executives and founders would have understanding and empathy toward international teams, but it’s often not the case. 

Now, we have been told on many occasions that it can be hard to predict the amount of resources required for market entry. To help with this challenge, we have developed the Total Cost of Entry (TCE) formula which we will go through in more detail in a later module. While helpful, however, leadership should understand that these estimates should be viewed as more of an art than a science and the actual cost may be significantly higher as a lot of unknown factors will come your way.

Kathryn Hymes, former Head of International Product Expansion at Slack, warns against relying too heavily on data and numbers when making decisions about international growth

Determining whether it is strategically the right thing to do is more important than calculating the potential impact of an investment.

She also warns against “launching and leaving” - Global expansion is not just about launching in a country and hoping for the best. It takes long-term commitment. As Kathryn Hymes explains, companies have a natural temptation to leave once they launch, letting their focus wane. 

Before finding a sustainable growth model, they begin looking to new markets for additional

growth opportunities. While this appetite is healthy for any company with global aspirations, it is important that HQ continues to keep a close watch on the budding local presence to ensure they reach local company-market fit. 

Building for sustainability and scalability has to be part of the strategy and resource allocation must provide a sustained investment in a new region; otherwise, you are setting yourself up for failure.

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In addition to resource commitment, setting clear performance metrics is crucial for success. These metrics should reflect the goals and focus of the local team and measure the right things. Resources should be tied to milestones, rather than just providing the local team with whatever they request.

Chang Wen Lai, CEO of Ninja Van, compares HQ's role in global growth initiatives to that of a mountain climber's guide. HQ should point the local team in the right direction (to the right mountain), but allow them to choose their own path. HQ should provide enough funding for the journey (just like with real mountain climbing), but not so much that the team loses focus and strays from the main objective.

What these examples boil down to are 3 distinct warnings

1. Don't rely heavily on data and numbers, set more qualitative, customer discovery related metrics

2. Don't launch and leave, resources need to be sustained over time

3. Give local teams some flexibility to choose their paths and what elements to dedicate resources to

Tableau, a Seattle-based data visualization platform, saw first-hand what happens if your localization efforts are rushed and adequate resources aren’t committed to key areas. The company experienced a rocky start in Germany. Immediately after translated website content was released, German customers began to tear apart the language, sending the company corrections and in correspondence saying things like "You gotta be kidding me… you think I am buying your product when you can’t even translate/communicate our language?" 

To ensure success in global growth initiatives, it's crucial to align performance metrics and how success will be measured. This is a collective effort between HQ and the local market team, where both parties have a say in what is being measured. Early on, during market entry, metrics may not be solely focused on revenue and profitability. 

Rather, metrics such as finding product-market fit, building key partnerships, and establishing government relationships may be more relevant in setting the foundation for future growth. Even hiring the right people can be an important milestone in unlocking resources. As the market matures, more traditional profitability metrics will become the focus. 

A great example of resource and milestone alignment comes from the ridesharing platform, Uber.  The two main metrics the Launch Teams were measured by were whether the right local team was hired and whether a rider could get a ride from the city center within 5 minutes of requesting a ride. As you can see, metrics were defined differently depending on the expansion stage. Later, the metrics changed to customer growth and revenue as their local presence in the market matured. 

To align HQ and the local market team on resources, you should consider the following keys to success…

1. Commit to growth in each market for the long-term and allow time to explore the market and gain traction, two to three years or more. It always takes longer than you think.

2. Conduct adequate localization discovery and market research to understand the extent of localization required and thereby the amount of resources likely needed when entering a new market

3. Effectively estimate the required resources for success. This applies to both HQ (for developing structures to support scale and growth, discussed in a later module) and in-market.

4. Calculate the total cost of entry and tie it to future ROI. Build in a buffer and always remember to frame the cost as an investment, defining estimated ROI.

5. Ensure executive visibility through check-ins/status/updates to show progress and ensure that resources continue to be allocated to global growth efforts

6. Set realistic and simple metrics. Identify no more than three core metrics, defined jointly by HQ and the local team. When both sides are involved, they are more engaged and committed.

7. Stay agile and iterate as you learn more about the market and business in the local office matures. Metrics are more qualitative to start, aligned with company-market fit, then shift to profitability in later stages. As facts on the ground change, company metrics should follow suit.

8. Customize targets and metrics for each market to meet unique market opportunities and complexities.

From a practical perspective, these commitments help companies find product-market fit during market entry and help build momentum to achieve company-market fit during the market growth phase and scale in market maturity.

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 4 of the Global Growth Master Class.