Founder, CEO and CIO of HGM Fundmanaging investments in the financial technology, health technology and communications industries.
It has always been a given in business that companies may need to go international with their activities to drive growth and expansion beyond a certain stage in their business journey. The potential benefits of a global presence are numerous: companies can increase revenue, sales, investment opportunities and diversification, reduce costs and dive into untapped talent pools.
However, an international presence does not automatically equate to a global presence. In my experience, when I’ve visited global offices in the past, employees have been more than delighted to share their lives and stories with me, be it in the form of a communal meal at their home or proudly displaying their 5-year-old’s handiwork. . But it’s up to us, as leaders, to find the time and humility to build a special bond. It goes a long way in bringing employees together, no matter where they are.
With this in mind, I have a few recommendations on how to start building a business with a truly global presence.
Pay attention to international markets.
This step is non-negotiable. For example, consider that in the second quarter of 2021, approximately 67% of Apple’s revenue came from overseas markets. Asia-Pacific, Europe, Middle East, Africa and Americas (excluding the US) together accounted for approximately 55% of Alphabet’s revenue in the first quarter of 2021. McKinsey has discovered that only 70% of US domestic demand is currently met by locally produced goods. And in the current environment, with many companies looking to mitigate supply chain challenges and potentially slower domestic demand, the percentage of US companies that believe their growth prospects are based outside the US is grown to 49%according to research by Ideas and Action.
To put it plainly, much of the value creation US companies have achieved and will drive in the near future is fueled by a complex chain of global links. This can range from meeting demand in international markets, driving research and development, and recruiting global talent to sourcing and/or manufacturing critical parts of the supply chain. If you don’t pay attention to global markets, you won’t be able to adapt and react to the ripple effects that can cause economic peaks and troughs worldwide.
Close the gap between international offices.
While having international offices can lend a stamp of honor or legitimacy to companies, having a truly global presence is a completely different ball game. The list of wildly successful US companies that… failed in international markets (either in specific regions or as a whole) is long and varied.
However, if we dig just under the skin of corporate failures, similar patterns emerge. My observations show that companies often lack understanding of the international market, target audience, cultural norms and even business and social ethics and etiquette. While it may be true that a U.S. company’s identity can open doors in certain countries and markets, companies must recognize that they are expected to live the U.S. values they adhere to. Every time I meet leaders and managers responsible for directing and overseeing key locations who have never entered a factory in that region, I am amazed.
Give back to the local value chain.
Long-term cooperation generally stems from mutual understanding and respect. In America, apart from the much-discussed widening pay gap between CEOs and line workers, I find the pay scale inequality between US and international CEOs to be shocking as well, even in cases where the company’s global performance would have eclipsed its domestic performance.
As such, I think leaders should consider whether a better use of the company’s resources would be to strengthen the local value chain that delivered these results, rather than shifting it back to parent company and US executive salaries. Reinvesting at least some of those profits into R&D or bolstering operations or brand presence in the offshore wing could also have a ripple effect to better attract local workers. I believe it is much easier for offshore teams to trust a company that actively contributes to the local scene than it is to work for an anonymous entity that mines local talent and resources and hoards the profits.
Listen back to your responsibilities.
From my perspective, despite many well-diversified supply chains and operations, American companies have not yet scratched the surface of what is possible through true international collaboration, knowledge sharing and wealth creation.
Businesses need to ensure that the profits from specific regions go back to building the business and culture there. More importantly, as a leader, you must ensure that the respect you show at home is also shown at regional offices. This means equal treatment for all employees, regardless of which office they work in. Not only will this go a long way in ensuring business ethics, but it can also be recouped a thousandfold by employees who remain loyal to the company through thick and thin. Just because you might be able to get quality work for a lower price from another country doesn’t mean you should treat those workers any differently than a US worker.
Being a superpower can open doors for American companies, but to keep them open, you need to stay competitive in international markets. A softer, humble approach with a global vision based on creating equitable wealth, sharing and empowering the local value chain with significant investment is necessary for companies to build international industrial teams. Sustainable wealth creation in overseas U.S. companies requires a long-term commitment to go beyond operations to give back to those countries, communities and charities for holistic development and growth.
Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.