In international expansion uncertainty is unavoidable. You can have the best strategy and plan known to woman but things some are bound to come up to throw you off track and you need to have strategies in place for when they do.
I read this article in the HBR, and realised that these are strategies I’ve found useful over the years for coping with uncertainty in international business:
Table of Contents
? Embrace the discomfort of not knowing.
You don’t need to have all the answers before you start or even along the way – be open for learning new things & applying flexible solutions. I’m sure you’ve heard the phrase we’ll cross that bridge when we come to it and this is something that certainly holds true in International business.
Of course it can be really difficult to accept that you don’t have all of the facts before you start out on any kind of project but sometimes you really just have to try to be very humble and to embrace the opportunities that come your way.
Stay flexible – keep an open mind
Flexibility and cultural awareness are also key. I’ll talk about cultural awareness in more detail further down this post. You need to be flexible and keep an open mind in order to find the best solutions for the market which you are working in. This of course is easier said than done, because often we are tempted to apply a solution which worked well enough in another market, ignoring the fact that the situation is different here.
It’s often a kind of arrogance to assume that coming into a new market we know better than many other people who tried to be successful there before. And it can be very risky to assume that what works in your home market or in another export market will automatically bring the same level of success in the new market that you are entering into.
It’s easy to believe the fallacy of “the way we do things in country x is the non plus ultra” so you need to keep an open mind and don’t go in with preconceived ideas. If you can learn to successfully live with the uncertainty in international business then you will be for sure in a better position to grow your business in all markets.
? Distinguish clearly between “complicated” and “complex” issues.
All too often we use the words complicated vs complex quite interchangeably whereas in actual fact these are slightly different concepts that we need to manage in different ways.
Complicated issues usually have a set of components that can be separated out and dealt with in a systematic way relying on a set of rules. That means that once you figured out the solution to the problem then you can repeat it as needed. An example of this would be the technology to produce a certain characteristic in a product. You can predict once you’ve developed the technology that the results will be very similar each time that you produce something.
Complex issues on the other hand are often really hard to get a grip on as to what exactly are the moving parts. Additionally there are no hard and fast rules as to how those parts will interact with one another. Examples of this include managing teams but also often product registrations in emerging markets.
What about when a problem is both complicated & complex?
Both types of problem are frequent when working internationally, but require different approaches for their solution (often a problem is both complicated and complex? ).
That’s the case in the example I mentioned above of product registrations in emerging markets. On the surface of it there is a clear process to be followed which can be rather complicated but where it seems obvious as to what needs to be done. However, in reality the way that the officials working for the authorities may react to your application as a foreign exporter can be difficult to anticipate. This can result in complex issues related to relationships and compliance questions. So you may find yourself needing to think about how to manage both the complicated nature of the documentation required, whilst maintaining a complex network of relationships without stepping over the compliance guidelines laid down by both your company and your domestic market laws.
You need to keep an open mind in order to deal with complexity in the best possible way. It’s not something that you can solve but rather something that you have to learn to manage. Therefore it’s better to work with scenario planning and to adapt this as you go along.
? Let go of perfectionism.
Each market is slightly different, so treat it as a learning journey & “grow as you go”. Let’s face it, if you set off on a roadtrip, you don’t wait till all the traffic lights are green before you set off, do you? It would be unreasonable to expect to know everything and have the perfect plan in place before you begin with your market entry. You have to treat the project as a learning journey.
Of course that doesn’t mean you should abandon having a strategy and a plan in place altogether but you have to be careful as to where you cross the line into procrastination. Many European companies often want to forecast every piece of sales for the next 10 years before they’ve even made a delivery into a new market. This is an unrealistic expectation which can only result in disappointment.
As I’m sure your parents told you when growing up, nobody is perfect so don’t expect it in your international expansion. Additionally, you also need to think back to school and Newton‘s laws of physics: remember that it’s easier to change the direction of motion once you are already moving. So don’t wait until you have the perfect plan and the perfect situation to begin working on your project. It’s better to start with the best strategy in the moment and then to pivot later down the line as required.
? Don’t oversimplify or take risky short cuts.
Be disciplined about understanding both the complexity of the situation & your own blindspots. In the same way that you shouldn’t confuse the terms complicated and complex, you also shouldn’t oversimplify or take overly risky shortcuts.
When you oversimplify this gives a distorted impression, where the nuances of a multilayered issue can be lost. When this happens companies often rather arrogantly assume that a simple solution is the right one for a problem rather than admitting to their ignorance and potentially also a certain amount of bias. This can happen rather quickly especially if you feel that you are a market leader in your home country or that you are truly a world leading specialist in your field of operation. It’s easy to get a false sense of security breaking a problem down into simple steps, whilst often in the international arena, it’s difficult to recognise the complicated interdependenicies at first glance.
For example it is all too easy to underestimate the difficulty of achieving food registrations in emerging markets by believing that your product quality is so supremely good that you won’t have any issues. If that country has positioned their laws to make it difficult for overseas manufacturers to enter (such as is often the case for example in China) then you can easily fall foul of the regulations.
Another example would be to take the risky shortcut of invoicing in local currency in a market which has a rather volatile or only partially convertible local currency. This could land you in a lot of trouble further down the line whilst seeming like an easy short term solution to satisfy a customer.
? Seek support.
Don’t reinvent the wheel because you’re too proud to ask for help from others who’ve travelled that road before. There are plenty of people out there who can help you with your international expansion.
- People you know in other companies who have entered the same markets
- Official bodies such as the chamber of commerce or other associations
- The community on LinkedIn
- Consultants of various kinds who have experience in the relevant market (set up a call with me here)
? 10000m view.
Zoom out periodically to keep your sense of perspective, especially in new environments. It’s all too easy to get caught up in the day-to-day operational problems and to lose sight of the original strategy. This can be especially true if at the beginning of your operations for whatever reasons you’re bleeding cash and really need to make difficult decisions about necessary changes or potential pivots to the direction of your business.
Let the data and research guide your decision & never assume that just because something works in one market that it will be equally successful in any new market that you were trying to enter. The number of times companies have some kind of “idée fixe” about entering France (great golf) or Japan (rich nation) even though there’s no evidence pointing to potential for their products there drives me nuts… & of course, that’s just the start of the journey for international expansion.
So do the research find out as much as you can in advance of entering into new international markets. However don’t let this stop you from taking action because opportunities may only have a small window of time. Action will bring progress far more quickly than trying to provide the perfect plan that is just never finished and just never can be 100%.
You need to learn to ask the right questions too otherwise you will find always yourself with the wrong answers. This sounds like an oxymoron but far too often companies fail to ask the critical questions when entering into international markets.
Of course this is a critical factor of success for any form of international expansion. I’ve written about this topic many times before and whilst you can never have a full understanding of foreign cultures you can at least make yourself aware of the main pitfalls and the main questions which you are likely to face.
Doing research into this area in advance of entering into a new market will certainly pay off over time. Of course having staff who either originate from the country that you are targeting or who have lived there for many years will also help you to avoid the worst pitfalls. The last thing you want to do is to cause some kind of major social media incident, damaging your brand simply because you were unaware of the accepted cultural norms in the market which you were trying to break into.
It’s usually relatively easy to research into a culture before you make your first business trip there, although deeper understanding requires more experience. If you are open and ask questions with genuine curiosity during your trip then people will usually be happy to answer your questions about a country. Although as mentioned in my post on the Culture Map several weeks ago these kind of questions are not going to tell you how to effectively negotiate or give feedback or how to manage a team in those markets so you do need to be aware that there is more to it than just learning basic rules.
Dealing with Uncertainty in International Business
So which of these factors are the ones that you find most difficult to live with when expanding internationally? Think about which strategies you need to embrace in order to better manage the uncertainty which is bound to arise in your international business. Are you using these strategies already (perhaps unknowingly?).
As I said at the beginning of this post, uncertainty in international business is about the only thing which IS certain, so you need to be prepared to cope with that. It’s not possible to eliminate it completely so you have to do what you can to reduce it. At the same time you have to walk the fine line between “doing good research & making a great plan” and falling into analysis paralysis.
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