I came to the end of my Global Strategy class with Prof.Bill Barnett thinking, what was my key takeaway? Whilst it was only a brief course, we discussed the global expansions (i.e.beyond export) of Facebook, CEMEX, Ebay and NetApp. Why did they win/lose in each geography they entered?
A key teaching within Barnett’s sessions was to recognize the distances (technological, market, institution, culture) between the region one has come from and the one they are entering. Then, strike a balance between how locally responsive/customized the company needs to be close these distances and how much it can leverage its global capability in this new market.
Obviously, executing the above strategy is dependent on knowing what these distances or differences are and how to address them. Just because a company is successful in one geography does not mean they will succeed in another, especially by using the same strategy or product. Despite this seeming somewhat intuitive and obvious, companies forget that they must learn this. They must learn the intricacies about a region beyond what desktop research can ‘google-up’.
- Facebook in Japan – Despite Facebook’s original explosive growth being driven by privacy, it failed to learn how important privacy was in the Japanese web culture. Now, Facebook is used more by businesses for marketing and for recruitment (sound like another network you know of?). But it is changing finally.
- Ebay in China – Ebay bought a local start-up that was learning and developing a product customized to China. Ebay’s acquisition put a halt to this learning and tried to offload its ‘winning’ technology and systems. It failed. It was too early for Paypal, it didn’t anticipate the onslaught of counterfeit products (putting it in a interesting legal position) and they tried to change local buying culture rather than adapt to it. They began to catch on, but by then it was too late.
Companies must design a business that can learn. One that is built (think the structure, routines and culture that make up company’s organizational design) around executing existing plans and products will unlikely fit the task. It’s almost like a company must adopt a start-up mindset. Think about the learning processes that are encompassed within the business model canvas and lean start-up/customer development methodologies. They aren’t that indifferent