Having been fortunate enough to have the experience of operating in executive roles for a variety of large publicly traded to small private companies; I realized that there are very few manuals or books pertaining to “the essential 20%” of the global skills required to be successful. Operating globally for a start-up organization or an established company looking to expand into new markets is challenging. There is a lack of concise information about the key skills, guiding principles and just plain “Street Smarts” needed to succeed in the global business market.
I use the term “Street Smart” to describe an individual who can quickly assess an environment or situation, determine the key metrics that increase the probability for success, and then have the personal characteristics to succeed and win. In other words, being “Street Smart” means that you can think fast on your feet, make quick decisions on limited data, have a magnetic personality that attracts others, and have the tenacity and creativity required to close the deal. In this book I share my personal experiences as a way of introducing you to the “Street Smart” principles that you can apply today in the global marketplace.
From Chaper 2: Legal - "When in Rome, You Can't Do as the Romans Do"
But What if Something Goes Wrong?
Goods and services are sold every day across national borders.These transactions are subject to a myriad of laws, regulations, restrictions and special arrangements—details of which you are most likely not familiar. Your current global business operations may be progressing without any major threats or improprieties from foreign corporations so far—in fact, your global business may be thriving. But what if something goes wrong? In the United States we are well conditioned to hire an attorney at the first hint of legal woes or evidence that someone is ripping us off. But what if you were wronged in a foreign country, what would you do then? Could you sue them? Can you get an injunction? Should you call the U.S. embassy? Should you call a local investigative reporter to run a story? Should you inform the industry media to the malfeasance?
A country’s legal system is worthless to your business operations if you have no confidence that there is effective enforcement of laws, contracts, and judgments. Even when enforcement is available, if the courts are known to be slow, your business opportunities could be long gone. You also need to take account of the level of corruption that could be present in your target country. Corruption could range from flat bribes to subtler “processing or facilitation” fees that are asked of you by a government or private vendor.
Where is UPS when you need them?
We shipped three large boxes of computer equipment to Spain three weeks ahead of an upcoming tradeshow. Our shipment made it to the docks withno problem. But when we inquired about getting the equipment shipped to our local office building for assembly and testing we were told that the “local delivery” could take as long as 15 — 20 days to deliver the boxes to our destination less than 15 miles away.The dock processing company told us that there is a “special processing fee” that we could pay in order to “guarantee and expedite” the delivery of our shipment. Instead of taking the quoted 15 - 20 days, it could now be “magically” delivered in hours for an additional 700 euros.
Practices like these may have to be factored into your expansion and cost of doing business calculations prior to your target market selection. All markets have some form of hidden costs associated to them whether they are obvious illegal bribes and corruption to more mundane import taxes, special government licensing fees, express handling fees, etc.
When formulating your global expansion strategy, it is imperative that you obtain more than just good, but outstanding legal advice.My guidance when otaining corporate counsel for global business is to look for the following characteristics:...
From Chapter 3: Language and Communications -"Being Understood Even When They Do Not Understand"
Please Speak Slowly
One of the first questions you may ponder as you venture out into the global market place is how are you going to communicate. Numerous questions come to mind. Will the whole meeting be conducted in English? Do I need to bring a translator? Should I be paranoid if they talk in their native tongue for the entire meeting? Are they offended that I don’t speak their language? Should I get my slides translated? Is it rude for me to ask them to slow down?
I have found the answer to all of the questions above to generally be “No”. The global business language is English, but you will have to be patient and make accommodations when necessary. English is the current lingua franca of international business, science, economics, technology, aviation, and the internet. Even so, it is still beneficial for the global business executives to expand their knowledge of foreign languages.
Make an Attempt
On my first trip to Paris, I recall being excited at the opportunity to finally speak a little French since I had studied the language in junior high school. In an attempt to navigate my way via the Paris subways to my meeting, I asked directions of a friendly looking gentleman on the street. I chimed in my best Parisian accent, “Où est le métro, si vous plait?”
With elegance, the gentleman replied “Brother, it is down the street on your left.”
The lesson I took away from this experience is that if you make an honest attempt to speak the basics of the language like “please”, “thank you”, “nice to meet you”, etc. your foreign counterpart will appreciate your efforts and be very accommodating.
Not understanding the language when most of the meeting is spoken in a language other than English can be used to your advantage. Japanese executives are known for having their subordinates do all the communications and translations while they sit back and listen. Even though they speak English, they understand the value of having extra time to think and formulate a calculated response...
From Chapter 4: Negotiations - "No Referees, No Rule Book -- No Fair"
Avoid the Zero-Sum Game
In many foreign cultures, your foreign counterparts will view negotiations as a zero-sum game, i.e. it is impossible for both sides to win. They may feel it is okay to employ harsh negotiation tactics, aggressive behaviors, and in some instances dirty tricks. The list of what Americans and even I feel as “unfair” is long, but we need to understand that our feelings are immaterial to the negotiation process. Some of the perceived “unfair” tactics I have witnessed are direct lies,misrepresenting the value of items or standards, secretly accessing our computers that were suppose to be in a “secure room”, booby trapped contract templates, threats of taking our IP or corporate property, threats of physical altercation, strange people following us between meetings, bugging of our “private meeting room” in the counterpart’s office building, and hidden audio taping of the meeting to name a few.
In some cultures, they may believe that if you are stupid enough to accept a one-sided term, then they should take advantage of you. How you respond to an “unfair” negotiating counterpart is critical. Your goal is to stand your ground and steer the negotiation towards a logical method to reach a mutual consensus.
They May Not Blink (part 1)
When negotiating a partnership agreement with a Russian distributor, I caught them at worst a lie and at best a huge miscommunication. We were negotiating a maintenance and support contract and we had mutually agreed to stay as near as possible to industry standard percentages. My Russian counterpart was adamant that his company had never paid a partner more than 5%. He claimed that he had negotiated every one of his company’s deals in the previous seven years. I was adamant that this percentage was the lowest that I had ever seen or heard in my career. We tabled the discussion for the next meeting as we had other issues to discuss. After the meeting, I talked to one of my colleagues who had negotiated with this same individual two years prior and I discovered that he had signed a deal for 11%.
At the next meeting armed with this information, I confronted my negotiating counterpart. His reaction was no reaction. He did not blush, smile, look away, turn red, stutter or any of the typical reactions most Americans would anticipate when we catch someone red handed.
Reactions like these are typically American reactions. In many cultures they may not respond like you expect. My recommendation is to leave your American view of reactions at home early in the negotiation. But certainly you should not give in or capitulate to what you perceive as a harsh or unfair negotiation tactic.
For my Russian negotiating counterpart, his goal was to get as low of a maintenance and support percentage as possible. He had no intentions of finding a “win-win” solution. When you are dealing with zero-sum negotiators, a good course of action is to first challenge their standard by either finding a different one or weakening the impact of their standard. You can weaken the impact of the zero-sum negotiators’ assertions by shifting the burden of proof to their side. I have found that there are two types of questions that are useful in situations like this. The first type of question is those that are used to get your counterpart to justify their logic. Questions like, “Why do you say that?” or “You must have a good reason for your position. Please help me understand it?”
The second types of questions are those that frame the tradeoff and its result, if both sides agree to the logic.Questions like, “I think I understand your point and therefore will be forced to provide you with less of “x”, can you agree with this?” or “We can lower the price, but which options would you like to eliminate?”
They May Not Blink (part 2)
I responded to my Russian counterpart’s 5% proposal by stating, “I think I understand your point that you must maintain your corporate goal of 5%; therefore, we will only be able to provide you with 9 a.m. – 5 p.m. local support based on U.S. work hours. For 5% provides little value to my company, thus we are in no position to provide 24 hour support”. This got my counterpart’s attention as I knew he needed 24 hour support. His company was planning to sell the software primarily in Russia and its neighboring countries. After some weak counterproposals, he changed his position and we settled on 9%.
From Chapter 5: Protecting Intellectual Property - "The Crown Jewels"
...A dynamic of software development is that it is continuous. It is an ongoing activity for developers to be coding new features and bug fixes. Like discussed in chapter 3 in the “Uncovering the Other Attributes” section, a core value of a technology company is the development of its product roadmap and its resultant innovation. Innovation is a major asset that the technology company is selling. Stagnation and lack of new compelling features becomes the kiss of death for a technology company. Successful technology companies are constantly assessing the market needs and demands, brainstorming new features and functions, and releasing beta versions of its product for perspective customers to test and provide feedback. For our company in a new product category, our value would be based on how fast we could build new product features. Our goal was to release three major software releases a year, such that customers would view these new features as compelling and opt to upgrade. The pace of these releases, coupled with innovative product features, was essential for our company to grow and acquire customers.
This became a key element of our IP strategy. Our goal was to innovate faster than Huawei could reverse engineer our code. We would use time as our ally. If Huawei believed that reverse engineering our code would take longer than the time it would take us to produce new software releases, then their reverse engineering efforts would not be of much value. For example, if they received version 2.0 of our software and it took them six months to reverse engineer it, as long as we were coming out with version 3.0 two to three months earlier, then there was little value in Huawei reversing the code. It is analogous to someone printing last week’s news, a week late. It has less value, because readers more interested in reading the most current information. As long as we were innovating new features that the customers wanted, there would be no reason for them to purchase a solution that had functionality that was less than our latest release. This is how we used technology and operations to defend our IP. We would create, build, and innovate faster than Huawei could reverse engineer. As long as this time equation was in our favor, we would have some level of IP protection. This is not a perfect science, but it is the risk we had to take if we were going to get China Unicom’s business while being forced to work with Huawei as technology partner.
The Huawei story above highlights one of the biggest challenges when interacting with a foreign partner particularly for technology based products. The challenge is managing how much information you should disclose to your partner or customer. Certainly in the conversation with Peter and his team, the Huawei engineers were not engaging in any nefarious activities. If we were going to be dumb enough to go to their facility and share enough information about our software such that they could figure out our trade secrets, we needed to be blamed, not Huawei.
From Chapter 6: Outsourcing - "Freinds or Foes?"
...In my career I may not experience another trend like outsourcing that can impact the competitive landscape in such a short time span. Nearly all businesses whether they are large or small, high tech or low tech, are aware of “someone out there” who is looking to encroach on their business. Identifying who they are and what they are doing will vary from industry to industry. But for my industry and maybe yours, you can start with China and India and perhaps search no further.
For my industry, selling telecommunications solutionsto wireless operators, China and India are major beachheads that can be penetrated in order to grow sales volume to a significant scale. Both China and India are appealing for two simple reasons: population and growth. China’s population is 1.3 billion and India’s is 1.1 billion. In comparison, Great Britain’s is 60 million and the United States is 300 million. Yet, China and India are still considered emerging markets as overall mobile penetration is around 36% for China and 19% for India. Even at this low level of penetration there are still more mobile phones in China than there are people in the United States. China and India are individually adding 7 -8 million new mobile phone subscribers per month which by comparison is more than the total single populations of countries like Finland, Denmark,or Portugal.
...If you were contemplating a college area of study in the nineteen eighties, most students and parents would have believed that a career in computer programming would be stable and robust for a lifetime. If you had told them that at the beginning of the millennium, the value of these jobs would diminish to a price point that was near the fast food industry, they would have thought you were out of touch with reality.
Outsourced in Downtown Boston
In 2007 my colleagues and I were having a meeting with IT executives from a large U.S. based mobile operator in downtown Boston. Their offices were adjacent to the floor that contained the corporate IT support team. This team was responsible for troubleshooting and fixing PC hardware and software issues for the mobile operator’s employees. There was nothing atypical about the building or the office space, except for the nationalitiesthat occupied the numerous cubicles on the floor as none of them were U.S. citizens. There were at least one hundred workers and they were all foreign nationals mostly from India and China. This was staggering to see as virtually the entire IT organization had been outsourced in downtown Boston.
From Chapter 7: Culture - "It's Not a War, It's a Way of Life"
Recently while checking into a hotel in Zagreb, Croatia, the front desk clerk asked me, “Sir, are you apart of the Fifty-Cent contingent?” Yes, even rap music has penetrated Eastern Europe. Evidently this market is lucrative enough for rap artists to travel, perform, and share its version of American culture. Everywhere you look while traveling you can see and hear vignettes of our culture, whether it is pop music on the radio, hip-hop fashion worn by teenagers, bootlegged copies of the latest Hollywood movie, best selling books and magazines, or McDonalds and Starbucks on virtually every corner.
As you start your journey into a new global market, you will be behind in the race of cultural understanding. That being said, you can use this knowledge gap for your benefit.If you make an attempt to learn, your foreign counterpart will come to appreciate your efforts. It does not take a tremendous amount of effort to read and study the basics about the market you are preparing to enter. The more you relay your knowledge of their country, the more you will be respected. Steven Covey said it best “Seek first to understand, then you shall be understood”.
You Will Never Know More About Them, Than They Will Know About You
From my travels around the world, the most commonly found English speaking television broadcasts I have viewed in hotel rooms are Cable News Network (CNN), BBC (British Broadcasting Channel), and Music Television (MTV). The intensity and pervasiveness of American culture around the world cannot be overstated enough. The world is bombarded with daily insights into our culture, news,and entertainment. At first glance, CNN and the BBC are very understandable as news is global, but MTV is a stretch for me to comprehend as to its global significance. On a recent trip to Paris, at an after trade show corporate party, I was amazed at just how much my foreign friends knew virtually every song and the words to many of the greatest American Pop and R&B hits from the eighties and nineties. It may be a sign of my age, profession, or just my un-cool personality, but I have underestimated the significance and relevance of music and movies to the world psyche. One could argue that America’s most prolific and influential export industry is our culture. Because of the explosion of American culture across foreign borders and multiple broadcast mediums, the worldknows more about you and your culture than you probably imagine.
The world’s recognition and some may argue obsession with our culture is only a piece of the puzzle.The world also has a profound understanding of our politics, history, and religion well beyond what the typical American would realize...