The Golden Rule of International Expansion

Written by Jeff Dahl. Recognized as an industry leader and innovator, Jeff Dahl has over 35 years of experience working with global consumer brands and direct selling companies. He is passionate about helping direct selling companies transform and adapt to the rapidly changing business and consumer environment, as well as helping smaller companies launch and scale.

Jeff also advises Private Equity, and recently started a Fractional Leadership practice with Strategic Choice Partners.

The Golden Rule of International Expansion

I have been fortunate, actually blessed, over my career to see the world up close and personal. My career has taken me to 40+ countries across Asia-Pacific, Europe, and Latin America, 4+ million flight miles, and lots of learning the hard way! It all started in 1996 immediately after graduating from Northwestern, Kellogg School of Management. My executive sponsor at The Coca-Cola Company called and said it was time to repay the Company for that pricey MBA! Then he said we were moving to Hong Kong… I about fell out of my chair! But my wife was up for the adventure, and our three kids were too young to know any better, so off we went.

Fast forward to my years in the direct selling industry… building and leading multi-national and multi-cultural teams, opening new markets, repairing old markets, and guiding global strategy has been an absolute adrenaline blast! Whenever a young employee asks me for career advice, I always say try at least one international assignment. We live and work in a global economy, and the related learning is not taught in text books.

The First Rule of International Expansion in Direct Selling

Assuming you have done your homework, have the required funding and organizational bandwidth, and you are convinced your business model and products will do well in the targeted country, do nothing more until you hire a strong GM… even before drafting your new launch plans. Trust me, I have seen several premature launch plans shredded by a new GM with better information and market-specific experience.

So, what’s The Golden Rule? To put it simply… Hire a local and industry-proven GM! The GM role is the public face, corporate leader, and hub of all activity in the respective market. They need to be grounded in the local culture, business environment, and the local direct selling industry. I detailed in a previous article about the complexity of our industry and the difficulty explaining it to outsiders. Good luck trying to teach an outsider about our industry from the other side of the globe. Your new GM needs to hit the ground running!

Local industry knowledge and proven mastery of all the operational and cultural nuances in the respective market is critical to a smooth and successful launch, and then leading the general business forward. And it goes without saying that language fluency is critical in effectively communicating with the local team, field distributors, and local vendors, as well as managing the occasion conflict between all of them.

Expats, please don’t be offended. I have seen several expat GMs succeed over my career, but I have seen many more fail. Sure, expats can be effective in functional roles, but in my experience, the market leader needs to be local. If you want to develop a family member or someone from your corporate team, don’t first thrust them into an international GM role. Start them in a market support role, or a functional regional role that interacts with multiple markets and/or liaisons with headquarters.

Just a side note on expats: I played an expat role too, and survived. Back in the day, 1 in 3 never made it past their first year. Living conditions, schools, separation anxiety, environmental, language challenges, and political unrest unsettled many families. For example, the biggest issue I observed in Hong Kong and China was expat kids picking up asthma from the smog. We all love our kids, and this led to an early exit for several families. On a positive note, I will mention that my expat assignment was the cornerstone experience for our family. The kids returned to the US academically advanced, grounded in cultural diversity, and “worldly wise”. So, I’m in no way knocking expats; I’m simply highlighting the facts I’ve experienced in my own situations.

The only exception to The Golden Rule, in my personal experience, was in Japan where I hired an American GM already living in Japan. A missionary kid raised in Japan, he was fluent in Japanese, culturally grounded, and had a proven track record and established reputation in the local direct selling industry. It was a smooth and successful launch.

Before switching topics, I want to reinforce the importance of engaging your new GM on the front end of planning. Bring your new GM to headquarters so they can help your team bake out launch plan details and educate your team on local topics like competition, industry trends, and culture. Additionally, bringing your new GM to headquarters will help build important relationships with the corporate team (a team that they will be routinely calling, outside of your normal working hours, for support). Trust me: that relationship is helpful when your phone rings at 3am!

Think Global, Act Local

Some would agree that it’s relatively easy for your corporate team to cook up a strategy to conquer the world and build a template for new market launches. Access to international data and information is much easier today, and there are deep insights and established protocols and lessons from within our industry that your team can source. Not to mention, there are dozens of battle-hardened international veterans who have “been there, done it” and can help guide your team.

Thinking Global is important as it helps your team establish a global brand and general competitive positioning, as well as building synergies within your global business, like organizational structure, supply chain, operational hubs, and regional communications and marketing. But honestly, I have never seen a “cookie cutter” new market launch plan. You’re lucky if you can replicate 60% of the details as you open new markets.

The operational and field nuances within each country is where many trip. Again, just because it worked a certain way in Korea does not mean it is going to work the same way in Indonesia. Act Local always challenges even the best prepared plans. Governmental, regulatory, trade, competition, and local consumer dynamics are constantly changing around the globe. Another reason why hiring a local and industry proven GM is critical. Let them help you before you burn some of your launch funding.

The new market launch template I have used repeatedly in the past has 48 core topics with an average of 10 sub-tasks each, and all spread across 4 different phases… Market Assessment, Plan Development, Implementation, and Post Launch. That’s 480 tasks orchestrated across 4 phases! And again, this is just the template. Your new GM will possess the local knowledge and experience to help you modify and adapt your template.

Important note: Please don’t skip the Post Launch phase. Many corporate teams are quick to move on to the next new market launch, and don’t build the discipline and process to monitor and learn from the most recent launch. We jokingly called this “launching orphans.” You’ll learn more and get better at launching new markets by taking your time, monitor and study, and dive deep into the data. Not to mention that mentoring and developing that new market team is priceless, so you can pull on them to help launch the next market.

Culture is King

I’m not referring to your individual company culture; I’m referring to understanding and adapting to the local culture within the country of operation. Over time, global executives learn to act like a chameleon. Every country culture is different, and every time they step off that plane, they change their colors. As a young executive operating in Asia-Pacific, I was bruised and battered over the first couple years. Effectively moving between diverse markets like Thailand, Korea, Philippines, Fiji, and Indonesia was a huge cultural challenge. Every flight was spent preparing to change colors. And just because they speak English in Australia and New Zealand, please don’t think you can play American without ruffling some feathers. Use your ears first, listen and learn, and be slow to speak and act.

Truly understanding local culture is not easy, but it can be learned. Unfortunately, I have witnessed how the lack of cultural sensitivity can quickly stress local relationships. I recall one experience where I didn’t know whether I wanted to laugh or cry. I watched one US-based executive, with little international exposure, dent our relationships in three consecutive markets. The first was in Canada where he opened with a verbose colloquy on Maple Syrup. Then in Mexico, he couldn’t stop raving about Margaritas & Nachos. The proverbial “straw that broke the camel’s back” was in Colombia where he mentioned cocaine while discussing business opportunities. It took me quite a while to talk several angry local leaders off the cliff.

Yes, it was a painful event. Once again, a local and experienced GM can help you navigate the cultural rapids. And please let them review any speech from a foreign executive before they take the stage!

In closing, I really want to reinforce that the GM is your most important hire when launching new markets. The new GM will then help you recruit and build out the rest of the local team. The GM will make or break your international expansion plans. You can also leverage local and regional recruiters that have worked in the respective market, so you don’t miss any important cultural nuances and required operational experiences. Take your time, check all references, and include industry veterans to help you and your recruiter vet any candidates, as well as vet your new market launch plans.

Best of luck with your international expansion. It’s both a challenge and a rewarding adventure. Cheers!

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