With U.S. consumer Internet growth slowing, the "global expansion" refrain is being sung by major Internet companies. The concept of global expansion is not new to these companies. Most have had offices and staff in these regions for years, but unlike their early success in the United States, initiatives outside the U.S. have largely performed below expectations.
It seems as if brands, ample cash flow and good intentions are not enough to justify success. With U.S. growth slowing, however, the importance of success abroad is growing.
Cultural differences are as vast as the geographic distance between the United States and Europe and Asia, the two most targeted regions. The U.S. culture, for example, values constant, unchanging standards, while Eastern traditions reflect a belief that changing circumstances can justify changes in behavior. For Americans, signed contracts are used to set and enforce behavior between parties. In Asia, a contract is not fixed, but a guideline. When circumstances change, new behavior may be merited and the partner is expected to be flexible.
Country by country
Capturing market share and, importantly, revenues in Europe and Asia is a complex and delicate process, even for local companies. In fact, there are no Pan-European or Pan-Asian Internet leaders. Winning in those regions requires a country-by-country struggle, with strategies that reflect the particular characteristics of each specific country. While that's obvious enough, American companies have struggled.
Although most set up local offices in targeted countries, in many instances the offices have been led by U.S. managers or others who lacked the relationships and deep understanding of the local culture. Strategies for international markets were modeled after strategies that had worked in the United States. With nonlocal--albeit well-intentioned--managers, it was even easier to misunderstand the local market.
As the author Anaïs Nin said, "We don't see things as they are...We see things as we are."
American views on verbal and nonverbal communication, the importance of business cards and an emphasis on performance or profitability over corporate relationships, for example, are not shared universally. Cultural mistakes can be costly.
Some companies have hired good local managers but have not given them enough freedom to develop the business based on what would work in that market. This is a fine line for a company to walk.
A corporate identity for a multinational company requires consistency in how brands are projected and business is developed, yet local effectiveness requires adapting to the specific cultural requirements of different societies. Negotiation styles, decision-making processes, adherence to policies, for example, often differ dramatically by country.
Think global, act local, is a concise way to sum up a strategy that in practice is difficult to implement. Deep knowledge of the local market is essential, but the harder next step is to allow the local offices enough flexibility to adapt marketing, positioning and business development in accordance to the particulars of a specific culture.
It may take longer than expected to see results, but in the end, it is the culturally aware American who is able to walk through doors not open to his less-sensitive counterpart.