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For a company to be global, it must leave behind its U.S. biases

by Stephen Hawley Martin
for Virginia Business
July 30, 2007

Perhaps your company is a small to mid-size business caught in the crunch brought about by the deflation in the value of manufactured goods created by China and other low-cost labor countries. You may be thinking of moving some manufacturing to China with the old saying in mind, "If you can't lick 'em, join 'em."

On the other hand, you may see a move into China as the first step toward the globalization of your business. Anyone who has traveled abroad realizes the world is now a relatively small place and commercial opportunities are exploding. In contrast, how much growth opportunity is there nowadays in the United States? After all, to grow in most domestic markets means a company will have to take away market share from another business. Internationally, the story is different. Consider the lure of 1.3 billion Chinese, perhaps a quarter of who are beginning to acquire goods routinely found in almost every American home.

To win internationally, a company must set aside its U.S. market biases, and learn that the U.S. way is not always the right or best way to do business. That makes it essential to become open to new ideas and different needs if your company is going to prosper in the global marketplace.

One example is Imation Corp., a digital media storage company. When it was spun off from 3M in 1996, almost 50 percent of its business was outside the United States. Now, international sales account for 65 percent. This shouldn't be surprising when about 95 percent of the world's population lives outside the U.S. and much more than 50 percent of business is done offshore. Business has much more room to grow outside our borders than it does inside.

William T. Monahan, Imation's CEO during that period of dramatic offshore growth, wrote a book about Imation called "Billion Dollar Turnaround." He maintains that a company may sell worldwide and even manufacture overseas, but that does not make it a global enterprise. Being truly global means addressing all opportunities equally, based on value and return, not "U.S. first and then we'll get to the rest." If opportunities are better in Asia or Latin America, a truly global company will put its priorities and assets there, and sacrifice elsewhere - even in its home country.

A global company needs a global focus. Opportunities, investments and assets need to be prioritized based on their potential financial returns, not the country they are in. Executives overseeing business opportunities outside the U.S. must take part in all key decisions at headquarters to assure non-U.S. opportunities are fully taken into account.

Home office executives in a global company need to visit international customers personally and often. How else can they acquire a full understanding of local needs and opportunities? Executives must understand the regional businesses, listen and learn so they can make the right decisions, and allocate resources correctly. They must know the customers, their needs, their cultural differences, and learn through firsthand experience.

Take China, for example. Monahan says that the first time he visited China was in the 80s.

"You had to have a lot of optimism and vision to see a positive future in China back then," he says. "Our 3M director in China had his office in a hotel, and you had to climb over rubble to reach his door. But so much has changed in recent years.

"Shanghai is now one of the most modern, efficient and beautiful cities in the world. It is a center of worldwide business and is fast taking its place next to the very top cities in the West. In 2008 the Olympics will be held in Beijing, and I expect change there will be incredible. They will gear up to make a huge impression, globally. The Olympics represent an enormous opportunity for China to build its reputation and leadership, and the Chinese will take advantage of it."

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Stephen Hawley Martin is a former principal of The Martin Agency in Richmond and the author of more than half a dozen books including his newest, Lean Enterprise Leader: How to Get Things Done Without Doing It All Yourself. He is editor and publisher of The Oaklea Press, a book publishing business dedicated primarily to helping business executives increase productivity.