Internationalizing is a paradox. When a business has grown to the point where it’s seeing the rate of domestic growth begin to slow, going international can be the best route to maintain fast growth.
But even after an international presence is established, the home market still delivers the lion’s share of revenue, so that’s what continues to capture the majority of senior management attention. International expansion, in this context, appears initially to be a distraction -- but of course it can’t be neglected, or it simply won’t happen.
The biggest digital players all had “internationalize early” as a key part of their strategies. And whatever the grand strategy may be, there are practicalities to consider. Businesses need the right people in their international teams; people who can operate with agility and autonomy, but still stick to the plan when leadership attention is elsewhere. Managing teams halfway round the world is an exercise in recruitment, trust and logistics.
Recruiting the right team
By the time a US business is ready to enter the European marketplace, it will have the core sales, marketing and management skills secured. Those skills are transferable - but are the people?
There are benefits to transferring some team members from the US to the UK or Europe. These people can build shared values with new teams in the growth market, and they’ll bring knowledge of the company’s product, process and existing strategy with them. If there’s someone in the organisation who’s used to working remotely or taking lots of shuttle flights, consider that as part of the core skill set. They’re also on the books already - despite the eventual issue of work visas, it’s often still quicker to transfer someone than to wade through a local hiring process with its recruitment lead times and candidate notice periods.
It’s not practical to ship everyone over the pond, however - and even ruling out the logistics, new hires drive the changes in approach that need to be made when adapting to a new market. Rincon Venture Partners’ John Greathouse lists several advantages of hiring teams locally, including their existing networks and chemistry (which makes growth and networking in the local market a sight easier).
Teams need to be reshaped when entering Europe. Some areas where local hires can have an impact include:
- Senior leadership - either the manager of the European business or a senior-level advisor to a manager who’s transferred from the US. The ideal candidate has built a company in Europe, or better, has previously run the European arm of a US business. These people understand the nuances and pitfalls of European business and culture, they have an existing network of relationships and leads, and they often have target hires and partners they’ve worked with before. They can be trusted to run the European business in the absence of US leadership attention.
- HR management will be heavily involved in recruiting and expansion, and it helps if they have shared cultural expectations and understandings with the people on the ground. Ideally they’ll have some blended experience and a familiarity with how business is done in the US - which helps them serve as a kind of translator. There are practical benefits too. Contracting, consultancy, statutory vacations and maternity leave all work differently in Europe and the UK, and there are penalties for not following the rules - the best way to avoid a costly misunderstanding is to hire someone who knows how things work.
- Data protection officers have a more prominent role in European businesses. American companies have previously been able to self-declare that their practices meet EU regulations, but this will no longer stand once the General Data Protection Regulation rolls out. The European climate has always been more consumer-friendly, and the new citizen-first approach to data protection reflects that. As above, so below: hire someone who knows the rules.
Autonomy, trust and reporting
European teams need to establish themselves on their own terms. If they can’t, they’ll become dependent on supervision from the US HQ, which places the burden back on senior management - exactly what the US leadership wants to avoid.
Hiring people with experience and confidence in the day-to-day running of a European business is a good start. The next step is trusting them. Empowering the European team to make the right decisions - trusting them to do what’s right for their market - means they can deploy their local knowledge to best effect.
Oracle’s Jon Williams, a panelist at our recent event at Rise New York, explains:
“One of the things you need to consider, as you’re entering into a new marketplace and helping set teams up to be successful there, is making sure you go overboard in allowing the teams in on the vision of the company, the mission of the company, what the operating principles are to support that mission, because it galvanises everybody around a common statement. “
This process starts at recruitment - onboarding senior people, especially European hires, in the US so they get a feel for how the business already does things - and continues into reporting.
Despite the difficulties of time zones and glitchy connections, it’s important to establish specific, regular reporting times. This serves both ends of the US-Europe chain - the US receives regular information on performance, productivity and predictions, while the Europeans can ask for support, services and insight when needed.
It’s vital, however, not to leave the European team feeling like they communicate from the bottom up. A successful global business has a cross-functional architecture - the European branch is not ‘run from’ or ‘managed by’ the US, but works with the US arm to form and support an organisation. It takes two pillars to hold up the bridge.
Jon identified LinkedIn -- where he had served as senior director, Global Marketing Solutions -- as a business that has done this right. When they internationalized, they held bi-weekly, all-company, all-hands meetings that brought in thousands of employees on a conference call that restates values, missions, KPIs and operating principles. This repetition of message meant everyone knew they were working together towards shared goals - and could be trusted to do so on their own.
Networking and the growth plan
In the early stages, US management need to look for two things. Firstly, well-connected European hires whose contacts and expertise can kickstart the European expansion. Secondly, networking opportunities: key for identifying hires and building cross-functional relationships between the European and US teams.
Networking is also vital for the company’s growth plan. It establishes the brand’s presence before investment is made and the infrastructure rolled out. A Silicon Valley or New York startup may be big news in America, but as often as not it’s an unknown in Europe or the UK. Consumers, partners and potential hires all like to see the business as a presence in their market, working with local media and local companies, building case studies and connections.
This groundwork means the business is a known, credible entity by the time it starts actually trying to sell things, hire people or engage in joint ventures. It’s a matter of making the business and its expectations known - and the expectations should be high. The perfect European face of a US startup is a nimble, ambitious team looking to grow and hire by drawing on local insight and expertise.
Internationalization is a must for ambitious US startups, but the first six to 12 months require some finesse. Management and shareholders want to begin to focus on international growth, but in the near-term the US business makes more money and neglecting this will sink everything.
It’s a catch-22. The way out is to build credibility through networking, hire the right people, onboard them in a way that builds trust, keep them connected with global headquarters, while giving them the autonomy they need to become an effective local team.