Globalisation : Diary of a Gloviot
Trevor O'Hara is the founder and Principal of Renarc.
Prior to founding Renarc, Trevor spent over 20 yeas living and working internationally. Most of this time was spent as a senior executive in global-facing roles such as MCI, Nortel Networks, and Schlumberger Sema. Fluent in 4 languages, he was educated in Dublin, Oxford, Paris and Berlin.
“Change Just Isn't What It Used to Be”
It is said that the only constant in international business these days is change. That word scares most of us in this era of economic volatility I know. Yet most of us have become used to the term - organizations and employees hold on to whatever last vestiges of certainty there is in the market, looking for light at the end of the economic tunnel. We are now so accustomed to change that, let’s face it – it just really isn’t what it used to be. Yet, companies embarking on international expansion, it seems, still have a lot to learn.
In the frenzied boom of the 90s, many organizations embarked on international expansion programs without the slightest hint of…
”Hmmm…. perhaps we should seriously consider what we’re doing here folks.”
Change was something that organizations could BRING to overseas markets. The motto seemed to be:
“Hey, we like this back home, so you ought to like it too”
Perish the thought that businesses embarking on international expansion needed to change. But, major organizations soon saw the writing on the wall. Swissair’s international buying spree ended in bankruptcy, Home Depot “experimented” for two years in Latin America, then pulled out in 2001, Merrill Lynch spent 4 years trying to grow a business in Japan after buying Yamachi Securities, but retreated when they found that the Japanese simply did not like US-style mutual fund investing. The highly successful British lunch chain Pret A Manger has struggled since voyaging to the USA. Its tidy and dainty boxed sandwiches — too heavy on the mayo with far too little filling, have simply not appealed to Americans as they do to the British. According to a recent study by Bain of 729 organizations whose revenues exceeded $500 million, only 1 in 6 were successful in expanding internationally during the 90s. This begs the question:
For these companies, it seems that that the definition of “change” had suddenly been re-written, and interviews with the press and media could have read like organizational obituaries:
Wall Flower Journal: So, Mr Gloviot, analysts are saying that to be competitive, you must clearly understand whether the cost structures and customer profiles for your industry really compelled you to expand overseas in the first place, or whether you may have been better off viewing global expansion simply as one growth option among many. How will this experience empower your organization to change for the future ?
Mr. Gloviot: “Uh ? Duh...Well, we have no idea what we’re doing, but in the future we shall do something completely different, that’s for sure”.
Of course, there is the odd company that blunders into overseas markets and still makes a major fortune. Take for example the US multinational manufacturer of sanitary towels in South America who witnessed booming sales, yet were startled when they discovered local farmers were using the sanitary towels as dust masks.
There aren’t many of these fortunate cases, because duly compelled to put the brakes on any company about to commit to the same blunder. Or maybe the word “blunder” is just a bit unfair.
But, take the case of the US-based company Krispy Kremes, about to enter the European market, without any form of product localization whatsoever. The glazed donuts are about to be put on sale in the company’s first store in Harrods in London in October, just when Dunkin Donuts has shut down its last shop on the island after more than a decade, tails between their legs, baffled that the Brits just don’t seem to want to eat donuts for breakfast.
Heaven forbid, the tale of Krispy Kremes simply brings up too many images of the nagging wife shouting in the air of her hen-pecked husband:
“Honey – I told you so”.
It seems then that old habits die hard. For organizations like Krispy Kremes to really succeed at cracking the market, they will have to change attitudes Brits ( and other Europeans ) have towards breakfast, or perhaps to change their own ways and think about adapting the product to the local market.
But then again, who was it that said:
“Learn from the mistakes of others – you can’t live long enough to make them all yourself”.
© Copyright Trevor O'Hara, 2005