The Perils of Overlooking Ethos in Expansion [and How to Avoid Them]
There are thousands of books, articles, and excerpts on globalization, international business, and global strategies, each divulging different ways to gain market share and global brand recognition: Should you adapt your products to the marketplace differently? Take advantage of economies of scale? Or look at global growth based on cost and risk reductions given the geographical opportunities?
When considering a new global growth model, business leaders usually cover the basics. First, they look at their business model to determine how to adapt the company’s value proposition to the new geographical market participants, and then they determine what infrastructure (enterprise resource planning, outside partnerships, and organizational management – to name a few) is needed to succeed.
But one element that is often overlooked – or worse, assumed to be inherently part of the strategic process – is the ethos of the business.
The ethos of your business sets the tone for how your organization operates. This core set of values – be it trust, fairness, honesty, or even environmental awareness – is not automatically incorporated into your global strategy; you must make a conscious effort to include it.
Just as you discuss how you will create new sales opportunities, you must also consider how your company ethos could affect which strategies you adopt, what trade-offs you might make, and to what degree the ethos of the business itself may need to change.
While it is one thing to adapt your business model to gain competitive advantage or to create a “blue ocean” of opportunity, changing your company ethos to quickly gain market share in a new region is a recipe for failure in the long-term. The ethos of a business should not be changed, altered, or adapted to win new business outside of your home geographical boundaries, in my opinion.
As simple as incorporating your core operating principles into your international strategy may sound, there are countless case studies on companies that failed when going global because the leaders made trade-offs on mandates of their business ethos that they assumed came naturally, but often did not.
To make sure that you continually incorporate your business ethos into your global expansion plans, consider these steps as you go through your global development and execution process:
Align business ethos with key performance measurements.
A balanced scorecard (BSC) methodology is a good way for leaders to not only measure performance across key perspectives such as finance, customers, and internal business, but to also integrate external and internal processes. BSC helps leaders see where they have made trade-offs between future success and short-term gains, and ensures that success does not come at the expense of core ethos.
Compare defined activities to core values.
Think of this step as a checks and balances system for your plan. Once your organization defines and prioritizes key activities of the global strategy, each action needs to be compared with your business ethos, defining expectations as it relates to what will be executed. A byproduct of this exercise is that you will also see what areas the company needs to excel in to guarantee your core competencies transcend to other regions.
Create a strategy map.
Intangible assets like ethos, corporate culture, and employee skills are becoming increasingly vital in today’s world of mobile resources, social networks, and real-time information. However, measuring these assets is often difficult. By developing a strategy map, you can help your employees understand why intangible assets are key to the success of your global plan. The map also helps convert intangible assets into tangible outcomes, as it shows the cause-and-effect links to how your intangible assets can create or change the desired outcome.
Creating a successful global organization takes time, patience, commitment, and the flexibility to adapt quickly based on the information you receive on the ground as you begin to execute. By making sure that your business ethos is firmly embedded throughout your global expansion, you can better ensure that you are building a long-lasting organization that fully encompasses your tangible and intangible assets as you leave your home geographical boundaries.
How does your organization focus on long-term sustainability without compromising its ethos? Share your ideas in a comment below!