By 2020, 95 percent of the world’s customers will be outside of the U.S. That’s why smart executives need to figure out how to expand their businesses to reach global markets, says Mona Pearl, author of Grow Globally: Opportunities for Your Middle-Market Company Around the World (Wiley, 2011). Here Profit talks to Pearl about the multinational mindset executives need not just to survive, but to thrive in our ever-flattening business world.
Profit: Why is global growth something executives should be concerned about right now?
Pearl: Because that’s basically the only way their businesses can survive. With the internet, global competition, and so many companies being acquired by foreign companies, they’re playing in a global field no matter what they think. So they might as well figure out the rules—or figure out how to make the rules—and try to make money.
It starts with a whole tweaking of the mindset: the U.S. is a huge country, but it’s not self-sufficient anymore. CEOs and other executives in charge of operations and growth need to look at the global market, because that’s the only chance for survival. And instead of feeling panic and fear, they should look at the global market as an opportunity.
Profit: What are some of the most common mistakes companies make?
Pearl: Many U.S.-based companies focus on tactics. They say, “OK, I’m going to China or I’m going to India, and I’m going to sell,” as opposed to asking questions that help them create a strategy. Where’s the best place in the world they can sell their product or service? Is the market right? Is the price right?
I talked to the owner of a company in Chicago a year or two ago who said, “I’m going to go to Germany and see if there’s a potential for our product to go into grocery stores.” I said, “Great. What are you going to look at?” There’s a lot to consider: if they don’t have this product, does that mean they need it? Are they loyal to local products? Do they have regulations that prohibit the materials you use? You really have to understand the culture and the business environment and be aware of what you don’t know, so you can ask the right questions.
Profit: Have Enterprise 2.0 tools made it easier to go global?
Pearl: Yes, as far as learning about different products, connecting to customers, selling, and even getting feedback. They’ve also changed the whole structure of how a product can be marketed or sold.
But if executives think that they can build strong global relationships with these tools, that’s a whole different story. Social networking has created an illusion for many U.S. businesspeople that they have contacts around the world and they have relationships. You may be connected to 2,000 people in 89 countries. So what? This is just the first step. Now, you have to start building these relationships. In the English language, everybody’s our “friend.” People don’t use this word so loosely in other countries.
Profit: What are the top lessons you want your readers to learn?
Pearl: For many C-levels, it’s to realize that they need to go global, and they need to do it in a structured way. They must know what they understand now and what information they still need, and basically develop a roadmap that’s a little more sophisticated than just saying “OK, I am going to China!” They need to understand that they can’t just follow the crowd, because everything’s moving much faster now.