Excerpt from my conference to the Audiovisual Postproduction Masters at Adat Oliba CEU University.
« A global entrepreneur, with business in various countries is not an alien. Their concerns are the same as those of others. For common problems, like finding necessary finance and the search for alternative sources of finance, governments have implemented policies specific to each country. (The OECD discussed in the report “The impact of the Global Crisis on SME and Entrepreneurship Financing and Policy Responses” active policies to address these issues in each country).
And yet, it is surprising to see how people who have developed brilliant businesses in their city and country of origin, don’t have a clear strategy when they start an international business, which they do based only on perceptions. To have a minimum knowledge of the market in which you want to open, a market study, however small, and speak some English – these are the minimum conditions the sine qua non to undertake an international project. Ultimately, as is the case with pilots, before flying, or undertaking an international business, you must have a flight plan. Most surprising is that even the largest companies do not have a flight plan. You have to spend the same amount of time preparing the flight plan as executing it. Just as 50% of aviation accidents are due to lack of fuel, most failures in internationalization are due to the lack of a clear project.
After having a market study (flight plan), it is then vital to be prepared to travel. Successful Spanish companies abroad total 8%. In business there is a great contradiction in that 90% of innovations introduced by companies fail, but at the same time 90% of companies fail because they haven’t innovated. This contradiction can only be overcome with a clear flight plan. By contrast the success of German companies in Spain is over 50%, the reason being that the German is more tenacious, it is harder for him to abandon projects. Another reason is that the Spanish executive doesn’t listen, but in contrast takes the decision to give up on an international project very quickly, which is a mistake, given that this means relinquishing quickly all the time and money invested in the project.
These issues must be overcome then because if we ignore them, we fail. Perfectionism doesn’t exist, not even in Switzerland. Before bureaucratic or other difficulties, the most important is to want to overcome any obstacle.
Experience shows that internationalization cannot be a later flight, if the company has problems at local level, these need to be resolved and then tackle internationalization. A second issue to confront in internationalization is preparing the team, predisposing them to address this new challenge and any personal circumstances that this will entail for the company staff. Without the predisposition of the team and sincere support from the management the process will fail.
Not just in internationalization, but in any life project, the important thing is to look to the future and not to the past. For example approaching emerging markets before they mature allows optimal positioning for the moment when these markets expand.
When someone says that to tackle future markets is to lose money, you have to tell them there are only 3 ways to become rich in 2 days: an inheritance, winning the lottery or fraud. For all other circumstances you have to dedicate time and resources. A clear example of this is the position of those companies that opened in Eastern Europe before those countries entered the EU and what they have now gained in returns.
To internationalize you must take into account the maxim: all business is local. This means that you always have to have a structure and a team rooted in the place where they are to do business. Putting a German at the front of a business in Barcelona, or a Catalan in Poland is a mistake.
One of the biggest barriers is the cultural differences between Spanish executives and those of other nationalities. The way of dealing with relationships and customs are very different and if you don’t know how to adapt to the customs and social roles of each country, the business is doomed to failure. A German is used to arriving, holding a meeting and signing a contract all in one day. In Spain this is impossible. Either a German learns to plan his investments in Spain or fail. The differences in perception are so big that even the concept, size, number of workers that comprises an SME in Spain is different to what constitutes an SME in Germany, although the EU has tried to standardize the criteria.»