Practical Advice for Small Company CEOs Going Global
By William J. Holstein

January 17th, 2008 @ 1:58 pm

Categories: Management, Entrepreneurialism, Strategy, Economy, Corporate Governance, Best Practices

Tags: CEO, Strategy, Team Management, Management, William J. Holstein

Say you’re the CEO of a company ranging from say $30 million to $250 million a year and you’ve never being able to figure out a way to go global. That’s unfortunate but not fatal. You still have time. And in view of what’s happening to the domestic U.S. economy, now would be a great time to start figuring out how to export or possibly even invest abroad. There’s huge demand in the world for the kinds of niche products that many American manufacturers make, ranging from water filtration systems to bolts to jet engines. Based on my years of reporting on the subject, here are my tips:

–It’s a mistake to simply hire a vice president for international, probably someone who is foreign-born or who has experience internationally. Some CEOs think that’s the answer but it’s not. The v.p. for international will go on a series of trips and rack up big expenses. He’ll come back from a trip and tell you that there’s a market for your products in, say, Germany, if only you’d customize them or adapt them in some way. That’s almost always necessary but the v.p. won’t have the clout within the organization to force it to move out of its U.S.-centric view and begin adapting to international markets. Only you, as CEO, can force your organization to respond to the international challenge. A v.p. might help; but don’t put all the burden on his or her shoulders.

–You should gear yourself up personally. That means taking the wife on a vacation to a couple of possible export destinations and meeting socially with people in your industry. It might mean going to a conference or industry association meeting in a foreign capital. You need to manage the relationships with your foreign customers from the strategic level.

–A corollary is that relationships are crucial. There’s not much future in on-off shipments of widgets to a customer in China or India. What you want is an ongoing relationship of trust. That’s the CEO’s job.

–In addition to perhaps having a v.p. of international, you should gradually build a management team that includes several non-Americans or else Americans who have had experience internationally with larger companies. The whole company needs to buy in to the challenge. I’ve seen many companies where the “domestic people” want to keep doing business just as they have been doing it, without taking any of the risks of going international. The “international people” lack the institutional clout to force real change. The result is stalemate.

–Take steps over time. Don’t make sudden plunges. And be willing to invest capital over a two or three year period before you expect to see a rate of return. International markets can be lucrative but they take time. This is another reason why the CEO has to be personally involved–it’s possible that your profit rate in the short-term will be reduced as you invest in the long term. Only a CEO can make that judgment.

What have your experiences been like in global markets?