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Building a global business
by Tej Kohli, CEO, Grafix Softech on 15-Mar-2013
As the world gets smaller and customers and investors are no longer dictated by geography, the desire, and indeed the need, to build a business with truly global value is becoming increasingly important.
Globalisation has changed the way we think about business in many ways. And it has served to iron out some of the differences between national cultures and business practices. In the cities of the Middle East, we may find traces of the great caravanserai and the souks that characterised the great trading past, for example, but modern business is conducted very much according to international standards.
And so, in many ways, building a business with global value depends on the same planning and processes as building a local company. Whatever your plans for business, the first step is to work out what you are good at, focus on that and then identify a gap in the market and how you might best fill it.
If you take a global view, there will be more gaps available to fill. Mobile phone companies, for example, looked at the fixed line infrastructure in the developing world and jumped in, disintermediating traditional telcos in the process. Take up of mobile phones across Africa and East Asia has been phenomenal as a result.
But business success also depends on constant engagement with the latest developments in your industry. Those mobile phone companies are indulging in an arms race to get the latest consumer gadgets out to western customers; but in developing markets, where banks have never managed to develop a viable business case for establishing basic banking and transaction services to the rural poor, they are involved in a very different proposition.
As a result, in Kenya, Afghanistan, South Africa, India and countless other countries, mobile phone companies have developed essential mobile payments and transaction services to unbanked customers � and have achieved a degree of penetration that far exceeds that in any Western nation.
not every market wants or needs the same thing
The story of the mobile phone companies illustrates yet another point about the development of a global business: not every market wants or needs the same thing. Clearly, there is little market for heating systems in Abu Dhabi or air conditioning in Greenland. And if you are selling DIY tools, then you should probably focus on markets with a thriving real estate market, plenty of re-sales and a culture of home improvements.
It comes back to making sure there is a real opportunity and whether you can stimulate real demand for your offering. However, it can get more sophisticated than that. My business provides e-commerce and payments solutions and it has shown some very interesting differences in behaviour.
For example, if you want to expand your online business to European countries outside the UK, France and Germany, you may need to think of a very different business model. These three countries account for 75% of all online sales in Europe. You need to do very careful market research to decide whether there is a demand for e-commerce in your chosen destination. Is there still a strong expectation that goods will be paid for by cash, or are cards acceptable? Will you have to deliver your goods with the invoice and invest more in debt collection? Do you have facilities to accept debit, credit and prepaid cards? What are the different fees and charges? These types of details are easy to overlook, but make a difference between a successful and unsuccessful business.
Then there are the legal and structural differences to manage. For example, Brazil has a complex method for withholding tax that doesn�t fit with the standard purchasing cycle used in the US or the UK. In Europe, Germany�s works councils are much more firmly entrenched at senior level than the UK�s trades unions.
Then there are different cultural expectations that need to be managed. Some are obvious: if you are in Delhi and need to communicate with Dubai you, need to allow for time zone differences, even language differences. Some would argue that you need to allow for language differences if you�re in London and trying to talk to New York.
But if you focus only on these obvious factors, you may miss more important differences. The reason that Brits and Americans sometimes feel they are �divided by a common language� is because the words represent alternative ways of thinking and a different ways of doing things � from working lunches to organising credit.
In fact, for all the similarities in the way we do business around the world, there are important differences that remain. For this reason, choosing the right people to work with becomes even more important in a global business.
I have always believed that success is built on choosing the right people and nurturing their talents. That doesn�t change if you have global ambitions. In fact it becomes even more important. The bigger the company, the more you need to delegate and the more you need to trust the people that work with you. When you have a global perspective, you have to make sure you have people in place who understand both the local laws for conducting business and that they understand the local accepted practice.
harnessing the power and ideas of young people
Finally, I believe that harnessing the power and ideas of young people is the key to business and economic success. Business is driven by technology and younger people, who have never known a world without computers will have completely different expectations than their aging parents. When we consider that when NASA first sent a man to a moon it had less computational power available to it than an average Western student has in their laptop bag, we understand how vast the change has been and how inspiring the possibilities could be.
As fresh thinkers with new ideas, courage and confidence, young people play an important role in any business. Shutting out their voices because they lack experience is a big mistake for any company that wants to achieve longevity. Trying to force them to fit your mould damages your prospects and theirs.
But we can extend that metaphor to young economies. As we saw with mobile phones, developing countries often leap straight to the latest innovation without developing legacy systems and processes. They too have fresh ways of thinking about business problems, unencumbered by traditional thinking or the need to make the most of existing investments.
Building a global business is about personal discipline, hard work, planning, focus, innovation and flexibility. But more than anything else, it is about listening. It�s about taking on board new voices and new ideas from people who are separated from you either by years or by distance and then building a company that can take those voices out to your customers.
Tej Kohli is CEO of Grafix Softech