One Small Step: Convincing Management to Invest in New Foreign Markets

 by William R. Dodson

 

15 January 2003

At a recent conference on trade with China a manufacturing vice president presented the stages through which his own company went to come to sourcing products from Chinese factories for sale and distribution in the U.S. market. He universalized these steps to all companies (at least, in America) interested in foreign direct investment in China. I’ve chosen to take his evolutionary model and apply it to all managers who don’t know a thing about a particular foreign market, but who are sensing market pressures to investigate possibilities.

 

The stages are:

 

1) Ignorance/Denial. Doesn’t know anything about business in a foreign country; doesn’t want to know anything.

2)   Acceptance/Desire. Cursory interest in the potential of the foreign market.

3)   Understanding/action. Actively researching the opportunities doing business in the foreign country provides.

4)  Expertise. The company invests increasing levels of staff and resources in the foreign country.

 

I would expand the model slightly and add a step between steps 3 and 4 that would have a representative from an established office make landfall in the new country. Such a transition is tantamount to the first step Neil Armstrong took when the Apollo lunar lander touched down on the moon back in 1969.

 

The new world is huge! It’s alien! It’s awful! It’s this step 3a that scares managers who are snug in their domestic offices.

 

So how can managers who want to see their companies invest in other countries change some very set ways amongst their colleagues and supervisors?

 

First of all, Manager X (who we will invest with supernatural powers of persuasion), must have a very deep and abiding belief that FDI is truly good for his company. Nothing convinces better than one’s own conviction. Still, that doesn’t mean Manager X should be an evangelist. Evangelism is a cultural thing: some cultures are more open than others to people papering their bodies with extracts of articles about foreign lands and strange habits, and running half-naked down corporate corridors. Nor is it advisable to constantly talk about the foreign country and how it’s good for the company. Then, colleagues will begin taking a jaundiced view of Manager X and of the target market, drawing an inextricable link between the kookiness of both.

 

Instead, Manager X must be more subtle in taking the company from stage 1 to stage 2. The key here for Manager X is to Listen (with a capital L). Manager X must learn on an individual basis what each of the key decision makers determines as “what’s in it for him or her.” How is foreign investment going to directly benefit the individuals who will be responsible for taking the risk in the new market. Is it fame? Fortune? Doing what’s right for shareholders?

 

One manager I knew understood that the President of his company was concerned about investing in China, because the President did not want to "get caught up in yet another business fad." The manager was sensitive, then, to tilt proposals for further market research into China away from the anything that smacked of blind advertising for the China Market.

 

Manager X must also create some sense of urgency in the matter. Some sense of urgency stresses the mind, brings issues onto an individual’s radar screen for consideration. It’s useful here to pass along articles or internet links to stories about how competitors are investing in a particular country, what their thinking is and, perhaps, how Manager X’s own company may lose market share in the long run.

 

The first two action items practiced with consistency over a span of half a year will raise the issue of FDI in a specific country to managerial consciousness. It’s up to Manager X then to begin synthesizing trends in the foreign market with his company’s core competencies. By consistently and respectfully passing along to decision-makers the possibilities of what the company could do in the foreign market backed up by what other companies have achieved through such investment, Manager X begins developing synapses of recognition in the minds of supervisors of what could be achieved in the foreign market.

 

It’s very seldom that managers ex

 

plore new countries on their own; however, if Manager X truly has the conviction that investment in a particular foreign market is right for his company, he should take a trip to the country on his own. On his own time, if need be. The trip is tantamount to indicating to other managers that “the water is fine for a swim! Come on in!” The trip will also be an opportunity for Manager X to make local contacts and do some initial market research to determine the best way to position her company’s products or services or capabilities.

 

Finally, at stage 3 and even 4, the company sends delegations of managers to the foreign country to “see with their own eyes” the possibilities for profit in the new land. At this point, Manager X can become a guide for the group, and may even find himself installed as the head of the foreign office.

 

Eventually, more and more staff from the office will stake their claims in the new market, and business with the foreign country will become self-perpetuating. At which point, Manager X will know it is time to discover a new world to explore … and to share with his peers.

 

William R. Dodson is Managing Director of Silk Road Advisors, L.L.C., which advises businesses on how to adapt people and products for success in international markets. He is the contributing editor on international business to the American Management Association’s (AMA) MWorld Journal of Management, and writes the weekly column “The Cultured Business”, found at www.silkrc.com and at the Global Perspectives section of the AMA’s member website. He can be reached at sradvisors@gmail.com or +1 (847)722-7817.