Going global the smart way

Canadian companies need to look to global markets to drive growth, or even survive, in today’s economic climate.

The impetus for companies to go global is driven by a number of trends. The country’s market is relatively small, fragmented and grows slowly. Many firms face threats from emerging markets and rebounding American competitors, all spurred on by globalization and falling trade barriers and tariffs. At the same time, it’s never been a better time to export thanks to a weaker dollar, extensive ties between new Canadians and their home countries and the world-shrinking impact of technology.

How can companies prudently go global without incurring undue risk and blowing the budget? Consider this 5C strategy framework:

1. Country acumen

Companies need to deepen their analysis of target markets beyond counting the number of potential customers or identifying competitors. Businesses need a granular understanding of customer habits, distribution channels, pricing and regulations.
2. Competitiveness

Business will never take off if it’s not able to design and deliver a competitively priced product tailored to local needs. Expect to go through multiple executions to find the winning product and an approach to marketing it.

3. Connections

In many markets success hinges on finding and working with politically connected, reliable and experienced business partners. They’re vital to establishing initial credibility, overcoming hurdles and helping secure early customer acceptance.

4. Capital

Companies need not break the bank when exporting, especially when they’ve done their homework and have the right partners. However, managers shouldn’t be too frugal either. Business risks can increase when you under-spend in critical areas like customer care, logistics and local professional services.

5. Commitment

As with other major investments, having unrealistic short-term goals can lead to disappointment. Patience and fortitude are needed, particularly in the less developed markets where things that could go wrong often do.

Learn from others

Plenty of Canadian companies have successfully gone global and offer what they learned to those considering the exporting plunge. CSR Cosmetic Solutions, a medium-size firm based in Barrie, Ontario, is one such example.

CSR is a contract manufacturer competing in the global cosmetics and personal care product industry. It was established in 1943. Almost 80 per cent of the business is exported to Costa Rica, France, Germany and the U.S. among other countries. Here are a couple of top tips that helped them.

1. Raise your game

CSR believes companies have to be competitive on a global basis over the long term, regardless of fleeting advantages like favorable exchange rates. Businesses should also deliver superior products to compete against incumbents in their home markets.

CSR also raised its game by doing the right things, right. For example, they regularly aim to improve competitiveness by stripping out unnecessary costs, training employees and prudently leveraging new, productivity-enhancing technology and equipment.

2. Pick the spots that play to your strengths

CSR is very strategic in terms of which markets they target and how they penetrate them. They only choose markets where their corporate strengths – product innovation, organizational agility and delivering tailored solutions – can deliver a winning value proposition.

Furthermore, CSR minimizes risk by deeply understanding their target market including cultural norms, regulations and customer buying behavior. Finally, CSR strives to eliminate the client’s impression they are dealing with a foreign supplier. For example, in the U.S. the company uses American consultants for business development and account management. Marketing is tailored to reflect regional needs. And CSR’s logistics strategy is designed to virtually eliminate any border issues.

Steve Blanchet, CSR’s president and chief executive officer, says he tries to make its global trade seamless for the company and its customers.

“We continually review and understand the changing market conditions and regulations in our export markets,” Blanchet says.

There is no silver bullet strategy to winning in foreign markets. Instead, success is about keeping an eye on the fundamentals: being bold, doing your homework, demonstrating agility and focusing on continuous improvement from a cost and product perspective.

Mitchell Osak is the Managing Director, Strategic Advisory Services at Grant Thornton LLP, a leading Canadian advisory, tax and assurance firm. He can be reached at Mitchell.osak@ca.gt.com and on Twitter @MitchellOsak

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Why do smart executives make bad decisions?

Why do seemingly intelligent and well-meaning executives make bad business decisions?

As consultants, it’s a question that organizations task us with answering, often through postmortem reviews of failed strategic initiatives. The idea is to develop a better understanding of how and why pivotal (and ultimately poor) choices were made in hopes of not repeating the mistakes.

We look at the analysis undertaken, the managerial deliberation and how the final decisions were made. In each case, we discovered that the root cause of the bad choice(s) was not the decision-makers themselves — i.e. stupidity on the part of management — but rather a dysfunctional process for making decisions.

Optimizing the decision-making process can go a long way to improving the level of analysis, managerial buy-in and the quality of the decision. And — perhaps most importantly — it could spare your organization from being responsible for the next Edsel or New Coke.

Worst practices

Rigid silos
Whether purposefully, a product of geography or a matter of culture, employees in many organizations are “siloed” in discrete units or departments. Rigid silos restrict the flow of ideas, hampering the collaborative process required for developing sound analysis and making informed decisions.

Executives who possess a siloed worldview — i.e. “empire builders” — can be particularly toxic. Unlike lower-level managers, these individuals have the power to inhibit the allocation of necessary resources and the development and implementation of strategy that serves the interests of the larger organization.

Excessive politics
Politicking is inevitable when any group is gathered to make an important decision. The trouble occurs when politicking gets out of control and supersedes sound logic. This sort of dysfunction breeds and emboldens bias and ago, which can hijack the process and lead to lousy decision-making.

Common examples of excessive politicking include: prioritizing departmental or career goals at the expense of corporate ones; keeping key stakeholders in the dark through the widespread use of back-channel communications; and overemphasizing consensus building or “what will fly” over what makes the most sense.

Muddled processes
Most large organizations assert the importance of strategic problem solving and retain scores of managers who possess this skill. However, many of these firms fail to create and follow the right practices for guiding and empowering these individuals to reach their full potential.

The process — if it even exists — often follows inadequate preparatory work and is too brief, under-resourced and devoid of key stakeholders. Worse, the individuals who are in the room often possess a shared analytical framework thus and lack the skills, expertise and vision required for distinguishing between a good idea and a bad one.

Best practices

There is no silver bullet for creating and sustaining an effective decision-making process. Every company and situation is unique. However, getting the organizational fundamentals right can go a long way toward mitigating and eliminating many of the aforementioned issues. Generally speaking, best practices include:

  • Developing and implementing a systematic decision-making methodology and process
  • Encouraging open and frank discussions about all options, assumptions and scenarios
  • Providing access to high-quality and actionable data
  • Using practical and coherent criteria for evaluating decisions
  • Having engaged and impartial leaders overseeing the process

For more information on our services and work please visit Quanta Consulting Inc.  Follow me on Twitter @MitchellOsak or connect through email at mosak@quantaconsulting.com

What business leaders can learn from the Seattle Seahawks

Now is probably not the most fashionable time to praise the Seattle Seahawks. Last weekend’s Super Bowl saw the team give up their lead with 2:02 left on the clock and proceed to come up just short of winning by throwing an interception in the last minute. But individual failures do not make of break a team. The long game is what matters, and the Seahawks have demonstrated two years running that they are among the most elite, dependably top-performing franchises in the league.

Below, I’ve outlined some characteristics of the Seahawks’ formula. No doubt, the team’s philosophy can seem a little hokey, but there is no denying that their transparent, competition-driven approach works. These insights should be of great interest to business leaders looking to maximize productivity at the lowest possible cost, and the lessons therein applicable to firms looking for better ways to find and manage talent, develop a supportive culture and align their organization around a central mission.

Recruiting talent

During recruitment, companies talk about their values and expectations — but often in an ad hoc or incoherent fashion. This is because many firms do not invest sufficient time and energy in identifying what kind of organization they are. As a result, new hires often discover they’ve been sold a false bill of goods. This can result in reduced engagement and performance and, worse, increased turnover.

The Seahawks recruit differently. Here’s an excerpt from the brochure they provide to prospective players. According to Coach Pete Carroll,

“We wholeheartedly believe in competition in all aspects of our program, and the only way to compete is to show it on the field. We’re dedicated to giving all of our players a look to find out who they are and what they’re all about so we can field the best team possible.”

This document details a philosophy of competition that is clear and direct. It sets an accurate tone from the original point of contact, letting every prospect and their agents know what will be expected and how they will be measured. This simple step helps to mitigate the likelihood of unpleasant surprises down the road.

Managing talent

The fact that more and more can be measured now — both in terms of productivity levels and strategic success — can put managers under a microscope. This inevitably results in an adversarial, “what have you done for me lately” management style and a general risk aversion when it comes to decision-making. Needless to say, this in turn can lead to diminished long-term competitiveness, poor morale and, again, increased turnover.

Seahawks management takes a different tack. Despite poor play for much of the final game, Coach Carroll never wavered from his season-long game plan and reliance on all players in his line-up. He stayed loyal to key players such as Russell Wilson. And, he was not shy about using new players like Chris Matthews. While Mr. Wilson was mediocre during most of the first half, he did lead the team back strong in the late 2nd quarter to the end of the game.Mr. Matthews led the Seahawks in passing reception yards in the final game, despite not catching a pass for the entire season and being a shoe salesman not too long ago.

Rewarding talent

Recruiters tend to bring certain assumptions to the table regarding what kind of person is best for a certain job. These biases often include a preference for candidates from a certain school, possessing a certain degree or having had certain work experience. These assumptions usually go unchecked because many organizations lack the performance measurement systems necessary to uncover what actually works — and what doesn’t. This can result in qualified, and often less expensive, talent being overlooked. Just as troublesome, it can result in weak performance being unwittingly rewarded in terms of hires, promotions and salaries.

The Seahawks, on the other hand, are hard-nosed and pragmatic in their approach. Everyone must compete for their positions every day, regardless of where they come from or what salary they command. Crucially, the Seahawks aren’t afraid of putting un-drafted and untested free agents on the field. These players tend to put in their best effort in exchange for the opportunity. For example, they signed Russell Wilson, who many teams passed up on because he was considered too small, for less than $1-million per year. He went on to be an all-star quarterback. This not only provides the Seahawks with more affordable talent, it motivates their big guns to avoid resting on their laurels and to continue to demonstrate why they deserve to be on the field.

For more information on our services and work please visit the Quanta Consulting Inc. web site.  Also, please follow me on Twitter: @MitchellOsak

Traditional media companies reboot

When I was growing up, watching TV was a family affair. We gathered around one cathode set at the same place at the same time to watch the same shows as everybody else. How times have changed. Nowadays adults spend more time online and on mobile devices than they spend watching TV, listening to the radio or reading the printed word.

Yet some things have stayed the same: We’re still watching TV shows. Only now we’re not necessarily watching the same shows, or watching them at the same time, or even watching them on TV. This trend, which shows no signs of abating, has significant implications for traditional TV cable and content providers, says David Purdy, Rogers Communications Inc.’s senior vice-president, content.

“We’re playing in a market now that has a solid mix of traditional cable subscribers, a growing group of ‘cord shavers’ — those who are tuning in less to traditional cable and more to online sources for TV and movies — and ‘cord nevers,’ many of which are Millennials.”

The move toward the digital consumption of television content is spurring a series of watershed developments in the industry, such as:

  • The rise of high-quality original programming exclusively available on streaming services (e.g. Netflix)
  • Increasing competition from vendors that historically haven’t offered professionally produced content (e.g. YouTube)
  • Increased crowd sourcing to determine which shows get produced, cancelled or resurrected (e.g. Amazon)

Traditional media companies and cable providers should be concerned. All of these developments reflect the fact that more consumers have relinquished cable and forgo live programming, opting instead for cheaper online services.

Rogers is transforming its business to address these shifts, says Mr. Purdy. “We recently partnered with Vice Media to bring more compelling content to the Canadian market. We also invested in and launched Shomi, a video-streaming service.”

How will these trends change advertising?

Online video is changing the way people interact with each other and relate to sponsoring brands. As a result, media companies are facing flat — and in many cases reduced — advertising spending, as ad buyers shift their dollars from well understood TV to new (and unproven) digital formats.

In some ways, however, advertising will become more valuable as TV watching becomes more, not less, social. For example, a growing number of people are having real-time conversations on Twitter about the shows they’re watching. Some viewers have even begun purchasing products they find appealing right from a show, with eBay and other sellers offering apps that enable viewers to browse and buy items related to what they’re watching.

But in other ways viewers are becoming less engaged with programming, and thus with ads, as fewer people watch the same shows (with the notable exception of live sports and a few big television productions such as Canadian Idol). This could translate into more complicated ad buys, more fragmented marketing strategies and harder times ahead for traditional broadcast media companies.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.  Follow me on Twitter @MitchellOsak