In a conversation between Sabit Tapan, Partner at Pedersen & Partners, and Emin Birsel, Senior Executive and Board Member with extensive international experience, key insights were shared regarding the importance of people-related aspects in international expansion and how organizations can enhance their chances of success through strategic approaches:
Strategic Role of the Company Board
Emin: Let's begin by examining the role of the company board, particularly its composition and responsibilities.
Sabit: Indeed, the board plays a vital role. What specific role should it play in international expansion, and how can it contribute to the success of such endeavours?
Emin: Obviously, company boards are crucial and play a pivotal role in the decision-making and oversight of a company's international expansion efforts. The composition and responsibilities of the board can vary depending on company size, industry, and specific expansion goals, contributing greatly to its success. A diverse board in terms of skills, backgrounds, and perspectives can provide valuable insights and expertise for international expansion. It can be beneficial to have board members with experience in international business operations.
Hence, a board often serves as a source of expertise and advice for the company's management team and the CEO. They can provide insights, contacts, and guidance based on their collective experience. This can include industry contacts, government connections, business partners, and connections in the target and international markets.
And, finally, the board should be regularly updated about international expansion and should periodically evaluate the effectiveness of the international strategy. The organization and the fit of the organization to those objectives require necessary adjustments as you go along.
So, it's very important to note again that the composition and the responsibilities of the board concerning the international expansion strategy of the company.
Organizational Adaptation and Flexibility
Sabit: Shifting to organizational aspects, how should companies handle mindset changes and structural adjustments during international expansion?
Emin: Adapting the organizational structure to international demands presents challenges and growth opportunities. Establishing systems for knowledge sharing, effective communication, and adherence to company values across diverse locations is crucial. Remaining flexible, responsive, and regularly evaluating and adjusting organizational strategies are key to success. The organization can also be significantly impacted, and with the right decisions, it can create a hugely positive momentum for success in the market.
The company's technological infrastructure should help the organization to make that transition along the journey. For the organization, ensuring effective communication becomes critical between the international offices, subsidiaries, and the central office.
In my experience over the years, I've seen that so many of the problems are related to communication and making sure that the organization across different geographies understands practically the same thing from what has been said and the vision of the company. It is also a critical task for the organization that all employees, regardless of location, understand and adhere to the company policies and values. That is an important binder for the company.
Fostering a company culture that embraces diversity and inclusion helps that process very much. It is crucial to remain flexible and responsive to the unique challenges that may arise during the expansion process. Regular evaluation and adjustment to the organizational strategies will also be crucial for success. Those decisions can certainly be made along with the new talent and new organizations that have joined the now-expanded organization. Of course, I think the next area would be to talk a little bit about talent, which will make sure that success is achieved.
Talent Development and Acquisition Strategies
Sabit: How can companies create and utilize these opportunities to develop talent and hire new talent during an international expansion journey?
Emin: Retaining top talent is crucial while identifying and developing local leaders is equally important. Companies should invest in recruitment, retention, talent development and cross-cultural training programs. Recognizing the potential tension areas within the organization and ensuring a supportive and inclusive work environment is key. Mergers, acquisitions, or international expansions can create anxiety within the organization. However, it is the lifeblood of the company to make sure that the right talent, and critical employees, stay with the company, and they see a future within the organization. So, this is the critical way for organizations to survive and prosper in the medium and long term. Retaining top talent in competitive markets is critical. But also identifying and attracting skilled local talent can be a challenge, yet a hugely rewarding experience. If the company is new in a market, that can be a higher challenge.
Sabit: Do you have solutions to this issue?
Emin: Transitioning from expatriates to local talent requires readiness assessment, preparation, and transition management. Companies must assess if there's sufficient talent with the required competencies internally to fill positions and plan for growth opportunities. It's a phased approach that requires careful consideration. The model that you described is very commonly used, and there are very positive sides to it. But I want to address several issues there. Usually, the model is to expatriate some employees, usually leaders, to the new organization. And this can be not only for top management but also for some critical functions such as finance and marketing. This brings numerous benefits.
Utilizing External Expertise
Sabit: Finally, the role of experts and consultants in international expansion, particularly in addressing people and organizational issues. How can they support companies in this complex journey? I served one-third of my career internationally and two-thirds helping companies to go international. I've seen many times shareholders, boards, and executives seek help and guidance when it comes to going international.
Emin: External support, experts, and consultants playing vital roles in supporting businesses on the international expansion journey. External support in the form of cultural training, leadership programs, conflict resolution, employee engagement surveys, and performance management system design are invaluable. Experts help bridge gaps, offering insights and strategies to navigate the intricate landscape of international expansion. I want to give some examples that are relevant to our conversation today.
These discussions provide valuable insights into the multifaceted aspects of international expansion, from the go-no-go route to market to the people and organizational issues. I think that by leveraging the expertise of the company internally, of its board, and external experts and consultants, companies can navigate this complex international business landscape. There are a lot of success stories out there with companies who have done it well.
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