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Culture Impacts Global Expansion

I had just wrapped up a Skype call and find myself glancing out of my office window. The sun was lower in the sky today and the mountain peaks sparkled, a sure sign ski season is coming. I watched as people rush off to the light rail system, closing out their workdays. Salt Lake City is my home-away-from-home, but it’s not simply the beauty and bustle that brought me here. While these have won my heart, I’m also the CEO of a Germany-based company, OTRS, and the United States is one of six international markets into which we’ve been expanding.

Global Expansion Shouldn’t Be Your Only Priority

Earlier this year, EY reported that 23 percent of mid-market leaders saw expanding into overseas markets as a top priority. Global expansion continues to be a focus of many business leaders. Why wouldn’t it be? Done well, it can mean growth – diversified markets, expanded customer bases, and increased profits.

My journey down the path to global expansion began in Latin America in 2009. With my first business, I didn’t explore global expansion and doing so with OTRS has opened up a whole world of challenges and opportunities. With each new market, there are logistical hurdles – understanding regulations, figuring out the tax structure, hiring the right people, etc.

But, the thing I’ve found most exciting – and which has a significant impact on how we do business – is culture. Not just culture in terms of “societal rules,” but also in terms of the values that people hold and how these direct their way of doing business. When it comes to global expansions, culture is key.

It’s Different For Every Company

But culture is different for every company. A few years back, Sabine (also German and a member of our board), flew to Mexico to lead a customer information session. She arrived at a chaos-ridden event. The event was to be held on an outdoor rooftop pool deck, and there were logistical problems from the get-go. The branded floats for decorating the pool sank, everyone arrived 30 minutes late (which was OK since the event team hadn’t yet collated the materials), it rained and people were herded indoors. Then, there was no room inside, so everyone regrouped outside again. From Sabine’s viewpoint, the event felt like a complete embarrassment, but not everyone who attended agreed.

You see, Sabine considers order and preparation to be part of event success: these are important values in our business culture and to her. To those in attendance, however, building relationships is a top value. To them, getting drizzled on while being shuffled from one location to another simply meant laughter and a shared experience. To those in attendance, the evening had been a frolicking success!

Culture Affects Your Bottom-Line

Culture doesn’t just play into how your company is perceived, either. Many don’ realize that it can have tangible bottom-line implications. Some of our contracts specify auto-renewal of our service management software. While this had never been an issue with German customers, we’ve found that, in other markets, contracts are not always viewed as binding. In certain cultures across the globe, we’ve had people routinely disregard the terms – and we’ve discovered, the hard way, that fighting this isn’t time or money well spent.

Despite the challenges, expansion has been 100 percent worth it. Our company is richer and more dynamic because of our global growth efforts. I think back on an early team-building activity that beautifully illustrates this. We hosted a company-wide meeting in Barcelona during which, each person was presented with a drum, and we broke into groups, designated by country to create performances. The German group played first. We were strikingly in sync: everyone played the same beat in a very structured, routine way. The Americans went next. They arranged for each person to play a unique rhythm under the direction of a conductor: this added a bit of flair to the exercise. Then, the Mexicans took the stage. Well, they just started playing. No order. No conducting. And, it turned out that they were the only group to which you listened to and felt, “This is music. This has emotion.”

The reality is, to create an outstanding performance, you need all of these elements in a workplace culture: the German structure so the audience knows what to expect, the US experimentation to tweak the process, and the Mexican enthusiasm to keep the audience (or your employees) engaged. Every culture is unique. Each has a place and purpose that enhances not just the world, but also your business operations. So, expand boldly into new markets, but also look for ways in which each culture can enhance your business’ overall maturity, direction, and success.

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