Everyone talks about “growing your company.” Why is that important, if you’re satisfied with it as-is? It’s not exactly obvious. Let’s take a look at the two big underlying reasons that growth is important, if not essential, to your company’s future.

First, it’s almost impossible to hold a business at steady state— it’s either growing or shrinking, depending on the strategies in play. If those aren’t growth strategies, a downturn is imminent. So, focusing on growth keeps everyone’s eye on the ball and the company’s culture aligned for success.

The second is more tangible. It’s about the long-term value of the company—what someone in the future can earn from the company (say, an heir or a successor employee owner) or what someone in the future will be willing to pay for the company. So, growth is a major ingredient in the valuation of the business.

Why is that? Aren’t companies generally valued on something like a multiple of free cash flow? Yes, but. The “but” is that growing companies are easier to sell—everyone wants to buy a growing company. Growing companies are easier to buy, as well. Why? Buyers are buying the future and usually paying back a lender. They love the idea of doing that out of a growing cash stream. For both those reasons, buyers pay a premium for a growing company.

So, if you have to choose between growth and status quo, choose growth. More in the next issue.

In our first two issues, we discussed the need for expatriates (expats), why they are important, and the “recipe” for maximizing ROI. In this second installment, we will discuss how the expat needs to manage, how they need to be managed and how they change over time.

In the 1980s and 1990s, expats both successful and unsuccessful were characterized by a curious mindset. They didn’t keep anything inside for long, and because nature abhors a vacuum, they constantly needed to ingest something new, replenish themselves, multiply, augment. The expat’s mind found it difficult to stop at one event or one country. Something always propelled them forward, drove them on without rest. Such people, while
useful, even agreeable, to others, were, if truth be told, frequently unhappy—lonely, in fact. Problems would arise because the expat was on his/her own. They lost touch with the best practices of their home country, both professionally and personally. This caused two major problems: first, the expat was no longer effective at driving the HQ message across and the expat no longer fit in back home.

In addition, many expats developed an over-inflated sense of their capabilities. The result was that the expat became an outcast both at home and abroad. Yes, they would always seek out others, and it may have even seemed to them that in a certain country or city they had managed to find true kindred and fellowship, having come to know and learn about people; but they woke up one day and suddenly felt that nothing actually bound them to these people, that they could leave at once. For all intents and purposes, they didn’t grow attached to anything, or put down deep roots.

Today, the expat has the same drive and impatience to get things done by taking calculated risks, regardless of country, industry, markets and position. However, the expat is a global executive and they also realize the long-term impact on the business, family, and their career. They know that having long lasting relationships and networking on a worldwide level is paramount for success today and in the future. In addition, they become experts in every facet of the enterprise—from Sales/Marketing, to Operations or R&D and Finance—not just care takers of the business. Finally, they know how to balance the local business cultural capabilities and the expectations of what the corporation requires. Regardless of industry, markets, and or countries of patriation, both expats and senior management need to take special consideration of the following, less they become caretakers of yesteryear.

How they need to manage:

• Instill mindset that compliance and accountability are essential
• Develop relationships with a local but global mentality
• Place greater importance on strategic planning than in their home country
• Maintain standards of home country
• Have a basic understanding of the history and political system of the country in which they are managing
• Put a greater emphasis on human capital development than in home country

How they need to be managed:

• Need to be empowered
• Need mutually-agreed-upon concrete targets; the statement of “Go fix the China office and good luck!” probably won’t cut it in today’s market
• Need a balance of autonomy and support from HQ
• Essential that they are educated on the country in which they will manage from a socioeconomic perspective
• Essential that a repatriation plan is in place for future critical functions

How they change over time:

• Become more culturally sensitive
• Learn skills of diplomacy
• Increase importance of compliance and accountability
• Resent consensus management
• Can appear to lose national pride from a superficial level
• Develop into a state of constant motion, both beneficial and detrimental
• Without proper contact with home country, they can develop into outcasts, both at home and in their host country
• Become more entrepreneurial

In the fourth issue, and final in the series, we will discuss the repatriation process and how to manage the global executive once they come home.

sending an expat was best for your internationally-growing company, in comparison to using locals from that region. It’s a complicated decision as to who will best represent you on a global field, and one that should not be taken lightly.

If the decision has been made to send a key manager to another country, planting someone from the U.S. “in-country” is expensive, especially if a family is being considered. On average, it costs a company approximately $600,000 to $1,000,000 per year for a family of four, depending on the package. Twenty percent of all expats return prematurely and more than 30 percent of those that stay until the end are ineffective. This is due to the fact that the manager was chosen for the assignment based on their technical skills rather than doing a proper assessment of their overall capabilities. The key to any successful expat is 70 percent attitude and 30 percent job skills.

In addition, there are three characteristic quality levels that build on each other that must be considered in vetting the right manager for the expat assignment.

The Right Stuff

• Level I – Professional Qualities

• Technical and corporate experience
• Experienced in managing others (three or more)
• Well-respected within key departments
• Clear communicators, oral and written

• Level II – Personal Global Qualities

• Multicultural mindset; affinity for working with foreigners
• Commitment to learning
• Good work/life balance
• Goes the extra mile in areas outside of the job function

• Level III – Personal Asia-Specific Qualities

• Strength and humanity
• Ability to network and build relationships
• Speed and patience
• Can serve as a well-balanced spokesperson for the company

Over the years we have seen many companies replace expats with locals. The primary reason for this move is usually cost cutting and the assumption that local management could handle the complex multi-tasking required to be successful.

Yet, in many cases, the business declined in revenue, and margin and fundamental operational issues started to wane. As a result, these companies usually decided to send the expat back to “fix the problem.” While this scenario seemed to be a trend, it is important to keep in mind there are very intelligent and capable managers in all parts of Asia.

The “Holy Grail” is finding a person that has Western company experience combined with the understanding and appreciation of Asian business culture.

In part three, we will further discuss the details of this transition from expat to global executive, and the successes and failures of each.

If I could pinpoint only one thing—the most important thing—that many business people ignore, it wouldn’t be the finances, or employee retention, or even marketing. In fact, the thing that businesses, in my opinion, is so off-the-radar for many that it wouldn’t even show up on a Top 10 list.

I’m talking about politics.

Yes, politics. Not the “what is red” or “who is left of center” discussions that seem to permeate every conversation. I’m talking about the legislation that, in its very essence, is designed to layout a framework for business in our state.

Yet most of us don’t get it. A lot of us can’t follow it. It’s nebulous, confusing and altogether frustrating.

And then there’s the time factor—”I’m trying to run a business, I don’t have time to learn what every bill holds and keep track of who is doing what!” Who has time to sit down and learn the processes and people over and over again?

Fair enough. But that doesn’t change it from being important. After all, with the Upstate serving as a major (if not THE major) business hub of the state, we can’t afford to ignore politics.

So, to help, Business Black Box teamed up with WORD 106.3 FM and Sunnie HARMON and John DEWORKEN group to provide a weekly podcast that will give you the down-and-dirty details of S.C. politics and legislation—in 10 minutes or less. We’ll tell you who is bringing what to the statehouse. We’ll tell you why it’s important. And, we’ll even do a little translation on the way.

You can find it on our site, you can subscribe to the RSS feed, or, soon, be able to get it on iTunes. Then, go to the statehouse website to find your legislator and tell them what you think.

Easy, right? Ten minutes, and all the tools are in place.

Now, no excuses.

Watch the full interviews of Upstate Trail Blazers:

People who are setting the stage for the next level of business. Developing a new software. A new product. Using business tools in a whole new way. Being a visionary thinker with the power to challenge “the way it’s always been done.” Meet six Upstate leaders doing all of the above, and taking our business culture – locally, nationally and globally – to a whole new level.

Watch the full interviews of Upstate Trail Blazers:

People who are setting the stage for the next level of business. Developing a new software. A new product. Using business tools in a whole new way. Being a visionary thinker with the power to challenge “the way it’s always been done.” Meet six Upstate leaders doing all of the above, and taking our business culture – locally, nationally and globally – to a whole new level.

This is the first of a four-part series that will discuss the transition from the Expatriate (Expat) to Global Executive. For decades, expats were characterized in one of two ways—either they were a loyal lifetime employee who didn’t quite have the talent to run a unit in the U.S., or there simply wasn’t any spot for them in the U.S. These loyal employees were still rewarded with a posting, including the perks of club, car and international school for the kids, in locations such as Hong Kong or Paris.

Usually, these offices were already established and the expat played a caretaker role, performing mostly ceremonial duties. Another major reason for sending these people was that the CEO usually wanted their best and brightest right next to them at headquarters.

Fast forward to the 21st century, and this has completely changed.

“Expats” now prefer the term “Global Executive,” and these positions are being filled by the young and ambitious looking to springboard into the C Suite by managing offices with exponential growth in places such as China, India and Russia. Rather than golf three days a week, these Global Executives are expanding the business, securing talent, formulating strategies and developing their teams into top-notch performers. Furthermore, these roles are not just as VPs or heads of business units, but support functions such as marketing, sales, logistics, IT and R&D.

However, there are still traditional expats out there, and a “clash of ideologies” has since become evident. Since expat positions are quite attractive, one common weakness that develops is the fear of losing the position by taking risks. In the end, expats who develop this weakness become an extreme liability to the company and subvert the entire reason that they’ve been sent overseas. The safe play is to go with the flow and do just enough to get by without taking the risks that can lead to major losses. Unfortunately, many of these risks are what lead to unprecedented success. A mentality of “hold the gain” infiltrates their thinking and stagnates personnel.
Global Executives take a different approach to their position. They treasure the opportunity and see it as their ticket to validating their value in the organization.

So, what are the characteristics of a Global Executive? What does it take to find one, get them on board, and ensure there is a high rate of return on both sides?

Further than that, one must ask some deeper questions. Can you manage your business without an expat, (i.e. remote control from home base and/or hire a local person for the specific country or region)? What will be the return on the investment and why can’t you “get by” with local talent? (This issue causes companies to vacillate when trying to establish a presence in Asia.)

To help you begin the exploration into your own business’ global presence, here are some key advantages and disadvantages of sending the Expat or managing with a local.

Manage This…Expat or Local
• Expat Advantages
• Corporate culture
• Western management techniques
• Western customer requirements that need support in Asia
• Internal relationships to get the job done

• Expat Disadvantages
• Lack of cultural understanding and sensitivity
• Seen as temporary, lacking credibility
• Cost relative to return
• Personal impact, no work/life balance

• Local Advantages
• Culture and language
• Local and regional networking
• Ease of getting the job done in country
• Reduced expenses

• Local Disadvantages
• Respect with key management
• Western management techniques
• Western customer awareness
• Developing strategy and long-term objectives

In the next issue, we’ll continue to explore the world of the expat, and how to find the best global representative for your growing international business.

A conversation with a taxi driver during a trip to Europe early this year caught me a bit off guard. I asked if people were suffering because of the economic crisis, and, to my surprise, the answer was ‘not really.’ At a time when we in the U.S. were reeling from a constant stream of news of ‘the worst economic crisis in a generation,’ the Dutch economy was doing just fine, thank you.
As it turns out, the recession truly is a global phenomenon, but its impact has varied around the world. Two good indicators of economic health are gross domestic product (GDP) and unemployment.

GDP is picking up in parts of Europe and Asia; China recovers
There are signs of recovery on the horizon. France, Germany, Japan and South Korea all saw slight GDP growth in the second quarter, hinting that they may be moving out of recession.
Those lagging behind include the US and the UK with slight declines, reflecting both economies’ greater exposure to the banking and real estate crises.

Contrast this with China. As if on another planet, GDP there rose 7.9 percent in the second quarter. This growth reflects the government’s investments in infrastructure, and increased access to credit. Most pundits are claiming the recovery is well underway in China.

Unemployment hits Europe, U.S. and Japan hard
Europe and the U.S. have seen significant rises in unemployment. But the increase has been particularly fast in the U.S. due to much looser employment laws and the sheer number of high profile bankruptcies.

Japan recorded the highest rate of unemployment since records began in 1953, something that may have contributed to the historical change of government there.

Although Chinese unemployment data is notoriously unreliable, they have felt the pinch of the downturn, as government officials have stated that unemployment jumped at the end of 2008.

South Korea is a notable exception, showing only a slight increase in unemployment over last year.

Case for optimism, but proceed cautiously
Lots of statistics—but what to make of all this data?

Clearly, the recession is a global phenomenon that has affected almost every economy. The impact has been felt differently in different countries. The Asian economies, and China in particular, continue to be export driven, with increasing trade within the region. Europe is showing signs of recovery in some markets, but unemployment is chronic and growth stagnant.

There are early signs of a recovery, not only in the GDP data but also business sentiment, credit loosening and fairly robust recovery of most stock markets.

For businesses considering expansion into other markets, there is a clear indication that it may be time to have a peek overseas for opportunity. While it may take several more quarters for the U.S. to emerge from its deeper recession, several European and Asian markets could be fertile ground for new products and services.

Watch the full interviews of Upstate Trail Blazers:

People who are setting the stage for the next level of business. Developing a new software. A new product. Using business tools in a whole new way. Being a visionary thinker with the power to challenge “the way it’s always been done.” Meet six Upstate leaders doing all of the above, and taking our business culture – locally, nationally and globally – to a whole new level.

Watch the full interviews of Upstate Trail Blazers:

People who are setting the stage for the next level of business. Developing a new software. A new product. Using business tools in a whole new way. Being a visionary thinker with the power to challenge “the way it’s always been done.” Meet six Upstate leaders doing all of the above, and taking our business culture – locally, nationally and globally – to a whole new level.