Strategic Planning for Successful International Expansion

Strategic Planning for Successful International

Expansion

Lessons learnt from Asian failed experiences

By Walter AdamsonFounder & PrincipalDigital Investor

Melbourne, Australia

October, 2005

[email protected]

©2005 Walter Adamson

Strategic planning

The Challenge

Many small companies in the mobile and content space have struggled to expand:

Their overseas acquisitions fail to deliver Expansion proves more difficult Money and management effort is wasted

Typically many Japanese and Australia companies have these problems, often because of unsophisticated management approaches.


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The Top Six Sins

The most common faults, with the greatest opportunity for success when corrected are:

1. Unclear Strategic Intent

2. Underestimated risk

3. Lack of linkage between strategy and actions

4. Poor balance between “tight” and “loose”

5. Poor project reviews of Key Result Areas

6. Poor alignment between strategy and structure


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Business Characteristics

Characteristic Global Exporter Multinational Multi-local Global

Products & Services Homogeneous Homogeneous- some

customisedCustomised – some

homogeneous

Flexible architecture allowing for mass

customisation

Value Chain Activities

Highly concentrated in one country

Distributed but highly controlled by home

country

Highly duplicated in each country

Highly networked and distributed around

the globe

Basis of Competition

Economies of scale in production

Sharing innovations outbound from HQ Local responsiveness

EOS of production and knowledge, and low cost/customer

driven

Organization Home country nationals

HQ controls national companies

Strong national organisations, HQ

plays primarily financial role

Decisions made at centres of

competence

Customers All customers get the same treatment

Local customers supported by national

sales, global customers with

difficulty

Local customer focus, global

customers only with great difficulty

Supports global and local customers


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Global Assessment

Attributes Never --Scale-- Always Description

Thinking Global ● Managers thinking of the world as one environment

Commitment to global vision ● All employees aware of global

vision and acting

Building global initiatives ● Multidisciplinary teams active in global programs

Appealing to customers worldwide ● Customised offers and cultural fit

Building globally scalable resources

Deliberately sharing knowledge and synergies

Managing the connections Managers managing in local cultures sensitively

Developing global leaders and teams

Global values, compensation tied to behaviours

Leveraging IT to build global capacity Effective common systems

Capture global benefits Investment returns support local/global balance


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A lack of clarity in the Strategic Intent:

leads to poor strategic decisions,

and most importantly leads to

the wrong allocation of resources,

wrong allocation of management attention.

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The ABCD Planning process:

A is the AS IS – today B is the STRATEGIC INTENT C are CONTRAINTS and CRITERIA, D is the DESIGN of Pilots (prototypes of the new business model – used to test the feasibility of the Plan).

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A clear Strategic Intent:

Drives the Mission and its Objectives, Strategies and Actions

Which in turn require judgments about what is Loose and what is Tight, and the Tight are reported through the Scorecard.

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2. Underestimated Risk

An overestimation of the current competencies, born of success in the home market, leads to an underestimation of the

risk and effort needed to cross the chasm to the new Strategic Intent.

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2. Underestimated Risk

Steps A and B are the hardest parts:

A – Must confront the genuine status and capabilities and strengths and weaknesses today – this is often threatening B – Must develop the Strategic Intent, which requires clarity of vision and purpose, and is challenging and requires effort

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3. Lack of Linkage

A lack of linkage between Strategies and Actions leads to uncertain results.

That is, the strategic plan often does not tell a story – it doesn’t speak to the

Mission and the Strategic Intent.

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3. Lack of Linkage

The relationship and transition from Vision, Mission, Objectives, Strategies and Actions needs to be clear and explicit. Vision is the “light on the hill” Mission is what you stand for in relation to your stakeholders Objectives are where you are heading Strategies are what you’ll do to get there Actions are how you’ll deliver

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4. Poor Balance

Commonly, there is a poor balance, or no explicit balance, between loose and tight – between autonomy and mission-critical tight –resulting in: management anarchy in the culture and execution

and a lack of alignment with the corporate centre.

When this happens it is very hard to deliver the corporate value proposition.

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4. Poor Balance

Once the decision about balance is made then the key to effective management is the scorecard:

If it is not on the scorecard then it is not “tight”, since the scorecard is the tool for visibility into all the selected tight variables.

Financial Operational

PeopleKey Result

Areas

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5. Poor Project Reviews

Key Projects, that is those projects related to Key Result Areas, are not reviewed and

reported upon in a regular and effective way, by key stakeholders and independent

observers.

This is a common failing.

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Projects in Key Result Areas are a “tight”:

They must be reviewed and reported on Regularly Independently – including Project Director Quarterly or better Summary statistic on Balanced Scorecard

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Many companies, especially those expanding overseas, have floundered when key global projects have surprised the Board:

Regular reviews are about risk management Ensure ongoing alignment with the business Ensure project does not have “a life of its own” Ensure that good money is not following bad.

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6. Poor Alignment

The Structure and Culture of the organisation are not aligned with and continuously reviewed

against the Strategy and Execution plan –

resulting in excessive friction and waste in execution - and ultimately an inability to deliver

against the Strategy without extra and excessive attention and resources.

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6. Poor Alignment

Exceptional performance comes from:

Peak human performance Peak business performance, and

Relates to clarity, consistency and commitment

Better aligned organisations perform better

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6. Poor Alignment

Once Strategy is right, and the Execution can be conceived, there must be alignment of Structure and Culture.

Overall, alignment deals with the relationships among the people, processes, strategy, and customers of an organization relative to that organization's purpose, or what can be thought of as the "the main thing” for that organisation.

The most effective tuning and alignment of Structure and Culture enables the most effective Execution of Strategy.

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The Route to Success

1. Get the Intent clear – and understand how big an effort and how risky it is to get there.

2. Build the Execution plan – and a clear link from Strategy to Actions.

3. Judge the Balance – and if it is not on the Scorecard then it is not “tight”.

4. Watch the Key Projects – since they will determine your success.

5. Align the Structure and Culture – with the Strategy and Execution.


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Contact

Walter Adamson

Principal – Digital Investor Pty Ltd

Melbourne, Australia

+61 403 345 632

[email protected]

Skype: walter

Walter Adamson is VP Asia-Pacific of the i-mode Content Forum, at www.imodestrategy.com

Strategic Planning for Successful International Expansion

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