Going Global: The Rising Internationalisation of SMEs

Internationalisation gives rise to multiple challenges, of which attracting and retaining talent are among the toughest.

For small- and mid-size organisations, deciding to go international is a big step. Helped by the digital transformation, which dramatically lowers the barriers to entry into new markets, more and more SMEs are dipping their toes in international waters.

One of the most overlooked pitfalls when expanding overseas is the need to adapt your company’s culture and behaviour, and to be truly open to new ideas and approaches. It’s all about people.

Why should executives consider taking their business abroad?

Internationalisation has quickly become reality in many sectors and companies of all sizes are affected, regardless of their ownership structure. It is fair to say that even local, family-led companies are heavily affected by the internationalisation of today’s economy, as they grow to become true SMEs. Being in those international markets logically generates additional revenue, strengthens brands that achieve greater visibility and diversifies risk.

The internationalisation process is essential for company survival and growth, but is not a process to generate quick returns. These projects often require long periods of maturation: patience is key.

Aside from attracting new customers, what are the challenges when attracting and retaining international or foreign talent?

When considering entry into any new target market, whether it’s a new national market or a move abroad, it’s essential to know the target market inside out.

Business leaders who successfully transform their organisation from a national into an international player are generally characterised by their in-depth understanding of local customers, tastes and customs. They know how to tailor their products and services without losing the company’s identity and its overall brand positioning.

Only seasoned executives are able to find that balance between ensuring that local operations continue to perform well without being alienated by the company’s new direction and the excitement of global opportunities.

Having that in-depth understanding and finding that balance not only require adapting the product or service to the new target market; it’s also about ensuring that a company attracts the right local talent from the new market to further support its growth.

For SMEs that started life as family businesses, this is a challenge for which they are often ill prepared. They may find themselves in a situation where they lose momentum as they are unable to crack the code to adapt their employment offering to local needs and tastes.

Cracking this code often involves a better understanding of the culture and habits of the customer in the new market. It requires the company’s leadership to develop and fine-tune their personal skills in order to be a successful employer in this new (employment) market.

Which soft skills are required by an executive involved in internationalisation?

Above all, the company-wide adoption of a culture of internationalisation is essential. Ensuring that a company’s leaders have a high level of cultural intelligence is crucial. It should be clear that the leadership team sees the strategy of internationalisation as a key priority. Actions speak louder than words. Therefore, a company’s actions should reflect the desire of the leadership team to move into this foreign market.

Additionally, the profile of those executives who have successfully led and implemented an internationalisation process is always characterised by a high degree of flexibility and willingness to adapt to the needs of each market.

They understand that potential customers in the new target market may be unaware of their reputation back home and that they can establish a similar reputation only by building the business from the ground up, creating trust by showing that they are in it for the long haul, by investing in the future and by being willing to build long- term relationships. Any action that could be regarded as quick wins could painfully hurt their reputation, slow down the company’s international growth or even result in a withdrawal from the new market.

How important is it to have a local presence?

Companies can overcome this by working with local partners and by quickly appointing a seasoned executive who knows the local market inside out, someone who believes in the company’s strategy and can identify with its values and vision.

Attracting such a local executive should not be delayed. As soon as the viability of the internationalisation is established, an executive with an international, multicultural and multilingual profile should be sought.

However, experience of the corporate culture within the company’s homeland remains an absolute must. Inviting newcomers from other countries for a longer time period in order to immerse themselves in the organisation’s home market gives new managers the opportunity to integrate and understand core values, company culture, processes and has proven to be very effective for both parties.

Applying the best practice of hiring an executive leader early on in the internationalisation process will allow the company to smoothly transition from a national to an international organisation, while avoiding cross-cultural misunderstandings.

Key takeaways

• Transforming a national business into an international business requires a comprehensive knowledge of target local markets
• There is a critical balance to be struck between seizing new opportunities and satisfying the needs of existing markets
• Cultural intelligence is a crucial leadership quality
• Creating trust in new target markets is not a ‘quick win’ exercise