I’ve moved…

I’m closing up shop at this blog address, and have moved over to a new address in the blogosphere: http://cindyecarpenter.wordpress.com/

If you’ve been reading my posts via RSS feed, please remove the old feed and add the new one!  If you got here from a search or link, please consider checking out my new blog.  See you over there!

Selling American Services to Emerging Economies?

A recent article in the Economist, “Export or Die”, highlighted opportunities for American businesses to sell to emerging economies.  It’s a fascinating read, and much of what is says flies in the face of common thinking about globalization.

Popular opinion is that the fast-growing economies in India and China are primarily sources of low cost labor, through outsourced services or manufacturing.  The Economist article points out that they are also growing markets, especially for – surprise! high end services and manufacturing.

America’s export boom is likely to be led by firms that are already global in scale and by sectors in which America has a clear competitive advantage: sophisticated, knowledge-intensive capital goods like microprocessors, and high-end services like engineering, oil-production services and even (witness KPF) architecture.

Few companies better capture that trend than Intel, a microprocessor giant. It is one of America’s most successful companies, and 80% of its revenue comes from outside its home country.

80%!  Another company with a similar strategic profile, which I wrote about here, would be EMC, which derives about 75% of its revenue from overseas.  Yet the other examples in the article are not as predictable: an American-based architecture firm, KPF, discusses a key project in Hong Kong.   The firm has used the same internet applications that help Indian businesses to send IT services to the US, to help send their architecture services to Hong Kong.  Their Asia business is a big part of why they did not have to lay off employees last year.

So where are the opportunities?  The Economist says that “Services are playing an increasingly important part in America’s exports. Their share of the total has gradually increased, to nearly 33% last year. Within that category, the private side, which covers things like business, professional and financial services, has been growing fastest.” Is it time to start opening up new sales territories at your firm?

Higher International Sales Led to Higher Returns in 2009

I think this falls into obvious category:  In a year when the GDP growth was higher in emerging economies, companies that built markets in those countries were likely to do better.

Business Week reported on a Goldman Sachs report that showed that the 50 companies in the S&P 500-stock index with the highest revenues from international sales (a median of 68% from outside of the US, vs. a median of 25% for the total S&P 500) returned an average of 51% in 2009, vs. 26% for the S&P 500 overall.

Their mild comment: ‘The trend may well continue. Goldman strategist David Kostin favors “firms with high sales exposure to Brazil, Russian, India and China…given the significantly higher GDP growth outlook.”‘

What a difference a few years makes.  In the past, business saw the BRIC countries as being primarily a source of lower operating costs, and companies with significant sales in the BRIC countries were viewed as having a risky strategy.  What will see in another decade?

Emerging Economies = Emerging Markets

Mention India, and you will likely start to draw fire about taking away jobs from Americans and sending them offshore, how frustrating it is to deal with customer support in India, etc.  But just a slightly closer look at business news will reveal that businesses are increasingly looking at India (and China and emerging economies in general) as a new and growing market, as well as a labor source.

Two recent articles in the Boston Globe about EMC illustrate exactly this point.   One article titled “EMC sees a bright future in India” immediately attracted a string of vitriolic comments about giving away American jobs, fining American corporations for “moving” jobs to India, and dealing with customer service in India.  But what the article actually said is this (italics are mine):

EMC Corp. of Hopkinton is betting big on India as a major market for data storage hardware and software, and as a key source of first-rate engineering talent.

…“India offers tremendous opportunities in innovation and market potential,’’ said EMC chief financial officer David Goulden during an opening ceremony for the newly expanded Bangalore center.

…In addition, Duplessie said, EMC was “enhancing their Asian customer support with low-cost, English-speaking knowledge workers.’’

Another article, without mentioning India or China in the title, attracted no comments at all, yet spoke to the same direction.

…Meanwhile, Gelsinger saw major growth opportunities at EMC, especially in international markets. “EMC is not nearly as globalized as it needs to be,’’ he said. While Intel derives about 75 percent of its revenue from outside the United States, EMC gets about half its revenue from abroad. Gelsinger believes that EMC must expand its sales in fast-growing overseas markets like China and India.

EMC’s push towards growing markets in emerging economy countries is paralleled by similar strategies by leaders across many industry segments: technology, consumer products and services, pharmaceuticals, and financial services.

A narrow focus on preventing job losses through greater regulation misses the big picture, that growing jobs requires growing businesses, and the greatest opportunities in business growth at this time are in international markets, especially in emerging economy markets.  What’s different in this phase of international business is that while both markets and production are globalized, they are not necessarily in the same country.  Functions are more likely to be regionalized and networked, rather than organized into country silos.  Using EMC as an example, it has R&D centers  in a few key technology hot spots around the world, a regional customer service center for Asian markets in India, and it’s headquartered in the US.  The challenge in front of us is learning how to manage these new global business structures effectively.

Sales Messages “Lost in Translation”

Shortly after my post about how spelling errors can cause your buyers in another country to dismiss your company as “unprofessional,” comes this post at Harvard Business about sales emails that are “lost in translation.”

Nadia Nassif writes about two kinds of problems in sales emails: first, spelling and grammar errors; and second, using a generic message that is not personalized to address your potential client’s needs.  She has a great example of an email she received, and how she would re-write it to increase its effectiveness. Check it out here.

I think there is another message in this example that still needs to be teased out, about the challenges of using new social media channels in cross-cultural selling.  (The email in her example was written by someone who is in a LinkedIn group and referenced a discussion there.)  There’s lots of excitement and interest about using social networking tools such as LinkedIn, Facebook and Twitter to enhance the relationship-building process and increase overall sales effectiveness (see this discussion of Sales 2.0).  These tools tend to have a culture and style of their own and, no surprise, they vary across different countries and cultures.  Trying to follow the style that fits both the channel and the regional culture of your intended prospects requires extremely careful attention to nuance.  What makes it more tricky is that, to be effective, web 2.0 messages should be highly personalized – that’s the whole point, users are involved in relationships, not just taking in one-way pushed content.  That means you can’t count on the carefully crafted sales messaging put together by your marketing team, each message should be unique, and the risk of communication gaffes across languages increases significantly.  How can globalized businesses use these tools effectively to sell across cultures?

Why Spelling Matters in Sales

When my daughter attended a local school in Pune, India, we heard from several of her teachers that they were concerned that her “writing is poor.”  Eventually we figured out that what they really meant was that her handwriting was poor – it didn’t live up to the standards for beautiful, flowing, precise handwriting that are expected of every Indian student who seeks to pass the Indian board exams.  Since we intended to return to the US and our daughter would not be taking the Indian boards, this was not a concern for us.  But that didn’t mean her teachers weren’t influenced by her handwriting; good handwriting is a key requirement for Indian students, so it’s one sign that Indian teachers use to evaluate the quality and commitment of their students, and it was clear that their perception of her as a student was influenced by her American scribble.

Why am I bringing this up? There’s an analogy here with spelling and grammatical errors in business emails and presentations for American clients.  One element in how prospective clients form an opinion of individuals and the companies they represent is the quality of their written communications.  If English is not your first language or if, like Indians, your English usage is different than American English usage, your written communications are likely to have more spelling and grammatical errors than those of your peers who grew up in the United States.  It’s neither logical nor fair to evaluate the quality of your business offerings on the basis of your spelling, but it still influences how your American clients perceive you, even when they don’t think it should.  A recent Wall Street Journal article noted that “Spelling and grammatical errors indicate a lack of professionalism that can get in the way of your success.”

How do spelling and grammatical errors influence your American prospects?  Unfortunately, it gives them exactly the kind of message you don’t want them to get.   Like the individual in the WSJ article, you and your company may “risk being perceived by senior leaders as immature, illiterate or lacking attention to detail.”  If you are selling offshore services, you need to build confidence in your prospects that their business will be in good hands, that it will receive your highest attention, and that you will be able to communicate effectively in writing, particularly via email, the most common global communication mode.

Ask an American friend or colleague who is a business professional to review some of your written materials such as  introductory emails or presentations.  What do they see?  Do they pick up on small errors you miss?  How does it affect their overall impression?  Ask them to be honest!

The good news is that this is relatively simple to fix: Get all of your standard materials reviewed and corrected by one of your American colleagues who notices these errors (not everyone does).  If you’re in a larger company, make this part of someone’s job description, to provide QA on all marketing and sales materials prior to sending them out (most big consulting companies make it a standard practice for all presentations to go through a department dedicated to this QA).  Develop standard templates and messaging that can be pre-reviewed, and use these when developing new materials.  Turn on the spell-check in your email program, and don’t let anything go out without using it.

Good Ideas for US businesses from India?

I’ve recently noticed a few  articles on a related theme – lessons that American businesses can learn from India.  Experiences in another culture or country are often the source of innovative ideas, and tapping this idea stream is one very good reason for developing a truly globalized business model (vs. a multi-country business, where each region operates as a silo).   All too often, American businesses can, like the stereotypical American tourist, focus on what they do better, and ignore the opportunities for learning from other countries.  We tend to assume that because a developing economy has more poverty or poor infrastructure, that they are “behind” the US and there is only a one-way learning process (see some of the comments on Navi Radjour’s article, mentioned below).  Nothing could be further from the truth.  I wrote about one example of this at John Deere here.  Here are some other examples in recent articles:

In an HBS blog post, Navi Radjour wrote about this concept broadly, arguing that ‘the US must learn to receive India’s “smart power” as much as it is willing to bestow its own onto India.’ He then went on to cite two examples – SELCO in the clean energy sector, and Aravind Eye Care hospitals in the healthcare sector.  These are examples of companies that have developed an innovative product (or process, in Aravind’s case) to greatly reduce costs, which expands the market for these products dramatically.  I don’t think either company’s products are directly transferable to the US market as is, but there is an opportunity to leverage the products or ideas to offer lower cost rural electricity and eye surgery in the U.S.

In another example, Gunjan Bagla wrote about how much better the customer service is on Indian airlines (at least, Kingfisher and Jet Air), versus on American airlines.  This is true of the quality of service in many Indian businesses targeted at upper income segments, such as department stores, hotels, car services, etc.  I think this is partly because these services are really luxury services in India, while they are commodity services in the U.S., and are able to support a higher level of staffing and customer attention.   Nonetheless, if I were in the airline business, I would look at Kingfisher and Jet Air along with Singapore Airlines and Southwest Airlines as great examples to learn from, regardless of the country in which they practice.

Finally, the Wall Street Journal ran an opinion piece earlier this summer discussing the values and lifestyle of the generation of Indians who left India in the 60s and 70s as a positive example for others to follow in the current economic crisis.  The piece had the same nostalgic tone as those written about the values of those who lived through the Depression in the U.S., yet it was interesting to see a positive spin on the limited resources in India at the time.

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