Creating a product then extending it into different markets is not easy. There are lots of stories about seemingly obvious gaffes, like the “Nova” brand in Spanish speaking countries meaning “no go.” Many of these stories are myths, but the difficulty of translating an app, a marketing campaign, or distribution strategy to another country is very real. In today’s world, many cultures have adopted some of the same surface habits, like jeans, coffee and a necktie, making it harder to understand how differently cultures have evolved.
Framework #1: Two tiers of culture
My first framework is a simple one – always assume there is an international layer of culture and business, and a domestic layer. A group of companies and consumers who enjoy being multi-cultural to some extent, and for various reasons adopt foreign ideas, customs and products. These reasons can be the sense of being international or, the unique features of certain foreign products – like New Yorkers at a French bistro in Manhattan – the food as usually fine, but there’s also the sense of the place as being international. Or Chinese toasting with Chivas in China.
Domestic vs. International Business
This last is something I have a little experience with, as I worked at a Chinese company in Shanghai, Starnet/Genesis, who worked with Chivas in the China market. This company was run by a consummate Chinese businessman, and was focused on the domestic layer. In sharp contrast to the glitzy Shanghai marketing events that were driven by Pernod Ricard (Chivas’s corporate owner), Genesis ran heavily domestic campaigns that targeted KTVs and 2nd & 3rd tier cities. As a Chinese speaking foreigner, I saw first hand what that style of business required – lots of late nights with KTV owners, drinks bought for various officials and important people, and so on. The domestic layer could not have been more different from the international one.
When entering a new market, it is important to understand that the domestic layer of business usually takes a little while to even see, much less operate effectively. And sometimes that domestic layer will expect or require features or practices that are difficult for the foreign company to navigate. An example of this, again from China, is Bloomberg. As a premiere source of trusted company and investment information, Bloomberg has rigorous standards for the sorts of information they will provide to customers. In contrast, their major competitor in the 2010 time frame was a company called Wind Financial. Wind was known for publishing the word on the street as well as more formal data. It turned out that many Chinese investors preferred the option to hear and considered these less-verified sources.
In contrast, business in Shanghai, New York, London, Sao Paulo or Berlin can sometimes feel international, like the global rules are understood. This in turn gives product managers and executives creating products for different markets a sense that they’ve got it – they understand local variance because they’ve done focus groups and spent time in the country. And of course, they’ve hired domestic talent, many of whom have the same western degrees and international lifestyle aspirations. This can be thought of in the same way as early adopters vs. early majority in a product lifecycle, and for many of the same reasons. International staff in a city like New York or Shanghai are almost by definition more exposed to new ideas, open to them, and comfortable with uncertainty, the same traits that define an early adopter.
And just like technology products that need to make the jump from early adopters to early majority and beyond, international products that do well with the city-based, international business community in a given country will need to make the leap to the other 90% of the country – the domestic economy.
Framework #2: Culture as a set of dimensions
Every culture is old, is a mix of influences and shows up in lots of unexpected ways, varying hugely within a country. Trying to really learn a single truly foreign culture is a life’s work, indeed most people barely know their home culture. So what can a product team do when going to another country?
One approach is to identify key dimensions of culture, and use these as a starting point. Any time one distills something so complex as culture down to abstractions like these dimensions, much is lost – but again you have to have somewhere to begin.
A number of approaches have attempted to create such a framework, the one I have had success with was created by a Dutch employee of IBM over a 40 year period, Geert Hofstede’s 6 cultural dimensions. These have grown over time, starting with four that were somewhat western in their scope. When conducting research to validate and apply these to Hong Kong, a fifth, “long term orientation” was added. Over time, a sixth, “Indulgence” was also added.
These dimensions are a little counter-intuitive, until you realize they are describing an incredible variation of cultures, practices and attitudes. The comprise:
- Power Distance: a measure of how comfortable a culture is with hierarchy. Scandinavian cultures tend to prefer flat, egalitarian power relations, for example.
- Individualism/Collectivism: Loosely knit social groupings contrasted with tight-knit groupings. We assume America is individualist while East Asian cultures are collectivist, but what about Vietnam compared to, say, Singapore?
- Masculinity/Femininity: More competitive society, vs. more modest, cooperative one.
- Uncertainty Avoidance: As the name implies, does the society require more certainty, or is uncertainty and risk acceptable?
- Long Term/Short Term Orientation: How tied to the past and resistant to change is a society, vs. open to change and pragmatic.
- Indulgence/Restraint: How free to indulge in basic and natural human drives is a society?
As you and your team consider entering a new country, understanding that the international layer of business is easier to enter, but can be misleading, is critical to deployment of resources. Better to establish a cashflow and beachhead on the basis of the size of the international opportunity, then expand into the domestic economy with insights and experience gained in the global cities.
While there, Hofstede’s dimensions will not solve every problem, but like many frameworks it will provide a starting point for hypothesis generation and testing to truly learn what works.