The opportunities, risks, and considerations inherent in transacting business around the world.

By Colin Dyer

Being—or becoming—a truly global company is a complicated and long-term undertaking. It’s a challenge, but increasingly necessary for organizations that want to compete and prosper in a business environment marked by continuing globalization. Jones Lang Lasalle (JLL), a 250-year-old company, has been an international firm for the last 50 years and we’ve been on a journey for the past 10 years to make ourselves truly global.

I myself have worked outside my native land for 40 years. I’ve run businesses internationally for 30 of them, and I’ve led global businesses for 20 years. So JLL’s rich history and my own personal experience offer an entry point for considering the opportunities and challenges of doing business globally.

What does it mean to be global?

Begin with the obvious question: What does it mean to be global? It’s easy to tell a purely locally focused company from a global company, but what is the difference between international and global companies? Planting flags in countries around the world creates international companies. Global means linking the pieces together with common standards, systems, policies, and processes.

It requires consistent branding. It demands total respect for the ability of any idea or any individual from any country to impact the organization. It means having a common culture that recognizes and willingly accommodates the different aspects of local business. But it is also recognizable across the organization as having the same, almost tangible, element that everyone feels regardless of what office they may be in. By this measure, the 2014 Walgreens-Boots merger created an international company. Accenture is a global enterprise.

Why be global?

Next let’s ask: Why be global? Why make the effort? Consider five broad motivations, not in order of importance:

Strategy: Pursuing the objective conviction that your brand, service or product has relevance and competitive advantage that is desired—and therefore will be valued—by an international audience.

In the case of JLL, real estate is professionalizing around the world, and that provides our strategic basis for being a global firm. We have seen solid international demand for our services in 80 countries, and balanced revenues at 47 percent from the Americas, 31 percent from EMEA, and 22 percent from Asia Pacific.

Growth: Gaining disciplined and consistent access to new growth, particularly in developing markets.

People: Integrating value from the diverse skills and experiences of people from around the world. Think of the power of India’s IT skills or Japan’s manufacturing prowess, broadly applied across an organization.

Customer/Client Service: Serving customers and clients who will buy, and pay premiums for, your products or services, and who are confident that they will have the same experience with your firm in Istanbul as in New York or Singapore.

Costs: Achieving powerful economies of scale on a world basis, or accessing lower cost bases for your products or services. For JLL, over the past three years we have grown our operating income margins from 8.0 percent to 9.9 percent, while our revenues have grown from $3.6 billion to $4.7 billion, indicating the benefits of global scale on our platform’s productivity.

How to succeed in global business

 To become a successful global business, companies need to focus on three general areas:

  • Completing the business path to going global;
  • Developing a global operating platform; and
  • Managing enterprise risk on a global scale.

The path to a global business

We have a simple mantra at JLL: Drive organic growth everywhere possible. Through the years, a significant part of our international growth has come from a commitment to persistent locally empowered organic development. This means adding service offerings and hiring individuals and small teams. It’s relatively safe, and it offers the best chance of maintaining a common culture across our organization compared to larger acquisitions, whose different merits we will come to later.

Organic growth starts by taking market share in mature international markets such as North America, Europe, and Australia, which is possible if your brand and products or services are strong enough. JLL’s reputation in the market often draws high-producing brokers to us without our having to hunt for them, for example.

It is more challenging to grow organically in developing countries. Your product and brand still need to be strong, but the greater challenge may be, “Can you grow people fast enough locally, or can you hire quality locally?” The challenge, too, is that today’s opportunities are more and more likely to be found in countries that are hard to deal with, and where transparency is not what you expect. In these markets, you may need to start with an expatriate and develop a stronger internal training program relative to other countries where you can more confidently rely on the general education system. But your ultimate goal is to hire nationals who both deeply understand the local market and can operate to your global standards for operations and integrity. At JLL, we are very proud of the fact that almost every one of our countries is now led by someone born there.

In mature markets, you can also grow confidently through mergers and acquisitions, as JLL has done, with 60 acquisitions of varying size over the last 10 years. You need the capital and, more particularly, the international management depth to manage a successful integration. And you need to make sure that you don’t just buy something and move on. Remember that most acquisitions fail, and that the good ones require detailed planning and a high-touch approach to managing through inevitable issues. Also, there are real limits to M&A in developing countries. It’s difficult to acquire your way into Africa, for example, because currently there is not much to acquire.

Along the path to being a global business, the inconvenient truth is that most products and services have to be carefully tailored to local needs. Some products are centralized and uniform. The Economist is one global product, but The Wall Street Journal and The New York Times publish regional editions. And J.K. Rowling’s Harry Potter books have been translated into 70 languages. P&G’s small-ticket products sell well in developing markets, but that is because P&G has tailored razors to India, where water is scarce, and washing powder to developing markets, where smaller portions are the norm.

At JLL, we sell entire office towers in the US and Europe on behalf of our clients. In China, there is a huge market in selling floors of office towers to investors, rather like condominiums. So different services require different skills, and local autonomy and service tailoring are needed to provide them. Sales and marketing strategy needs ground-up local design. Some companies are even switching product design resources to poorer countries so they can fundamentally rethink development by looking through the lens of local consumer and business-to-business markets.

Developing a global operating platform: finding the balance between top-down and bottom-up management

To operate a truly global business, management needs to find a balance between top-down centralized control and bottom-up decentralized execution, balancing the tension between a global standard and local delivery authority. A basic rule is that you get discipline, scale economies and best-practice transfer from central influence. But you get commercial agility, flexibility, innovation, and entrepreneurial behavior by granting local autonomy, so you don’t miss opportunities flying beneath your global radar.

Every company has to decide the best boundaries and protocols for its own business and markets. What works best for JLL is to be firm and flexible:

Firm: To avoid learning after the fact that we’ve just opened an office in Tunisia, or to avoid having someone in Madrid fly to Mexico City—without telling our Mexico team—to talk to the local office of a Spanish bank.

Flexible: To allow national businesses to adapt rapidly to local changes in demand patterns, or to pricing pressures and opportunities in a cyclical environment.

Aside from the global or local axis, there is also an organizational design element to work out. Are you going to give P&L supremacy to geographies, to service and product lines, or to customer segments? Will you run a two- or even three-way matrix? It’s difficult enough to work out that puzzle in a single country; it gets harder still once you cross borders and cultures. And in thinking that through, rational and objective reasons for a “right-for-the-company” approach pretty soon run into personal or group ambition, or national and cultural prejudice.

For JLL, P&L primacy is determined by geography. Within and across geographies, we have service line and client matrices. Because real estate is anchored to the ground, local market knowledge is still our critical differentiator. But as our clients globalize, we give more and more voice to cross-border structures in service lines, since our people value this where it benefits their clients and helps us sell our global platform.

On the compliance front, in our most significant countries, we have General Counsel who are responsible for legal work locally. We also have a small global compliance team to make sure that legal issues that cross business lines, such as privacy and anti-money laundering, are taken into account in each country operation.

Developing a global operating platform: mastering the hard and soft skills

 Another aspect you need to rethink to globalize your business platform is how to master the hard and soft skills that your organization needs to sustain itself and thrive.

The hard skills

 Hard areas include local fiscal systems and accounting rules. Your business staff functions need to be able to navigate the full range of national legal, language, fiscal, and accounting frameworks. Your websites and social media outlets have to be kept current in multiple languages. Your data, information, and analytics increasingly need global alignment. Branding and product nomenclature need to be uniform. Your Code of Ethics needs to be in the most important languages—ours has 20 translations—and the regulatory and compliance work you must do to run your business safely must be current in each jurisdiction.

This steps up exponentially for any business in financial services. It also impacts businesses like JLL that touch financial services, as we provide critical real estate services to many global banking organizations and advise other financial institutions on their real estate investments.

Such platform alignment is easy to talk about, but complicated to deliver. It takes time and substantial investment to build and maintain. You have to establish a long-term build plan and stick to it. And even when you think you’re done, you’re not, because these demands change constantly.

The soft skills

Harder yet is that your organization has to adopt and adapt a range of softer skills. Your people need to be skilled in cultural sensitivity. If you want to be effective outside your native culture, you need to be sensitive to other cultures. For example, communicating effectively with people whose first language isn’t English requires constant vigilance to use simple terms and avoid colloquialisms and slang. And while being good-humored helps you connect in most places, humor itself does not travel well, and can be perplexing or even rude in different cultures.

Behaviorally, you and your colleagues should also be careful not to judge other nations, cultures or methods through the lens of your own upbringing, beliefs, and prejudices. India looks like chaos, but it works. Switzerland looks too tidy to be fun, but the Swiss enjoy themselves.

It’s not just you personally. Your company culture also needs to be inclusive. You schedule conference calls so everyone can attend at a reasonable hour, not at a time that suits a US-based senior executive. And if that global conference call starts with a discussion of Sunday’s American football game, or if it coincides with the Golden Week holiday in Japan or the Mid-Autumn Festival in China, or if all references and communications are US-centric, you will not win hearts and minds. You will be perceived as a US company operating abroad, not a globally effective and inclusive organization.

Being successful globally is about being a broad church, accommodating all nations as equals so all can be successful. It means taking any good idea from anywhere as worthy of being spread across the business and treating the nationals of any country as worthy of promotion to the highest ranks. JLL’s most senior officers, a group of 400 that we call our International Directors, represent 25 nationalities in all of our significant country operations.

To be successful, your local business platform needs to look like the country you are serving, with a gender and ethnic balance that reflects that nation, so your company looks locally like the world in which your customers operate.

At the same time, you need to operate your standards of ethics to the highest level, not the lowest common denominator. If discrimination against gender or race is tolerated and not illegal in a country, that does not make it acceptable in your local office.

Developing a strong, consistent culture that your people and clients value pays valuable dividends. Without a strong culture, you cannot sustain an organization, much less grow it globally. A strong culture helps you recruit and retain the best talent, and create an atmosphere of integrity that reduces the cost of compliance and ethics violations and losses from operational negligence. And if your clients are international and hail from different nations, you will benefit from understanding and integrating their perspectives in your operations.

Managing enterprise risk globally

Any organization needs to manage the risks inherent in its business, starting at home. When you go overseas, operational risk can often be handled by retooling your home country processes: from food and factory safety standards to pollution limits and contract risk. It isn’t easy, but you can often adapt and apply your existing risk management processes.

When you are global, you encounter additional dimensions of risk. Think geopolitical: from the Arab Spring, Ukraine, Ebola, and SARS or MERS to national penchants for executive kidnapping and ransom. Think management: Your managerial depth is probably lower in countries where you have fewer employees, so you don’t have the flexibility of a deep home-country bench. Think petty corruption: It can be considered business-as-usual in some countries. Think major corruption: It does occur, and your people can be drawn into it. Think about the Foreign Corrupt Practices Act and its potential consequences. Think about legal systems where the rule of law may be less reliable than in your home country. You need to evolve your systems and processes to avoid, limit or manage these risks.

Overlaying cultural challenges

To best manage risk, you need to address at least three types of cultural challenges:

  • National norms in some places may be well outside acceptable boundaries for your organization, so you need to fight ingrained behavior;
  • Techniques like using a hotline to report bad behavior work decently in some cultures, but not at all in many others. The vast majority of calls to the JLL global hotline are from the US, India and, increasingly, China; we rarely get a call from Europe; and
  • Getting people in your organization to surface problems is hard in places where it would mean a loss of face. This is not a Western concept, but approximates to losing the esteem of those around you.

Rules for managing risk

A few rules can help manage risk:

  • Set clear expectations on areas that bring risk into your business, such as doing acquisitions or entering new businesses. Make your policies simple, clear, and global. Translate them into multiple languages;
  • Communicate constantly, and set the tone at the top, from your Board of Directors and CEO. Reinforce the message through local leadership in each market or country;
  • Make your people comfortable that there will be no negative response for raising an ethics or safety concern in good faith. We find that individual reporting of concerns remains by far the best way for management to find out about them; and
  • Finally, reward good behavior, fire miscreants, and do both quickly and publicly.

We have measures that say JLL has become better at this even as we have gone global. We’ve made the World’s Most Ethical Companies® list for eight years in a row. We’ve seen our professional indemnity insurance premiums drop 75 percent as a percentage of revenue. Still, global risk management is about constant and ongoing reinforcement, and anticipating where the next landmine is buried. You can’t afford to be complacent.

The most effective resource for risk management is ultimately your people. Wherever you operate, pick your leaders carefully. My measure is to ask, “Can I sleep at night with Manager A running country B?” Good leaders attract, train, motivate, and retain other good people. Together they will keep you out of trouble.

Summing up

We started with the rationale, the business opportunity, and the path to becoming global. Then we went to the hard-skill areas of systems and processes. We finished with risk and business sustainability, which are largely about softer cultural skills.

With resources, effort, systems, and rules, you can sort out the hard skills. The more challenging area surrounds the softer skills centered on people, values, culture, behavior, and tone. Companies that get those areas working coherently on a world scale are wired to be successful global enterprises.

Author Bio:

Colin Dyer is President and Chief Executive Officer of JLL, a Fortune 500 global real estate services and investment management firm. The firm has 230 offices and operates in more than 80 countries. Since joining JLL in 2004, the firm’s revenues have more than quadrupled through organic growth and more than 60 strategic acquisitions. Mr. Dyer was previously the CEO of each of the WorldWide Retail Exchange and Courtaulds Textiles. He holds an MBA from INSEAD in Fontainebleau, France, and a BSc in Mechanical Engineering from Imperial College in London.

 

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This article was featured in the Q3 2015 issue of Ethisphere Magazine. To subscribe and learn more about Ethisphere Magazine click here.