When companies grow, their structures grow. They develop subsystems – new roles, divisions and functions or multiples axes of management or product lines etc.
If companies grow organically they grow due to their internal forces: through increased sales, by achieving a stronger market penetration and developing new products or services. Organic growth means gradual expansion.
When companies go international
Going international can be part of an organic growth process. There exists, however, a qualitative difference to growing the business in the home country.
Operating in a new country means operating in a so far unknown environment: there is a new market with its specific customers and customers’ needs, there are numerous different regulations (like tax, law or social security, different labour regulations) and a different political and economic system. Moreover the company is confronted with different social rules and a new culture, has perhaps to handle working over different time zones, and has to deal with different languages.
And internationalization means constantly dealing with different dimension of distance. The exponential growth in remote collaboration and hence also leadership has been the vital means to bridge geographical distances and it has at the same time added the challenge to learn to collaborate and lead “remote” beyond the mastering of the technical aspects. A leadership position that functions for the largest part remotely has to perform all leadership tasks concerning the team and its individuals based on remote contact – and those are more than virtual operational business meetings. (Leading remotely Remote” leadership in its entirety)
The more internationalized a company becomes the more noticeable these challenges become and the more they penetrate the structure, processes, procedures and policies of the company.
Operating internationally adds challenges of quite a different character compared to those known before. Going international might still be organic growth but it is in fact a leap which is raising challenges to a new level and shakes up internal structures and habits.
From organic to inorganic growth
When organic growth is not sufficient companies regularly turn towards other growth measures involving external growth factors such as mergers, acquisitions, or partnerships and strategic alliances that rapidly expand the business (“inorganic” growth).
These again bring a new quality of challenges. The need for effective strategic alignment to ensure long-term success, less control over the direction of the company, The process of merging operations, cultures as well as people. Without proper management of the internal changes and repercussions integration will be insufficient or even fail and finally the investment will not be successful.
In the eye of the storm?
To the same extent that growth is necessary and desirable for a company, it represents a continuous process of evolution and adaptation. Whether organic or inorganic, growth is always as much an internal turbulence as being exposed to a new external environment. Internationalization is rather a leap than a linear development. Growth is always more than a shallow breeze. But the force of the wind increases continuously and abruptly with the different stages of internationalisation and even more with international acquisitions, mergers and alliances.
Growth is always moving towards more complexity, going international changes the challenge of complexity from linear to exponential. Going international will likely not permit us to stay in the (supposedly quiet) “eye of the storm”. It is more like opening the window while a thunderstorm is blasting outside.
We are living in a VUCA world as it has been amply stated for years. Businesses operate in an external environment that is V= volatile; U = uncertain; C = complex and A = ambiguous. Watch out for the next article in which we argue that as internal complexity (the “C”) increases, the other aspects (“V”,”U”,”A”) necessarily follow.
We will reshuffle the terms and put the C for complexity in front. Complexity shapes and often impede processes, complexity challenges internal communications and creates dilemmas.
“Companies: machines or manufacturers of dilemmas?” is our next question.