Firms launching new ventures overseas are often shocked by foreign business practices. Emerging nations like India and Africa are hotbeds of innovation, growth, and change — and along with this change comes varying degrees of uncertainty, corruption, and inefficiency. It’s a trade off many firms are willing to stomach: Opportunity, in return for some degree of chaos. The potential, long term benefits of a new market are clear. But all too often mature businesses from the Western world pull back, reeling from culture shock.
James’ Story: Culture Shock Head On
James, the CEO of a U.S.-based company, established the goal of launching operations in India. Considerable research and effort went into making this decision, and once made, the company embraced the goal across the organization. A target date of 18 to 24 months was set.
Early on, James began establishing personal relationships throughout India and invested considerable time overseas. On one such stay he decided it was time to get a permanent Indian cell number. With his dual-chip cell phone, he could have both a U.S. phone number and an Indian phone number at the same time.
Getting an Indian phone number wasn’t as easy as swiping a credit card, like in the U.S., but overall it wasn’t too painful. James had his dual-number phone and had a new set of business cards printed, featuring both U.S. and Indian numbers. Everything was splendid, until a few months passed and the Indian phone number was unceremoniously disconnected. It soon became clear that no matter what James did, his Indian phone number was permanently gone. The Airtel office where he signed up provided little or no explanation, and complaints went unanswered. Over the course of a month or two, James’ efforts to re-establish a phone number led nowhere. The funds his firm had deposited into the Airtel account where inexplicably gone, apparently never to be refunded. On the one occasion James did get in touch with a customer representative, the explanations given where unintelligible to James’ Western business sense.
It was a turning point for James. It was by no means the single most important event in his dealings with India, but it illustrated a problem. “My concerns about being able to operate a business, an efficient and responsible business, started to get out of hand,” James confided in me at one point. He added, “I had seen such disregard for customer care, such disorganization and chaos in Airtel, it opened my eyes. I started looking around, and started to see it everywhere.”
Soon thereafter, James’ conviction that India was a good market for the business began to falter. Before long, the firm started to look into other markets, and ultimately decided that Europe offered a much less risky opportunity. The company refocused, and is now operating in Europe, but James is glad to his experience in India. “India almost scared us off International development, but it was a good experience. We learned a lot about the hazards of trying to establish a market presence in an immature country, and a lot about what we should and shouldn’t be looking to do overseas,” says James, adding that “I’m glad we took our time, otherwise we could have made some really regrettable choices.”
What Went Wrong
James’ story is by no means unique. In fact, more often than not the culture shock of transitioning into a foreign business environment is so dramatic, the initial reaction is “what the heck are we doing here?” But James’ approach was a well thought out strategy: He took the time to investigate the market, slowly built relationships, and assessed whether India was in fact the right business environment for his firm. So, what went wrong?
From James’ perspective, nothing went wrong. The research paid off tremendously, and his firm avoided launching a business venture in an environment that was not compatible with his goals.
Many Western business people make the incorrect assumption that it’s “business as usual” overseas. The expectation that business operates the same way in other countries is flat out wrong. It’s “business as usual,” but only in the context of very different business practices. From James’ point of view, the Indian business environment was immature. He discovered problems that his firm was not prepared to tackle, including a very different workforce, different business laws and practices, and a widespread perception that customer care is secondary to business goals. James had built his company on very high standards of customer care. He had a very legitimate concern that delivering the same kind of customer care, in India, would be hard or impossible.
The different attitudes and business cultural preferences of India translate into very different work ethics and methods. To James, customer service was incredibly important, but it became clear that the customer is by no means “number one” in India. The customer is rarely put first — and this attitude is pervasive. It’s not just company policy, it’s a cultural phenomenon. James was worried the attitude would translate into huge training costs developing first-rate customer service.
While India and the U.S. both share a great deal in common when it comes to their business and legal systems, the actual experience can be quite different. India is, today, rife with corruption, a terribly slow court system, and poor enforcement of many laws. James’ Airtel account was initially established with about $5,000 Rupees (roughly $100 U.S.). In the United States, a firm could never close James’ account without notice and keep the balance — but that’s exactly what James experienced. Western assumptions about business practices and the rule of law don’t apply outside our home territory. Any business beginning operations overseas needs to understand the legal and social implications of doing so. A common sense assumption at home could be a completely foreign concept in another country.
Tackling Foreign Markets
While there are definitely a lot of risks to expanding overseas, there are also clear benefits and opportunities. The key is to pursue them from a position of knowledge, doing the research, building the relationships, and investing the time to know it’s the right course of action.
James did the right thing by setting a reasonable timeline, and doing a lot of the relationship building and “feet on the ground” research himself. But he also made a mistake by putting so much of the work on his own shoulders. While James made a sound business decision given what he had learned, could a different outcome have been more positive?
By engaging a team that already has the business cultural knowledge of a market, James could have saved himself a great deal of time and effort. More important, the outcome could have taken a very different track: A longer term, steady development plan that embraced India, and embraced its cultural diversity, was definitely possible. For example, a well-integrated and experienced team might have been able to provide the cultural perspective and advice James needed to succeed in India. A few possible strategies might have included:
- A Western training and education program, including immersion in the U.S. based company headquarters, to establish a truly first-rate quality customer care program in India.
- Relocating team leaders from the U.S. customer care division to India, to directly oversee and develop a quality customer care platform in India.
- Keeping customer care closer to home, and focusing on India as predominantly a resale market (versus a fully developed and independent subsidiary market).
James directly experienced the culture shock of being immersed in a foreign culture. Not only is this common, it’s absolutely typical. Most individuals immersed into a foreign environment will experience culture shock. The individual response varies considerably, ranging from forming a negative opinion about a target culture to experiencing a strong affinity and appreciation for the culture. By taking on the full role of explorer, researcher, and decision maker, James may have inadvertently limited his company’s goals by tying them to his personal reaction to Indian culture.