As the world becomes more dependent on technology, and as trade borders become seamless, how can boards acquire the tools and skills necessary to be effective and relevant in the global market? In a time of great change, shouldn't the boardroom transform its internal composition and address the changes that are occurring globally?
One of the board's responsibilities is to assess, validate and oversee the company's strategy. It has the fiduciary duty to provide the oversight, governance and platform for the company to build a successful global presence that will stand the test of change and still be on target, on budget and on time. Without the expertise in international business, how can boards today anticipate change in global decision making and execution? How can boards make decisions and assess global trends without the appropriate experience on how to respond to differences between internal corporate culture and the target culture?
How will you keep your eye on the ball if you don't know the rules of the game?
Going global is similar to embarking on a new adventure, a bold mission, and you are the commander. Consider the Titanic's tragic encounter with an iceberg on the Northern Atlantic waters in 1912. On a clear night, in a calm sea, under the command of a seasoned captain, disaster struck. Even after warnings of iceberg sightings, disaster struck! However, damage to the ship wasn't caused by the iceberg's tip, which rose visibly above the water's surface. Rather, the fatal damage was caused by the massive section of iceberg, hidden from view, beneath the surface of the water.
This great tragedy serves as a vivid illustration of the dangers that lurk beneath the surface for businesses embarking on global expansion. While every business prepares elaborately for perceptible issues, few businesses take the initiative to develop an awareness and sensitivity to all that lies below, hidden from view, and waiting to cause chaos. It's the same today as it was in 1912. People don't know what they don't know. Worse yet, no one can plan for something that has never been anticipated.
With a less than 50% success rate of middle market US companies going global, boards need to know how to successfully plan and assess opportunities for the company to thrive in a complex and constant changing global economy. If you don't have the right experience on board to cover all bases, how can you take the responsibility to make a decision that will shape the company's future?
By 2020, 95 percent of the world's customers will be outside of the U.S. To reach global markets companies, and therefore the board, need to adopt a multinational mindset with the drive to not just survive, but to thrive in our ever-flattening business world. Going global is a necessity and not a choice to ponder. The board and the CEOs need to look at the global market, because that's the only chance for survival. And instead of feeling panic and fear, they should look at the global market as an opportunity.
Multicultural and multinational boards are the new diversity. It is a necessity. No doubt about that. For many companies a big chunk of their revenue originates from outside the United States, yet they have hardly anyone on their board that is either a non-U.S. member or someone with global experience who can guide them through or even bring up the relevant points on global expansion strategies or how to craft successful global actionable decision making. Then there are the companies that are contemplating global expansion, but really have no one on the board to help assess and make the decision. How can companies overcome this barrier to success, and make informed, sustainable and relevant decisions on global strategic growth?
U.S. boards are mostly homogenous from the point of view that members are U.S.-homed and honed. Global and multicultural are the new board skills for a new global world where U.S. companies have to compete. It is not about being risk averse. It is about knowing how to manage risk in global markets, looking at the right data and making decisions that are well grounded. Boards need people with a global perspective, who have the ability, experience and expertise to question assumptions using a global prism, and dive deeper to see what's underneath the iceberg.
Strategic planning is about leadership while matching resources match against best opportunities. Someone needs to bring the global reality to the board and provide the strategic focus in terms of clarity, cultural expertise and the 'savoire faire'.
Whether the board is actively participating or merely evaluating the CEO's plan, international expertise is a necessity. Would you consider having a board without the financial or legal expertise among the directors? Why do boards think that they can make it up as they extemporize an expansion strategy without having anyone from a different country or with any global experience?
You cannot predict the future, but you can position your company to be successful in a changing global business environment. Positioning the company globally, and having the right lens through which to view, forecast and interpret market developments is crucial.
The Opportunity: Looking In All The Right Places
The good news is that global growth challenges can all be overcome using the right planning and execution tools, as well as adding global expertise in the boardroom. This will help dealing with global mindset when doing business internationally, as well as managing employees and executives from another culture.
Whether that candidate possesses direct industry expertise or cross-industry experience, having this global component on your board will add a competitive advantage, and will help manage the risk and set the company on the right track. If you are not aware of the minefields you are likely to encounter, how do you then make informed decisions without people on board that can bring the knowledge, confidence and experience? Who is the person that understands not only the 'hard facts', but the soft skills, knowing how to navigate cultures? Since it is what you don't know that will land you in trouble.
If companies are to flourish, their perspective needs to be global-not only in driving toward higher profits but in their operating principles. Only then will they find a greater understanding of their foreign counterparts, which, through mutual interdependence, can then lead to higher profits. To attain a global perspective, boards need to adapt their current operating principles to a more encompassing, more cosmopolitan viewpoint of business. Much remains to be done in both corporate and entrepreneurial America for this worldwide perspective to take hold, and much is at stake. The very success of the economy in the United States tomorrow depends on the ability of today's leaders to change thinking patterns by developing a global mindset and strategies that bridge the widening gap of opportunities domestically and abroad. With the right leadership, and the right people in the right places, U.S. businesses can look at the global market and see opportunities, not obstacles.
Mona Pearl is a global strategic business development expert as well as the founder and COO of Beyond A Strategy, Inc., a company providing expertise to plan and implement cost effective and sustainable global growth that improves a company's bottom line and helps realize seamless international operations.