Originally published on Forbes in Oct 2024. This article has been republished here.
Expansion Growth Pitfalls
Mustansir Paliwala, Principal at Zomara Group and Director Bus Dev at EQUANS. I help organizations strategize, grow and scale. Let’s connect.
“Growth demands a temporary surrender of security” is a quote by Gail Sheehy that should be adopted by any organization looking to grow and expand outside of its home base territory. I have yet to come across a business leader who will disagree with her statement, yet we see and hear stories of countless cases where a brand was unable to replicate the success it achieved in its native environment. Here, I will talk about five critical errors that should be avoided at all costs while looking for expansion and growth.
Errors Deciphering Market Research
Organizations typically don’t shortchange market research, and the value good research brings is universally acclaimed, but people tend to de-layer this research further due to confirmation bias. What this means is that there is a tendency to interpret data in such a way that it confirms pre-existing beliefs and assumptions. This generally leads to the objective analysis being de-prioritized and counterpoint reasoning and arguments get overlooked.
The other problem this uncovers is overgeneralization, where a small sample size is brushstroked into believing that its application will still be the same and will drive the same results in a larger market size, which steers you to neglect external factors and other relevant indicators.
The Cultural Angle
Leaders making critical growth decisions do get this. Cultural and societal differences make a difference, a significant one, in your go-to-market strategy, but certain subtleties are generalized time and again, which can have profound implications. As an example, it’s generally OK to pursue a client with repeated attempts and aggressive/assertive sales tactics in the West, but it’s not an acceptable norm in Eastern countries such as Japan—and the same applies to direct vs. indirect communication styles.
A brand with a strong presence and success in its home territory may assume its sales processes, which have brought them good results so far, will continue to do so overseas. Add to this the nonverbal communication and body language aspect, conformance to decision-making hierarchies and perception of those hierarchies, competitive vs. collaborative negotiation methods and significance of certain colors, etc., and there is a lot more you need to factor in and add on your repeatable home success formula.
Overestimate Brand Recognition
I have seen this cause more damage to a brand and, eventually, reputation than its competition. This knowledge and success can impede your vision and make you perceive that the same type of customer set will continue to flock to you because the performance KPIs make leaders think they’ve cracked the code.
Remind yourself that every market and customer brings a unique objectivity and that the reality is this is a non-linear, iterative process with continuous evolution. Any new product launch, marketing program or partnership requires you to adopt the same mindset as the beginning of the journey.
Many large global players have made this mistake. Best Buy expanded to the U.K. in 2010 but failed to gain traction because it overestimated its brand appeal. British consumers were already loyal to local electronics retailers like Dixons and Currys, leaving Best Buy unable to break through the competition. Starbucks failed to gain traction in Australia because it didn’t account for the strong local coffee culture and assumed its global brand recognition would be enough to compete. These are prime examples confirming the notion that a large cash flow and talent pool alone cannot protect you from this failure.
Over-Reliance On Historical Data
Statistics are antiquated information. They help to understand a pattern at a previous instance of time but are in no way capable of predicting future behaviors with 100% certainty. Many organizations do their growth forecast and budgeting in Q3 of the previous fiscal year without leaving much room to account for changes.
This fixated approach can lead to a path where, by not adapting to changing market conditions, you set yourself and your teams up for failure in two ways: 1) a failed performance-to-plan outcome for your team and inaccurate expectations for your stakeholders (management, clients, suppliers, etc.) and 2) removes you from any advantageous quick win scenario that may present itself.
Using historical data as a practice is encouraged, but its use should be confined to as a guide, not a blueprint. Historical data can offer valuable insights, but businesses should use it as one of many tools, not the sole basis for decision making.
Underestimating The Power Of Partnerships
There is a certain fear factor that the word partnership has in the business world—mainly because sometimes there are perceived negative connotations—but there are also countless examples of strong and successful partnerships bringing unmatched innovation and impacting lives all over the world. Overlooking this, specifically in growth and in new market or client entry scenarios, can limit you significantly in your pursuit of innovation.
It takes time to bring geographical domain-related expertise in-house, and building a partnership (short-term, temporary, target-based, etc.) allows you to bypass the growing pains somewhat. If your local legal compliance is top-notch, this can bring success in a shorter frame of time. Uber is a prime example of this, with its many partnership models with entities like Grab, Careem, etc.
Final Thoughts
You may have noticed that all the areas I mentioned above originate because of an inward mindset totally opposite to the very reasons for your organizational existence, which was to solve a critical problem for your customers or bring in a unique value for them. So once those core objectives are centered again, these pitfalls automatically take care of themselves and cease to exist.
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