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The VC Operating Partner’s Guide To Assessing Portfolio Company Global Capability

The VC Operating Partner’s Guide To Assessing Portfolio Company Global Capability

While each company’s growth path varies, after finding product-market fit, there tends to be 3 key drivers of growth:
1. Adding more products
2. Targeting new customer segments
3. Expanding to new markets

While each offers great potential, we will focus on how to succeed in pursuing the latter strategy, in particular, international growth. As someone with strong executive-level leadership experience, you know how difficult new market expansion can be (especially international expansion) and the obstacles that sit in between domestic success and global scale.

RELATED: Do you need support in setting up your portfolio companies for global growth success? Book a consultation today 

The goal is to avoid the time and money most companies waste in not approaching global growth the right way

We conducted 2 years of research, interviewing over 400 execs from 50 countries of the world’s fastest-growing companies, and found everyone was reinventing the wheel and making costly mistakes in the process. The result of this research was Global Class, the #2 Wall Street Journal Bestseller and National Bestseller endorsed by 45 executives who drove global expansion during the growth stages of some of the world’s top companies including Zoom, Slack, Canva, Google, LinkedIn, Uber, Flexport, Airbnb, and Zendesk.

We found that companies approached global growth one of two ways, leading them to fall victim to many of the causes of international expansion initiative failure. The two ways are:

1. Believing the “company way” will work globally

Thinking things like “we have a universal value proposition,” which is never true. Uber said this and lost in China, Indonesia, and other markets, ultimately learning and taking a new approach when expanding in the Middle East, acquiring Careem, and letting it operate with a more localized model.

2. Prioritizing speed, and changing anything and everything to find fit in a new market
If you localize for every market then soon you will find that you are juggling a dozen models that are hard to scale and support

10 things to teach companies in your portfolio to help them succeed globally

1. Create a common language around expansion
Since one didn’t exist, we created one in Global Class, helping leaders get on the same page about team building, localization, and more. Zoom’s Head of International Abe Smith said this about Global Class:

“Aaron & Klaus have literally written the book on international go-to-market… this is the book I wish I had 15 years ago.”

Even experienced global expansion executive Troy Malone, who led international for Evernote, Weebly and other growth stage companies professed that the book equipped him with the vocabulary and frameworks to teach others what took him a couple of decades to learn the hard way.

2. Stop and align
Before expanding to new markets, teams need to stop and ensure alignment around the “Four Commitments for Successful Global Scale,” which we learned are the four foundational factors for successful global expansion, as well as being committed to adopting the Global Class Mindset instead of a legacy mindset.

3. Go through a proper market selection process
Companies need to stop making stupid choices on what markets to enter. For example, another country speaking the same language doesn’t mean it should be at the top of the list of countries to expand to. Just because the UK and Australia speak English doesn’t make them the right markets to enter. They also don’t understand that organic growth doesn’t always make it the right market to enter since that traction may be shallow or the market may require extensive localization to get below the surface level of customers that the company has already started to capture. 

4. Use a market analysis tool that provides visibility into organizational capability and the degree of localization required
An analysis of market size is crucial and our Global Growth Opportunity Matrix, or G-GO Matrix, can help with this. This analysis will help companies not look to leap from large market to large market but instead understand that there is a spectrum they need to travel across to build sustainable scale, being mindful of what we call “Linked Markets” that can help make localizations more scalable. 

5. Do an in-market Localization Discovery
Companies need to understand local markets, do localization discovery, and travel to target markets to speak to key stakeholders because research conducted from afar may differ from the realities on the ground. This is what Troy Malone learned with Evernote’s expansion into India.

6. Build the right teams
We found there was a specific type of person who is the catalyst for helping companies reach global scale (we call them, Interpreneurs™”). Companies need to actively identify and nurture this entrepreneurial talent, while at the same time being mindful of purposefully creating an overlap of company knowledge and local knowledge in new local markets, as outlined in the Global Class Team Building Model.

7. Provide structure to the localization process
This is where many companies waste a ton of time and investor capital, in figuring out what in their go-to-market and operating models they need to adapt to get traction in a new market. We built the Business Model Localization Canvas to help take the validated model from a market the company has product-market fit and adapt it for new global markets.

This simple process can help the team align on WHAT questions to ask during Localization Discovery providing a guide on WHO to converse with to validate the business model, leading to the development of clear market selection criteria and an idea of the scope of localization required for the new market.

8. Manage Complexity

Your companies need to manage complexity (which we call, “Localization Premium”), looking holistically at what needs to change to reach product market fit, not just at the standard go-to-market aspects (language translation, changing pricing to the local currency, and localizing marketing messaging), but also operational elements (from navigating differences in local culture, localizing infrastructure, and adapting a number of administrative elements from corporate entities). The Localization Premium Analysis (or LPA) helps companies look below the tip of the iceberg to the below-the-surface and often overlooked items required to build a global presence.

9. Establish the scaffolding for scale
Structures and processes are required to support global scale (which we call, “Momentum Builders”), and are core drivers that help companies go beyond product-market fit in international markets to attain what we call “company-market fit,” which layers on having the right operational and cultural models to deeply penetrate new markets; from org structures like the Localization Resource Team, to playbooks for sharing best practices, all are important enablers for an organization expanding globally.

10. Manage a Global Footprint the right way
Developing the right management model to foster two-way innovation, and supercharge localization efforts, will help companies reach scale in international markets faster. 

RELATED: Book a call with us to understand the right mindset that leads to successful global growth

In summary, addressing the topics outlined above builds more confidence within each of your portfolio companies, and structured conversations around a company’s internationalization efforts build a stronger foundation for successful global growth. 

Whether a portfolio company is already in multiple markets and hitting that wall we often see companies hit once entering market 5, 7, or 9 - leading them to stall growth because they didn’t build the right foundation for global scale, or they are just embarking on their global growth journey, we can offer some great insights and case studies to help them avoid the 10 primary things that make global growth initiatives fail. 

Advise your companies to take our free assessment of their Global Capability Score, so they can see where gaps may exist in their approach to global growth. Additionally, we can engage more formally with your portfolio companies, providing a Global Capability Score. This is a deliverable that explains where companies are on track, at risk, or in the danger zone across 10 key areas crucial to reaching global scale successfully, which we develop through an engagement where we speak with key stakeholders.

About Global Class

The Global Class team has developed THE playbook that teaches organizations the right mindset, culture, and strategies to successfully build global businesses. Through consulting engagements and practical tools (+ case studies built from conversations with over 400 executives from the world’s fastest-growing companies), we help executives with companies valued at $1B to $100B reach global scale. From market entry to global scale, we help companies build the foundation for successful global growth through management consulting services, customized platforms, and more. 

If you'd like to learn more about Global Class and implement strategies and tools that we have developed, reach out to us!

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