Wednesday, September 20, 2006

Global Business - Corporate America's Approach is Counterproductive

From the current issue of American Executive magazine:

Like most American businesses, your company probably divides the world into four or five zones: North America, LATAM, APAC, EMEA, and the ever-present ROW (rest of world). For as long as US businesses have been doing business, these designations have served to delineate sales territories, marketing goals, travel budgets, IT expenditures—even bean-counter-level minutiae.

These are artificial groupings, however, designations that were designed decades ago when international travel was rare and international business often rarer. Dividing the globe this way is an American convenience that creates a narrow worldview. The rest of the world (I’m tempted to use the condescending American ROW) does not use these artificial delineations.

Clinging to nomenclature simply because of its staying power in US business harms our ability to mine the world’s opportunities and undermines America’s ability to lead the global economy. Worldwide customers no longer fit into the boxes that corporate America created, and we are paying the price for failing to see the opportunities that exist outside the boundaries of these zones.

Et tu, Microsoft?
Wikipedia’s definition of EMEA is instructive. “EMEA is a regional designation used for government and business purposes. It is particularly common among North America-based companies, which often divide their international operations into the following regions: EMEA, LATAM, APAC.”

A Lexis search of EMEA illustrates that countless American companies use the term. But when one considers that EMEA encompasses Europe, the Middle East, and Africa, seeing this as a single whole makes little business sense.

Even globally minded companies such as Microsoft use this designation. Microsoft’s EMEA site offers IT solutions for 10 categories, including government, investors, and women in IT. EMEA’s governments include liberal democracies, totalitarian regimes, and everything in between; its investment climates range from the transparent to the opaque; and the role of women is starkly different from one corner of EMEA to the other. Given these disparities, is it possible for even mighty Microsoft to force-fit these markets into 10 solution categories?

Microsoft touts the availability of Windows in 19 languages spoken in EMEA. But the European Union has 11 official languages, and the African Cultural Center claims there are 1,000 languages in Africa (South Africa alone has eight languages).

The population of EMEA is staggering. Internet World Stats lists Africa’s population at 915 million, Europe at 807 million, and the Middle East at 190 million. This means the area has 1.6 billion people—30% of the world’s population. The group of countries known as APAC is even more ludicrous to lump together; it comprises more than half the world’s population and spans more than 35 countries.

These are geographies, not markets. Countries within these designations often share nothing but proximity, and even then, it is difficult to argue that South Africa and Norway are proximate neighbors. Viewing your company’s global operations through this antiquated lens is limiting and counterproductive. How America sees the world is far from how the world really is.

These “comfort-zone” designations create missed opportunities that could impact the bottom line:
1. Borderless markets that overlay regions (e.g., the youth market)
2. Same-language synergies that reduce cost (e.g., Spain and Latin America; Portugal, Brazil and Macau)
3. Cost-saving cultural similarities (e.g., UK and US)
4. Deal flow between regions (e.g., South Africa and Australia)
5. Expat communities that exert strong influence on buying decisions and patterns in their home countries (e.g., Indian communities in UK/US and the 1 million-strong Japanese community in Brazil).

It’s a cliché, but in today’s global economy, the world must be seen globally. The lexicon America uses to describe markets suggests we are failing to do that. We learned in childhood that the world is round, but most of us have two-dimensional world maps on our office walls. In North America, our maps keep the Atlantic whole and split the Pacific; in China, the Pacific is whole while the Atlantic is split. This gives us a distorted view of the planet and, along with it, a shortsighted view of global business possibilities.

Look beyond EMEA
Start with a basic question: does your company see the world and its opportunities as global or international? In other words, does your company see the world in its entirety as a business opportunity of endless potential, or do you view it as fragmented, consisting of only a few nations or regions beyond the US borders?

Next, identify your customer/client. To increase global revenue, you must know your worldwide customer base. Determine who your customers are, what they think of your brand and products, why they purchase from you, and what their demographics are. You’ll also need to determine the psychographics of your customers—what are their aspirations, what influences their purchasing decisions? Where your customers live or what port you ship product to is superfluous beyond the details of customs.

Identify where you find your customers and, most importantly, how you reach them. You may discover that geography is the determining characteristic, but you may find your customer identifies with a culture that exists outside of national boundaries. Perhaps your customer lives in one part of the world but gets most of her information from publications, broadcasts, family ties, and community organizations half a world away.

Ultimately, you will discover the dynamics that drive your global revenue stream and ways to keep it growing. Acronyms like LATAM, APAC, and EMEA are relics. They can be kept for bookkeeping, payroll, and accounting purposes if abandoning them will create chaos within your organization. But when it comes to marketing and generating revenue from the new global marketplace, it’s time to retire those terms and pursue a more strategic approach to your business.

Josef Blumenfeld has managed communications and outreach strategies in 28 countries and is the founder of Tradewind Strategies. He can be reached at