In today’s global economy, companies routinely expand into new geographies, applying their successful business and operational models to new locales. Routinely, many of these businesses fail. By operating from the principle that what works well in one place should work just as well in another (with minor tweaks), companies frequently do not recognize how much context matters.
There are numerous contextual factors at play (including government regulations, infrastructures, and cultural norms) in various geographies that can derail even the most successful operational models. Understanding and adapting business and operational models to these new contexts is not a simple matter. But it can be done.
The first step in overcoming this problem is developing contextual intelligence — the ability to recognize knowledge limits and adapt them to new environments. Contextual intelligence enables an entity to gain deep insight to the contextual differences between geographies and then make the best decisions about how to alter, redefine, deconstruct/reconstruct, or completely abandon a business model in order to successfully expand into a new environment. Sometimes the best decision is to not expand at all.
Common practices in acquiring contextual intelligence include hiring cultural natives, creating local partnerships, and conducting cross-disciplinary training. Additional suggestions for improving contextual intelligence are:
*Researching a country’s institutional context.
*Recognizing that not all countries will migrate to a free-market economy.
*Understanding that geographic differences are often multi-layered, complex, and not easily generalized.
*Experimenting with new models and taking an entrepreneurial approach.
*Learning to distinguish between the general and the specific.
*Realizing that change can take a very long time.
*Creating data in-house rather than relying on others’ data.