Geographic expansion - how to make it work and not lose your shirt (2/5)

In our last post we looked in overview at the four steps companies can take to stack the deck in their favour in a geographic expansion. These are common-sense measures applied in the 30% of expansions that make money after 2 years, and missing in the two-thirds that spend 40% of their senior team's time to set up an initially loss-making and ultimately closed subsidiary.

In this post, we look in detail at three elements of the first step, taken before even looking at a new geography: preparing the company internally.

First is to create a clear, replicable business model, if one doesn't exist already. An employee from head office should be able to go to the new office and know exactly what to do without changing work habits. Without this, the new office will be at best completely autonomous and at worst in constant conflict with head office, either failing to second guess or having to constantly check on every step it takes. Chaotic environments that thrive by winging it, or companies that change tack rapidly at the whim of their current CEO, create chaos-squared when they expand. In the words of a now-global business consultancy: "If our existing model wasn't easily definable, then the new one certainly wouldn't be either - it would have caused complete confusion."

Second is to make sure that there is clear accountability and agreed decision-making processes in place. In most cases, this means having one person with the remit and decision-making power for the new office, before any decisions have been made. If that person can project manage, then all the better.

Third step is to introduce a consistent review and evaluation process that can be applied in the same way to the same standards across all offices, with head office being able to crack the whip to make sure the process remains standardised.

Bain & Company is a classic example of this disciplined approach. Bain is considered a cult within the consulting sector, with an intensive standardised induction programme where new recruits become "Bainies" before being let loose inside the company. Read a Bain presentation or review a Bain project plan anywhere in the world and it looks the same, because everyone goes through the same training programmes. Every Bain office uses the same set of 6 month performance benchmarks in a consistent global review process. With consistent processes and performance standards worldwide, clients have the same experience whichever office they work with. This tightly-managed simple business model has enabled Bain to grow into a genuinely global consultancy, attracting some of the world's top talent and serving some of the world's largest companies year-on-year.

In our next post, we'll cover the next step in stacking the deck in your favour: choosing the right geography.