Does that shiny new office you want to open in China say more about your ego than your business acumen?
You have to do a quick sanity check before opening an office overseas
Before branching out recruiter Julia Meighan suggests you consider whether the move could really be all about your ego.
Business leaders, Meighan said, sometimes see launching a new office in Shanghai, Paris or Jakarta as simply a way to prop up their legacies or bolster their CVs.
Pascal Soboll, managing director of the Munich office of the design firm Daylight Design (Credit: Daylight Design)
“You have to do a quick sanity check before opening an office overseas,” said Meighan, CEO of the global recruitment firm VMA Group in London.
Every business owner and CEO loves the idea of being the head of an international company
Meighan has overseen the opening of new branches from Frankfurt to Johannesburg and Hong Kong to Singapore. Each one required careful analysis of the location and the financing, but more than anything, it required a bit of soul-searching of her own motivation.
“Every business owner and CEO loves the idea of being the head of an international company,” Meighan said. “But you have to really ask yourself why you’re going abroad.”
It’s easier than ever these days for companies to access new markets, with manufacturing in one country, upper management in another, sales offices scattered across the globe, and designers and coders working in coffee shops anywhere there’s wifi. So, how do you know if that new office across town or on the other side of the planet makes sense — or is simply inflating your own ego?
Luckily there are ways to ensure this isn’t a vanity project.
International expansion may have more to do with your ego than necessity (Credit: Getty Images)
Relationships, not ego
The first step is similar to the process you follow before launching a new product or taking a different direction for your company. Draw up a detailed business plan, with a cost-benefit analysis, that shows why you’re doing it and what the upsides — and potential downsides — are likely to be, said Pascal Soboll, managing director of the Munich office of the design firm Daylight Design.
It needs to define why the new office is needed, making sure it’s not just to stroke the company’s collective ego, Soboll said. For his firm, opening a new branch in Munich made sense partly because of the pool of talented designers available in the southern German city.
I found out (that) in Paris people don’t want to meet for breakfast. Lunch, yes, but invite people to a breakfast and you don’t get any takers
“You have to have offices to build relationships locally. Even with today’s teleconferences and virtual meetings, you just can’t build relationships without meeting face to face,” Soboll said.
But Soboll is from Germany originally, and, to ensure the new office made sense, he knew he had to put aside personal feelings about bringing his California-based company “home.”
“We were extra cautious on this office, because there were a lot of personal feelings about it,” Soboll said. “We put together a business plan, and we justified it by detailing likely clients and how the office can bring them in.”
Get the details right
Once you’re sure the new office isn’t just about you, or marking out global territory for your corporate brand, the next step is making sure the new location fits into your existing office culture and future plan.
Think hard about that new overseas office - does is justify the expense? (Credit: Getty Images/Lesvos Greece)
President and CEO of Code 42, a 400-employee data recovery and backup firm, Joe Payne has opened offices one by one to keep up with his firm’s growth.
It’s sometimes a gruelling process though, Payne said, finding the ideal location, negotiating a lease, hiring staff, and making sure the whole thing matches the company’s culture. So those with some experience are far less likely to do this as an ego-booster. “Anybody who has actually opened new offices (before) knows it takes a lot of time and money, so it’s unlikely it’s just about ego,” Payne said.
It takes a lot of time and money, so it’s unlikely it’s just about ego
Trying to duplicate the company’s culture elsewhere means solidifying how the company is defined in every office, Payne added.
But whatever your company’s philosophy might be, Payne insisted getting the details right in every location is crucial, because it’s often the minutiae that make the difference between a productive office or a troubled one.
For instance, Payne said for his firm that means ensuring there’s always a good quality coffee machine for staff, among other things. He opened a new office in Texas a few years ago for his former employer. “When I visited the office for the first time, the coffee machine was mentioned four or five times,” he said. “It’s such a small thing, but you don’t want to get it wrong.”
Beyond coffee, any new office will require a profound understanding of the business culture that surrounds it, said Meighan.
“Breakfast meetings work in London, but I found out [that] in Paris people don’t want to meet for breakfast. Lunch, yes, but invite people to a breakfast and you don’t get any takers,” she said.
To make sure she understands the local work culture, Meighan spends time in the proposed city or country first. It gives her the opportunity to rationalise creating a corporate presence there, because it’s far harder, she said, to close that office if it doesn’t work out. First, there’s the human toll of having to lay off a team, then there’s breaking a lease, selling the furniture — all things managers would rather not be doing.
Once you’ve done the hard work and tapped into the local culture, and opened that new branch, Meighan said it’s time to benefit from the amazing thing new offices bring.
“In this era nowadays, where you can do business anywhere, it’s still important to have face-to-face relationships,” Meighan said. “Your reputation is everything, and you just can’t build a relationship by email.”