Landing your US tech firm safely in the UK
‘Going International’ is a natural step for any growing tech company seeking to serve international clients. But what may seem like a simple addition of a new territory, requires more careful thought. A management structure is needed that enables the company to achieve its desired goals in the UK without compromising its fundamental vision and mission. Enter the matrix.
Matrix Management
Matrix management is a Catch-22 for US firms hoping to land and expand in the UK. Consider a set of functional leaders (sales, services, support, etc) reporting separately to VPs in the US. Locally, they must coordinate (or not) horizontally, to ensure day-to-day operations go smoothly, without an effective local boss. Experience shows this leaderless collection of local functions is unlikely to hold together by good will in the face of conflicting budget and resource pressures. And they will typically require a senior executive to help ‘seal the deal’ at major new accounts, as would be normal back in the USA. A young growing company in the UK must compete fiercely for business with local buyers against incumbents, against ‘do nothing’ alternatives and against local competitors. While in the US the market is (typically) a little more mature, the parent enjoys an established reference base, and a well-honed sales process designed around the US competition and buying culture. The combined sales, services and support are led by an executive team with hard reporting lines to each other. Quite a different scenario to the UK organisation ‘floating along’ without a helm, across the pond.
Marie Celeste – over the horizon
The more successful the US parent feels it has been doing business internationally (eg running Canada and Mexico as a sales territory), the more likely they will be to assume that everything in the UK is equally hunky-dory. In fact, our experience shows that the opposite is more often the case, and painful situations can continue for years before the US parent begins to understand the scale and systemic nature of the problem. The UK entity can experience revolving doors with good talent being recruited at some cost, and then failing, only to be replaced by an equally rapid turnover of the next set of unsuspecting individuals. US companies can burn significant amounts of cash and squander growth opportunities by assuming the problem is due to flawed individuals.
Divergent Markets, Cultures, Timezones
So what is the problem? The problem is not the UK, nor the positive act of ‘going international’. Instead the problem is the lack of a captain. Every ship needs a crew with a leader. UK waters are very different to US waters… The UK buying journey is different.. UK buyers are more skeptical, and UK marketing and sales must adjust. Customers in the UK and USA have different expectations of service. UK market maturity typically lags behind the USA, but not in all sectors. Channels behave differently in the UK. Business in the UK is overall more ‘tricky’. US marketing often develops powerful materials using US references and US competitive and channel data, much of which may be less relevant to UK market dynamics. Timezone and distance means that it is not easy to behave like we are all in the same building as our matrix bosses in Boston or Irvine. Office space tends to be expensive, and legal franeworks less business friendly. Distance is less important than timezones which begin to matter more to staff under pressure to make balanced decisons, when the time-zones barely overlap.
The UK market is simply too far away from the US market in distance, time-zone, legal, service culture, competition, competitive buying drivers and buying culture, to be workable as a ‘tender’ to the mother ship.
Some companies elect to appoint the local sales leader (or services leader) as local leader overall. Very often the local functional leader appointed has insufficient time, interest, experience or capability to manage P&.shtml#43;L or skills sets outside of sales. Either sales suffers, or something else does. Insufficient investment in the local leader reflects an overly heavy reliance upon the matrix which in turn focuses more on divisional reporting. This then has a tendency to reduce the role of the local leader, or of undermining the local leader altogether. It creates a scenario ripe for internal politics in the UK as middle managers vie to exercise local control for their team, independent of any other local concern. Internal politics can undermine and ultimately destroy a US company’s ambitions for the UK without the parent being aware. So what should a company do?
Invest in local leadership
A local leader in the UK must provide a unifying leadership that represents the UK operation as an integral part of the global business. The local leader must take direction from the US executive, taking responsibility for shaping a unifying vision in the UK that translates the parent’s goals into a local mission. The leader must manage for local outcomes including local profit and for translating the parent’s goals, into local measurable goals that the local senior team is tasked to deliver. A P&L focus is an effective mechanism for the parent to maximise its use of cash and to provide scope for local decisions and incentives that tap into the local character and market landscape.
Divergent UK and US business cultures create management teams that do things differently on either side of the Pond. Giving too much control to the UK functional leads may allow UK culture to supplant its US counterpart, and vice versa. Somewhere out there is the middle course, and that requires the constant eye of an empowered ship’s captain to make optimal headway.
How is your UK business doing?
Have you experienced missed targets and loss of promising staff over the last 12 to 18 months? Is the UK market delivering the results you need?
Confidential discussion
TVBA has extensive experience of helping US companies navigate business growth challenges in the UK. For a confidential discussion on your goals for the UK market, and to explore strategies for continued business growth, contact David Orren at david.orren@tvba.co.uk, or call 0/+44 7914 223 691.