Advances in technology and the globalization of business have facilitated the process of international expansion to some extent, but the fact is that great regional differences remain: in business cultures, regulatory environments, and more.
All of which makes the question of when to pull the trigger on taking an agency abroad a difficult one—challenging enough, in fact, to make an executive wish they had a crystal ball.
How I See It
- Business is global today, and for many firms it is imperative to serve clients from many global locations. But expanding for expansion’s sake alone is not a path to success; agencies that are undertaking international expansions should have a very clear reason for why they are doing it.
- International expansion is a huge test of leadership. Those agencies with strong visions and leaders tend to thrive. For others, expansion can reveal weakness at the top.
- There is a very big risk/reward component to opening offices in new international jurisdictions. On the one hand, it can be an expensive drag on an agency if it does not go well. If it does, however, it can add great richness the client base, personnel, and culture of an agency.
How the Industry Sees It
I sat down with Johnny Hornby, Chairman and CEO of the & Partnership, which has agencies in Europe, North America, and Asia, for more on this pressing topic.
How can an agency know that the time is right for it to expand abroad? Is this decision drawn by the needs of its clients, or the vision of the agency’s leaders?
It’s always appealing to claim you’re a visionary, but the agency business isn’t one that works very well without clients. I might start an agency in an exciting market if I was sponsoring a top-talent start-up – but otherwise I’d want to know there was a client waiting for us in a new market before expanding.
What is the most challenging aspect of expanding internationally and opening offices?
The biggest challenge is dedicating a lot of talent and effort into something new without taking your eye off the ball on existing accounts and in existing offices.
To what extent do you recommend staffing a new international office with existing employees, versus local talent?
It’s almost impossible to start a strong local office without some strong local talent. Our business is all about coming up with ideas that connect with people, and that requires an understanding of their culture, in order to create something that resonates locally. Even if you speak the same language, it doesn’t mean you have the same cultural jumping-off point. Equally, to recreate something new with the DNA and brand you’ve already built elsewhere, you need people working in new markets that have already lived that DNA and that brand – so a mixture of local and existing talent is key.
How should agencies go about getting the real, unvarnished information about what doing business in a new jurisdiction is like?
Starting a business in a new country isn’t something to take lightly. You would want access to talent, new business contacts, and on-the-ground expertise. Entering a new market isn’t something to do having only visited a trade fair.
Who are the most important stakeholders to win over in a new territory?
Ours is a talent business, and convincing top talent to join you is the first thing to crack on entering a new market. However, talent won’t stay long if you have no clients – so clients come second. Thirdly, you want that country’s industry at large to recognize you. Points one and two are particularly pivotal – it is possible to succeed without point three, as long as you have the first two.
What is the most interesting object in your office?
The blank sheet of paper on the flip-chart.