Why Good European Companies Fail in North America.

Timothy J BrownBrevis

Why Good European Companies Sometimes Fail in North America. A substantial percentage of small and mid sized European companies’ North American start up operations initially disappoints management back home. Why do good organizations with interesting products and competent management fail to deliver promised results in North America? Understanding the answers to this question can be a real money maker for any business planning an initial market entry or dealing with an underperforming effort here in North America. Although a variety of causes can contribute to poor results, most can be linked to cultural differences or planning and communications failures. Often failure in one of these areas is exacerbated by weakness in the other. Incomplete planning mixed with unrealistic expectations is a sure formula for management disappointment, wasted human capital and lost market opportunity. Large organizations are better resourced to absorb this kind of failure. However for the small to midsized company missing North American sales goals can be a horribly expensive experience. Not only will the company pay the cost in wasted effort, lost profit and slowed time to market, but depending upon the reasons for failure it may permanently lose a portion of its potential North American customer base or irreversibly damage its brand. It is simply not enough to have a good organization in Europe, an interesting product and a successful European sales methodology and expect even at the most basic level to translate what works in Europe directly into the North American market. Although major elements of your European selling strategy may work well in North America, most companies eventually find that they must rearrange these elements to fit a new situation on the ground. Many European executives feel that they have sufficient understanding of American’s and America to plan their market entry effort without outside help. But I believe that surprising and valuable insights can be gained by approaching any planning for your North American sales effort as a completely new enterprise.......an enterprise which needs to be deliberately created from the ground up.

Put aside what you think you already know. Start by researching the basic marketing questions:

1. Is there a market for the company’s products? 2. What are the dynamics of the market? 3. Is there a technical fit? 4. Is there a market need? 5. Do we have a realistic and sustainable value proposition? 6. What are our differential advantages? 7. Can we make money over the longer term?

There is usually plenty of secondary information available and for many products no lack of industry experts who will happily sell you such information often without a quality guarantee. (And I have seen plenty of expensive inaccurate and misleading research). Done right, nothing is a valuable as first hand contact with your potential target customers. Visit with them and ask their opinion. This is perfectly acceptable behavior in North America. Getting this kind of direct access and the good information it brings are key to putting together a successful plan. As a bonus it provides a good initial step to establishing your potential selling relationship. Accurate communication and complete understanding of customer responses in these interviews are indispensable to success in the planning effort. It is tempting (and fun) to try to gather information solo, but I recommend to my clients that they always work together with a knowledgeable native born North American partner in this effort. Not only does this approach facilitate efficiently getting to the right contacts at the appropriate levels, it helps interpret the information gathered accurately and provides nuanced cultural context. It is easy to fail by ignoring the simple truths about the North American Market itself. It seems trite to remind sophisticated European business people that America is not Europe, but it needs to be said and understood. (The same is true going in the other direction…..Europe is not America but that is the subject of a different article with some unique issues of its own aimed at American executives) Most companies will readily admit to this fact but immediately add their own version of “yes but” based on what they think they understand. And in this little “yes but” lies a chasm into which the entire enterprise can collapse. Many Europeans feel very familiar with America…after all they’ve watched countless American TV shows and movies and seen enough news footage to create a sense of “knowing” the culture. Many have traveled in North America and had first hand experience. Most often travel has been limited to larger cities and resort destinations with limited personal contact. Even Europeans who have lived in America for years and present themselves in business settings as “American Experts” are often very misinformed.

There have been volumes written about American and European cultural differences and I can’t hope to develop the subtlety of thought expressed in these works in this small space. I would only offer a few key points to consider: Geography:

America is a very big place. Planning must account for distances. To put this in perspective, the distance between New York and San Francisco is a bit more than the journey from Delhi to Moscow.

Culture:

There is no single distinct “American” culture. The business culture of the country and what are commonly judged as acceptable business practice vary subtly by region. Generally speaking these regions are the Northeast, the Mid West, the West Coast and the South. The differences between doing business in New York City and Louisville, Kentucky can in some ways be compared to differences between doing business in Hamburg and Barcelona. When considering these differences it is good to keep in mind that although most Americans are very approachable, not all Americans are informal. Americans think, act and reason differently than Europeans. The decision process is accelerated; action is favored over long deliberation. Clear, concise and short communication is preferred over expansive detail.

Language:

American “English” isn’t. American use of the English language is sometimes confusing, unclear and imprecise. Even very serious and important business communication can be very informal in tone and unclear in meaning to the non native speaker. I speak fluent German and still carry a dictionary with me. I always ask for explanation/clarification if anything is unclear and urge all my clients who speak English as a second language to do the same. It’s always better to ask for an explanation and perfectly acceptable to do so in the US. After all America is a nation of immigrants. In fact, within limits, “playing dumb” by asking questions in the US market can be a very productive way of mining information. There is particular danger in American usage of English for native speakers of the various European English dialects....... something may sound the same, be spelled the same as at home but have a totally different meaning.

Business Culture:

For the most part American business culture is open and friendly. Americans value speed and directness in business transactions. They expect value to be generated in their interactions. A slow response communicates indecisiveness and lack of commitment. Overall the business values and behaviors of Europeans and Americans differ

significantly. These differences need to be clearly understood and accounted for in planning to avoid conflict and disappointment.

Finally this short article focuses on business practice in the US since it is the largest market in North America and normally the initial target market for companies seeking to gain a foothold. It should be noted that Canada and Mexico are both important parts of the North American market which have their own distinctly different business “Cultures”. A successful entry into the North American Market requires that you put aside what you think you know, get firsthand inputs from your potential customers to incorporate into your planning and understand and account for the differences in culture you will encounter. All of this is best done with the help of a competent, preferably North American born partner with significant business experience and a professional network which can be used to your advantage. About the Author:

Tim Brown is the Founder and Managing Partner of Brevis Consulting; a firm that helps mid-sized European companies improve their North American results. In his thirty+ years of senior level management experience he has led organizations in North America, Asia and Europe as VP and General Manager, Senior VP of Marketing and Sales, National Marketing Manager, Business Unit Manager and Product Manager. He can be reached by sending an e-mail to tbrown@brevisconsult.com . © 2006 BREVIS Consulting