WHEN REALITY CHALLENGES YOUR PLANS

ACTIVE RESEARCH: CULTURAL BRIDGES FOR BUSINESS – EUROPEAN COMPANIES EXPANDING TO THE U.S

The sun keeps rising every morning, and whether there’s a Trump Administration in America or a Brexit vote in Europe, many European businesses still maintain a strong desire to come to the U.S. to experience the American dream. After all, with a GDP of $16.7 trillion and over 300 million people speaking a common language, we still tend to believe the United States is the largest domestic market in the world.

In 2015, I embarked on a research project to learn how European companies have invested in the U.S. market and how they succeeded. I spent 14 months interviewing entrepreneurs, international business consultants, international business lawyers, and executives at small to large European companies in different industries established in the greater Atlanta region, to learn both their decision-making process, their execution method and their cultural challenges. 

My purpose for this work is to provide insights and real experiences that may allow other European companies (or any foreign business, for that matter) to evaluate their capability when considering market entrance into the U.S. by learning from the successes and challenges of European businesses that have already undergone the process of establishing there. Much has been written about how to invest in the US market, what steps to take and so on, complete guides and manuals have been published and made available on the web, but still, many foreign businesses don’t make it, spending a significant amount of money to then go back without achieving their dream success. 

“Much has been written about how to invest in the US market, what steps to take and so on, complete guides and manuals have been published and made available on the web, but still, many foreign businesses don’t make it”.

Through my extensive research, I discovered both a series of unique perceptions and ideas held before entering this market as well as an array of diverse strategies implemented to achieve success. Throughout the 12 articles I will be publishing (one every month) I will be sharing my discovery hoping it can help businesses look deeper into their plans and evaluate their resilience to unforeseen impacts in the U.S. market before taking the step. Underneath facts and figures, there is an intangible layer relating to culture, relationships and perceptions and it is my intention to bring them into businesses’ radar of attention.

Understanding Why European Companies Make Their U.S. Expansion Decision

In analyzing my research, I discovered: 

  • 55.6% of the companies in my research were already well-tested and successful in Europe and other foreign markets. They’ve expanded to the U.S. to re-enforce their brand position and take their business to a level much higher than they could achieve anywhere else in the world.
  • 30.6% entered the U.S. to follow existing European customers who’ve already expanded into this market. They wanted to continue serving these customers domestically.
  • 8.3% risked coming to the U.S. to develop a non-existent product by leveraging their know-how, and, in some cases, developing a new product through partnerships with American organizations.
  • 5.6% entered the U.S. to deepen their relationships with existing customers after years of exporting their products from Europe.

Key finding – The story shared below shows how critical it is to have a clear vision for your business and its expansion, and how that vision will make clear the way to approach a demanding and competitive market like the U.S.  

Skaltek, Inc, a Sweden-based company in Atlanta, GA, USA

I interviewed Ralph Skalleberg, Country Manager for Skaltek Inc., about his experience starting and growing their U.S. headquarters. Skaltek Inc. is a Swedish privately-held family business that makes automated machines for the cable and wire industry. Founded in Sweden in 1974, Skaltek has today customers in 62 countries and offices across the globe, including a U.S. headquarters in Atlanta, Georgia.

When Skaltek decided to do business in the U.S., they were still a young company in Sweden. Based on the vision they had for their business, they wanted to create a bulletproof customer service and they knew that passing the customer service test in the U.S would assure them anywhere else in the world. Coming to the U.S. would allow the company to strongly learn and improve in that area.  

Like many companies, Skaltek started in the U.S. through a North America–based contact hired to represent the company, do the business development and build a North America customer base while shipping machines manufactured in Sweden. In the U.S. the process to get the first customer took a long time, longer than the company back in Sweden would ever expect. They had no idea, by then, how long it takes to build a business in the U.S., especially for a foreign company.  

Skaltek’s challenge in the U.S.:

Skaltek’s philosophy to achieve a global market presence with their machines was very well defined from their headquarters in Sweden but they soon realized the team in North America was not following the founders’ vision or the company’s philosophy, leading it in a different direction. The team in the U.S. had their own ideas on how to develop the business, ideas that were different from the founder’s vision. The clash of opinions on how to lead the U.S. operation was impacting both the relationship with existing and potential customers as well as Skaltek’s desired market positioning.

Skaltek’s solution for the U.S. operation:

Ralph Skalleberg, the youngest of Skaltek’s founder two sons moved to the U.S. and shortly after his move, along with expanding the existing space in their Atlanta facility, Skalleberg started operating a drastic change in the way Skaltek was operating in North America. Like Skalleberg likes to say, “the change was to focus on Truth and the Plumb Line, to unite the team to a higher level of consciousness”.

 Being born and raised in an entrepreneurial family driven by a desire to create something extraordinary, Skalleberg’s way of seeing and conducting business made him a strong believer in long term relationships. Following the same principles his father used in both creating Skaltek and raising him and his brother, Skalleberg tripled Skaltek’s U.S. operations in just three years. 

Skalleberg’s family has been building a Rolls Royce-level for the cable industry, delivering high quality innovation while being mindful on their impact in the world. All Skaltek machines bear a stamp with the words “With Confidence, Joy & Love, I am responsible.” This stamp is their personal accountability for their machines and also an example of the Swedish culture in business (1) the strength of a verbal agreement and (2) the commitment to their word, being this also a basis for their U.S. success.

“Underneath facts and figures, is an intangible layer of contact with the U.S. market related to culture, relationships and perceptions”.

Skaltek Inc. has no corporate structure or management. Instead, the company brings people together to do what needs to be done, with each employee held responsible for their respective roles, another example of the Swedish culture on a democratic decision-making process. Skaltek leads its operations with a simple motto: “Confidence is the start of it, Joy is a part of it and Love is the head of it. I am responsible”, Ralph says that combining the Swedish culture in conducting business with the American focus in money-making and results, would bring together the best of the two cultures into the business environment.  

The sense of accountability garnered Skaltek a nomination for the Global Impact Award from the Metro Atlanta Chamber of Commerce in 2017. The award honors companies that go above and beyond to achieve excellence and innovation in international trade and investment for a sustainable global ecosystem in the metro Atlanta region.  

Skalleberg deeply believes no business should expand to the U.S. without a clear purpose. “Coming only for fast money will lead to failure, the money will come naturally” – he says. Skalleberg also sees a lot of good in the U.S. and a lot of entrepreneurship that can empower other entrepreneurs to succeed.

I couldn’t agree more. In my leadership development and coaching practice, working with business owners and executives from different regions of the world, I’ve witnessed when executives and entrepreneurs gain clarity on their purpose, they stay focused on their vision and build strength for when things get tough. There will always be moments of doubt and uncertainty, regardless of whether you’re a business owner or a C-suite executive. Your willpower and determination, fed by your clear purpose, will always lead to your success.

If you are determined to try your chances in the U.S., begin first by checking your motivation. What exactly is your purpose for U.S. expansion or for a global expansion? When you’re clear about your purpose, and understand entering the U.S. is not a ticket to becoming an overnight millionaire, you’re ready to start developing a plan. 

In future articles, I’ll discuss some of the planning methods I encountered in my research. 

Cristina da Costa is a Personal & Professional Leadership Developer and Coach based in Atlanta, USA, and an expert in measuring culture in organizations for multinational teams’ productivity and engagement.