Introduction to Lean Principles for Global Expansion
When expanding to a new country, whether a company is a startup, Series C, or MNC, every company is a startup. Global expansion is often more complicated than the startup phase. The team is presented with navigating a new customer base, complex regulations and a world of unknowns. Leveraging lean principles can be a differentiator between successful and unsuccessful expansion efforts.
The foundation of the lean model is the Build, Measure, Learn feedback loop. The business defines and tests assumptions, keeping the vision strong but tactics loose. For established companies looking to expand globally, the build portion can take the form of maintaining the full feature set of the home market offering, localizing certain features or building a brand new product from scratch. To gain tangible user feedback, it is crucial to get out early and often to test.
Choosing a Market
Companies planning to expand globally decide to do so for numerous reasons. The top reasons include new revenue streams, total addressable market opportunity, taking advantage of global trends and accessing top talent. In addition, expanding to new countries can support maintaining pace with competition, investor-mandated growth, wage arbitrage and beneficial tax or government incentives. When creating a go to market strategy companies should determine if they will expand to a single country, region, or go fully global from day 1. By choosing one country or region to funnel resources, you are forgoing the opportunity to gain learnings in other potentially high growth markets. Startups, scale-ups and even enterprise companies can benefit from leveraging lean principles for planning a go to market strategy. By launching an MVP, often in the form of the home market product, the local team can then begin to gain insights from the reception of local customers.
Go To Market
Utilizing the lean principles of Build, Measure, Learn, innovation accounting and minimum viable product (MVP) are never more relevant than launching a new market. Launching a new geographic market is the equivalent of starting a new company from scratch. When managed correctly, the team should start again from first principles to solve a local problem for the local customer. Fortunately, a company expanding overseas often has the advantage of an already built product, current product learnings, a current team and a budget allocated that can be leveraged to accelerate global growth. Creating a successful go to market strategy requires taking a step back to create the proper frameworks and strategy to ensure the plan is measured successfully. The goal of a lean methodology is to gain insights, iterate and pivot on the path to product market fit. Product market fit must be re-established in each new market along the path to a successful expansion.
Budget
Leveraging lean principles for global expansion within the Lean Startup framework does not simply mean cutting costs for efficiency. The principles focus on running lean tests with minimal investment to gain learnings before doubling down on successful opportunities. A mistake companies make is building out large, bloated budget plans without first validating the product market fit in a new country. A lean budget includes strategic, low upfront investment to gain learnings before allocating a more complete budget for establishing operations.
Operations
While utilizing a lean methodology can be used to develop go to market or product, it is also useful as a framework for the operational logistics of global expansion. The complexities, time invested, legal and regulatory landscape and cost of operating in a new market can far outweigh the go to market complexity of localizing and selling into the market. A tactic is to apply the “minimum viable” framework to entity setup operations, including vendors, office, recruitment, and many other setup logistics. Successful companies leverage modern technology, partner up with local stakeholders, plan ahead, measure their known unknowns vs. unknown unknowns and know the right questions to ask.
