Globalization—business opportunity and KM challenge

The economic imperative for businesses to globalize is almost as old as trade itself. In past eras, the promise of riches from foreign trade drove the Europeans to explore far and wide. Marco Polo, Columbus and many other explorers were lured by the huge potential payoff from trade in exotic goods — precious metals, spices and silks not available in their homeland. Later, large, multinational companies proliferated in the developed world to exploit foreign markets and take advantage of lower labor costs overseas.

In the long run, however, it has been global trade in ideas — knowledge — that has proven most valuable. The global adoption of inventions such as gunpowder and the printing press had a profound economic impact. Yet, despite the lucrative pay-off from the export of such innovations, until recently, their spread occurred mainly by historical accident and word-of-mouth. With the advent of the Internet and a growing awareness of our global economic interdependence, many enterprises have begun to develop more systematic approaches to global knowledge management.

Take the case of Lotus, well known for its collaborative software tools such as Notes and Domino. Lotus’ International Product Development group is working to extend those environments to support global knowledge management.

“What we are doing is trying to create a virtual water cooler around the world. That means that people can collaborate and brainstorm in a distributed environment instead of a physical one,” says Lotus VP Kevin Cavanaugh

“Right now, we’re testing out our globalization concepts in monthly meetings online between our HQ staff and our foreign offices. One thing we found is that global collaboration online involves a lot of up-front planning to coordinate different time zones, people working from home, and to allow for different holidays in different locales.”

Lotus also learned another important globalization lesson: that cultural nuance is often as important to communication as language is. “We’ve tried a number of interface models incorporating both machine and human translation. But we found that not only did we have to translate content, we also had simulate on-line the way in which business is done in foreign countries. In Japan, for example, there’s a lot of up-front social discourse before you get down to business. So we incorporated that socializing aspect into our virtual meetings with Japanese colleagues.”

Globalization challenges But, even while large multi-national companies such as Lotus are making significant strides in globalization, or “G11N” as its often termed, there are still many hurdles to global KM. The issues range from language and content management, to cultural, organizational and legal. Those just trying to get into the globalization game must pay careful attention to these issues, the experts say.

The challenges at this point, say observers, tend to be a mix of the strategic and the technological. (See accompanying story: “Global Readiness Tests”).

“With the integration of intranets, extranets and the Web, it is becoming easier and more cost effective not only to transact business overseas, but to leverage the knowledge gained there,” notes Forrester Research analyst Eric Schmidt.

“Yet US companies have lagged in responding. Very few have formulated a coherent strategy, or know how to take advantage of the options that the Web may offer. At the same time, many companies don’t recognize that by putting your business on the Web, in effect, you’ve already gone global. And when your business is global, you have to be prepared for a new level of complexity.”

Lessons While US companies have started recognizing the gobalization opportunity, they still have to address the hurdles of strategy, language, culture and dynamic content. What are the keys to success and what are the pitfalls to avoid? Some tips from the experts are:

Have a plan. One of the most important things to do early on is to conduct an assessment of readiness and to formulate a strategy. (See accompanying story.) Consultants and analysts like IDC’s (idc.com) Anna Giraldo-Kerr question the wisdom of moving too quickly, before readiness to globalize is established.

Readiness to globalize has several dimensions, Giraldo-Kerr and others say. One is targeting, or identifying to whom and where the global Web is aimed. Web infrastructure in the foreign country is another dimension. Finally, there are the information systems and Web sites which the company already owns.

“Companies that want to globalize need to look first at issues of demand — where are the potential business partners who want to trade with me, or who I want to buy from? Then, you need to think about the technical hurdles, like who’s online, how good is the telecom network in that country or region. Is this market equipped to handle widespread Web communication?” says IDC’s Giraldo-Kerr.

“In the first phase of our work for a client, we look at the technology and the systems that the client has developed so far. The question we ask is about the flexibility of the clients current Web site. Can it be adapted easily for other users? If not, how much retooling will be needed?” says Don de Palma, VP of Global Strategy with Idiom Inc., a Waltham, MA, solution provider.

Establish a local network. One big plus in G11N, say the experts, is footprint — meaning an established presence in the global marketplace. The large US hardware and software firms, like Cisco and Microsoft, do. But what if you don’t have that presence already?

The experts say that there are alternatives. One is to find partners — local distributors or suppliers who fit into your business model and who can also provide the on-site expertise that you will need.

“You would need to partner locally. There are many foreign firms seeking to do business with US firms. Often, they have the special part or knowledge of the local idiom or customs that can be an invaluable asset in globalizing.” says Giraldo-Kerr of IDC.

Another alternative, she says, would be to turn to one of the globalization providers. They know foreign markets, culture, and regulations and specialize in helping US firms navigate them.

“Hiring a G11N expert can be a smart move. But you have to be selective. The kind of questions you want to ask are: Do I just need tools or do I need someone to guide me through the process? Can I make my own partnerships or do I need a broker? Do I want the consultant to hand control over to my organization in the near-term or do I want the consultant to become an extension of my own team?” says Giraldo-Kerr.

“One thing we’re starting to recommend to multinational companies is not to internationalize their own operations at all, but to partner or outsource locally. That way, the US firm doesn’t have to learn the culture or the language, so the management issues are greatly reduced,” says John Beck, a globalization expert with Accenture; formerly Andersen Consulting).

“Two examples of this kind of approach come to mind. One is Intuit; maker of Quicken tax software). It closed its European operations and now uses only local reps and does business on the Web. Same thing with Ford Motor Corp., which sold off its overseas transmission plants to foreign partners, from whom they now buy. The Web is enabling these kinds of new solutions to be a reality.”

Speak their language. Translation, at least at a basic level, is not the daunting challenge that it was 10 years ago. Machine translation, say experts, can yield about 70% accuracy, even given factors like character set variations between English, Asian and Arabic tongues. And advances in translation memory mean that frequently used content, once translated, can be recycled in the future to save time and money.

A closely related issue is workflow. Even with better translation technology, there is still the need for human validation and for expert human translation of critical or highly technical material. New documents or items requiring translation must be routed through the translation engine, through human translators or validators, and then out to the relevant sites or pages. Solution providers such as Idiom Inc., GlobalSight, Uniscape Uniscape and Lionbridge have evolved different approaches to managing workflow. And very large companies such as Hewlett Packard or Lotus may manage the workflow process in-house.

Also, companies are testing new approaches to augment machine translation without going to full human translation. Lotus, for example, is testing different interface options for collaboration, from having an on-call human translator available during an on-line meeting to content annotation or enhancement solutions.

“Very often, we find that staff in our international offices are at least somewhat multi-lingual. So they only need help with very specialized or arcane terms, and that’s where they could call for a translator or access the content enhancement feature,” says Lotus’s Cavanaugh.

Ferret out the cultural nuances. Then there is the issue of culture. Many businesses erroneously believe that the World Wide Web obviates the need to deal with cultural differences. But experts like IDC’s Giraldo-Kerr say that’s a dangerous assumption for a US business trying to globalize. In fact, differences in culture may be the most important factor to consider in G11N.

“Doing business by Net does not mean you’ve solved the cultural glitches, the different business styles and the distinct legal and political systems found overseas,” Giraldo-Kerr says. “If you do not take the time to think through the issues, and develop a strategy, you are not going to succeed. Web-based globalization is still mostly theory. In practice, its embryonic.”

Says Lionbridge CEO Roger Jeanty, “Adapting to different languages is usually not as difficult as adapting to different cultures. There are differences of tone, of presentation. And these relate just as much to business partners as to those trying to cross boundaries socially. For example, in France, business people prefer a factual presentation whereas Americans tend to be more splashy, more glossy in their presentations.

Adds “The way that deals are made is specific to each culture. Maybe doing business in an intermediary setting. which is what the Web is, is acceptable in the US. But in Latin America, even Spain, personal interaction is necessary. In those cultures, you seal the deal in person, not by e-mail. Establishing personal trust is critical.” says IDC analyst Anna Giraldo-Kerr.

“What may be needed to overcome that kind of cultural barrier to doing business on the Web is personalization — the kind of personal touch you see on portals such as AOL and Yahoo. What they are able to convey is a degree of welcoming, the feeling that you are our only customer.”

Companies should not be sanguine about the issue of culture, experts say. Even seemingly sophisticated organizations can commit big cultural global gaffes. And those gaffes don’t come cheap.

“Just look at the NASA Mars probe debacle, where the proper conversion wasn’t be made between US and metric measurement. That caused a multimillion dollar waste of research money when the probe didn’t even come close to its destination. This shows just how profound — and how costly — cultural misunderstanding can be.” says Don dePalma, VP of strategy at Idiom Inc.