In his decades-long business career, Marty McQuade has seen a lot of changes. He’s seen a lot of trends come and go, a lot of competitors succeed and fail.
But nothing, he says, has made him sit up and take notice more than the breakneck pace of globalization in the automotive industry throughout the past 15 years.
McQuade is the general manager of DuPont Automotive Systems, the auto industry supplier arm of $28 billion DuPont, the world’s third-largest chemical manufacturer. In five years on the job, he has quickly learned about the importance of looking down the road as a globally growing organization.
“In any business, as you have the business environment changing as rapidly as it’s changing in automotive, you absolutely have to have a comprehensive and very detailed global strategic planning and marketing process in the business,” McQuade says. “As a leader, you need to understand the macroeconomics, not just in the country but in the region. What are the changes in industry demographics and technology, and, in our business, what is changing in the types of vehicles they are building?”
During the past decade or so, the globalization of the auto industry has drawn DuPont Automotive Systems into diverse regions, including Eastern Europe, Brazil, China and India. Each new market presents a host of different challenges for McQuade and his leadership team, but McQuade says there are a number of requirements that are universal for success, regardless of the market you are looking to broach: You must have local connections within the country, you must have a deep understanding of local customs, customers, politics and logistical challenges. In addition, any person you send abroad for an expatriate assignment must have the same in-depth knowledge you do if not more so.
McQuade says the only formula for creating a successful operation in a new market is a lot of research and a lot of resource commitment. The following are some of the lessons McQuade has learned about taking a company global.
Establish local ties
Before you head into a new market, McQuade says it is essential that you learn everything you possibly can about the customers you will be serving.
Without an extensive knowledge of your customers, what they produce, whom they serve and how they are mapping out their own futures, he says it will be extremely difficult to build a longstanding presence in a new country or region.
“It’s absolutely essential to have an intimate knowledge of your customers, and that goes back to developing intimate customer relationships,” McQuade says. “There is absolutely no substitute for having that knowledge of your customers. You want to know where they are going, so you can react and provide the response they are going to need.”
He says the most effective way to gain a ground-level knowledge of the customers in a country is to first cultivate relationships with local people in your industry. There is a time and place for you to send your own expatriates to a new country, but when you are trying to set up shop, McQuade says the more local talent you can involve, the better off your business will be.
“You really have to have a local culture knowledge,” he says. “My belief is that going into a new operating culture without really having someone who is local and can help you work through that is not a key to success. You really need to have local people on the ground.”
McQuade and his leaders normally try to gain an insider’s knowledge by developing partnerships with local automotive coatings companies.
“The coatings industry is a very large industry, and there are coatings companies in many countries,” he says. “So you’re typically looking to see if there is a local company that has a certain knowledge [that can be combined] with your company. For us, we search that out, we begin discussions and start developing relationships with local people. We try to be ahead of the curve in terms of looking where the markets are going and trying to develop those relationships.”
Your strategy for building partnerships with companies in new markets should be part of a larger overall strategy on how you want to grow abroad. McQuade emphasizes the importance of building a crystal-clear growth strategy for your entire company. All of your decision-makers should have no doubt about what makes for a good growth opportunity versus a less desirable opportunity.
“We have seen the need to develop very clear business strategies on how we’re going to enter newly emerging markets,” he says. “You need to look at if this is a market you want to enter yourself, do you want to acquire a business, do you want to enter a joint venture with another business. But in the end, you need to be clear on what your strategy is when going into a market so that it’s clear to your organization who is really executing the plan.”
McQuade says you can’t simply send your own people to a new market and expect them to build the business without local connections. But, he says, you probably won’t be able to rely solely on in-country connections to build a presence there, either. You will likely find that sooner or later, there will be a need for you to send expatriates into a new country.
The locally hired talent must be able to develop constructive working relationships with the managers you send overseas. To make that happen, you must find the best candidates among your ranks for overseas assignments, then train them extensively on the culture they are about to enter.
McQuade calls it “cultural immersion training,” and it’s meant to give expatriate assignment candidates a comprehensive view of the country in which they will be working.
“We hire from the outside, but we invest in that (training),” he says. “The training typically takes employees and possibly their families through a couple of weeks of education about what it’s going to take to live and operate in the new culture.”
Cultural immersion training covers everything from social customs to local food and dining habits, education systems, language training and the cautionary tales of other expatriates who have encountered pitfalls in adjusting to life in a new country.
The training stresses the importance of having expatriates develop support groups and surrounding themselves with people they can trust for advice and answers.
“People who have not been expats before might not realize that they’re going to lose their support group from whatever country they now live in,” McQuade says. “We try to get them to think about different ways they can have a support group.”
McQuade says you must be selective in who you send overseas. Expatriate assignments aren’t for everyone.
At DuPont Automotive Systems, McQuade and his senior leadership attempt to match up-and-coming managers with the right assignments by matching a person’s interest in such an assignment with his or her level of ambition and career path.
“Our placement process does a good job of clearly identifying someone’s career path and what they need in terms of their personal development in order to achieve their career path,” he says. “In these cases, if an expat assignment is important for an individual to achieve that development, then that becomes part of their development plan.”
If someone in your organization has the talent and ambition to become a senior executive at some point, McQuade says you should encourage that person to travel whenever possible and experience many different cultures.
McQuade spent four years living as a business expatriate in Germany.
“Expat assignments are a tremendous growing experience in today’s business world,” he says. “This is a very global market, whether you’re talking about automotive or other markets. If you have a desire where you want to become a senior leader, president, CEO within a global organization, and you have the opportunity to go into a different culture, work and operate there, it is a tremendous learning experience for anybody.
“From the business side, the benefits of having expats getting experience on these assignments means you are getting people who have a broader view of the world. If you spend your entire career in one country, it is very difficult to understand that the world is so different depending on where you are trying to do business.”
Diversify your leadership
McQuade says it is important for the senior leadership team of any business to be composed of a diverse group of people not only in business matters but culturally, as well.
An ethnically and culturally diverse leadership team can assist you in a big way if you are in the process of taking your business global.
“You do not want your leadership team to be only of the native tongue of the country of your headquarters,” he says. “If you have a diverse group, your senior leaders will speak multiple languages and can help you with that translation.”
Translation skills are highly valued in the people who manage the international communications pipeline at DuPont Automotive Systems, whether they are on-site managers, marketing or public relations managers.
Poor translation of company messages can stall a company’s growth. If messages aren’t effectively reaching the ears of those who need to hear them, McQuade says it’s as bad as not communicating at all.
“We take a view that, although English is the world’s business language, if there is an important message we’re trying to get out to the organization, we’ll invest the time to translate it to the local language, recognizing that there is a very large percentage of the organization that won’t understand the message otherwise.”
McQuade refers to his senior leadership team as his “arms around the world.” He frequently meets with his leadership team to foster alignment among the various aspects of DuPont Automotive, making sure that messages are consistent, regardless of where in the world the communication is headed.
“As I travel to many of our different regions, I view those trips as being in support of our local management team,” he says. “It’s all about how I can help them and support them to reinforce whatever the message is. It’s very important that your senior leaders provide a consistent message. Otherwise, you can confuse the local organization.”
Things to remember
Growing a business overseas is a complicated proposition. It addition to strategic planning and training people, McQuade says there are other issues you’ll need to consider, as well. Here are a few of them:
- Familiarize yourself with local environmental laws.
“You need an understanding of how to operate with the local government in the way of environmental restrictions and what we would refer to as product stewardship, in terms of regulations around hazardous material control. For us as a chemical business, that’s very important.”
- Familiarize yourself with local politics.
“Taking China as an example, you absolutely need to understand how the Chinese government operates, as opposed to a Western government. In China, we’ve invested a significant amount of time as a corporation establishing those relationships with local government. Having the local government be a supporter of your entry into their country can be very helpful in establishing your operation.”
- Form a detailed logistical plan.
“When you’re operating a global business, when you think of functional expertise, I would look at my operations to make sure the leadership of my operation has the right operating capabilities and processes in place to serve us globally.
“It’s along the same lines in terms of overall supply chain organization. We have, within our core supply chain group, the understanding of how to move our products globally. On a very general view, when we’re setting up in a market, we’re looking for a local partner that brings operational expertise. That partner is then very helpful in understanding the logistics in that emerging market.”
HOW TO REACH: DuPont Automotive Systems, www2.dupont.com/Automotive/en_US/