By Mona Pearl, Special for US Daily Review.
Includes excerpts from Grow Globally: Opportunities for Your Middle-Market Company Around the World. Copyright (c) 2011 by Mona Pearl. Reprinted with permission of John Wiley & Sons, Inc.
The Middle Market Advantage: The Right Mix
Middle Market companies are the most neglected and underserved and with the highest growth potential. While larger, and multi-national corporations have more resources to invest in exploiting these new opportunities, smaller companies, up to around $500B are more agile and can more readily adapt to change. And the proof is in reality: middle market companies have been relatively stable in their performance during the last few years as the world has been undergoing an economic tsunami: they are the ones driving sustainable growth, as they create jobs and innovate. However, when it comes to expanding globally and looking for opportunities across borders, only about 30% of them even try, not to mention the ones that try and subsequently fail.
How can corporate leadership take one large step back and look into the global marketplace to discover and assess new opportunities and new avenues to generate future growth?
Instead of gazing with fear at the global expansion process, focus with excitement and starry eyes at the opportunities and, most importantly, plan for success. Middle market companies are greatly positioned for global growth, and here are the three top reasons why:
- In a global context, this size companies usually are considered large, and can compete globally on a scale that provides them with a competitive edge. A $500 million company in the US may be considered middle market, but in most regions of the world, this is considered quite a large organization. It offers credibility and demands attention in cross-border markets.
- Middle market companies are more flexible, innovative and able to change and adapt much faster than the large multinationals. That is a combination of size, layers of management as well as corporate culture that are more entrepreneurial and forward thinking. Penetrating and developing an international market requires an entrepreneurial philosophy and drive—the same kind of philosophy and drive behind every successful startup business. Following that logic middle market companies should be the champions and enjoy exponential global growth.
- The leadership in middle market companies is more entrepreneurial, intimately involved and in-tune with the daily operations and by having fewer layers to go through, can adapt, move and act much faster. In many cases, the core team that started this venture is still around, and there is more of a tight and personal corporate culture
The risk may lie in NOT expanding into global markets
- If your product is seasonal, your options may be limited in the US. Why not choose markets that offer year round sales potential?
- Your product/service shelf may have timed out. Why not look for markets where there is a need for your type of product and you can extend its shelf life? Not every market is appropriate for the latest and greatest!
- How about collaborating with other brains from around the world and thriving by innovation? You have a closer relationship with the target markets and will get ideas for products you could never generate in-house
It starts with the tweaking of the mindset: the U.S. is a huge country, but it’s not self-sufficient anymore. CEOs and other executives in charge of operations and growth need to look at the global market, because that’s the only chance for survival. And instead of feeling panic and fear, they should look at the global market as an opportunity. Let’s stop peeking through the keyhole, open the door and step outside. Engage, play and succeed.
The fact that the US used to be the main playground for the middle market companies creates three main challenges:
A Global Mindset: For many, global expansion is not even on their radar. Many U.S. companies still consider going global an “option.” It’s not. Ready or not, almost every U.S. company is already competing with a foreign enterprise even right here on U.S. soil. In a technologically connected world, the U.S. can no longer afford the luxury of global isolation, but learn to play in the sandbox and launch successful international ventures.
American businesses fail at a rate of three to four times the rate of other countries in their ability to expand globally. Even worse, the majority of U.S. businesses never make an attempt. Of all the obstacles to success abroad, the greatest hurdle is simply mindset. Our entrepreneurial drive, vision, and expertise just don’t compensate for our lack of global perspective, drive and success.
The fact is foreign based companies are taking advantage of the recent economic down turn and buying American businesses at fire sale prices. Just look at the percentage of foreign ownership of major U.S. industries:
- Mining – 27 percent
- Information Technology – 24 percent
- Manufacturing – 20 percent
- Professional, technical scientific services – 20 percent
The U.S. can no longer afford the luxury of global isolation, and companies must respond by developing effective globalization strategies and launching successful international ventures.
Lacking confidence due to the lack of global experience: As the trade borders become seamless and the world becomes more dependent on technology, middle market executives must scramble to acquire the tools and skills necessary to survive and thrive in the increasingly competitive global market. The new frontier is that there is no frontier, and how middle-market businesses respond to this reality may have a significant impact on the economy as a whole. Savvy entrepreneurs will likely see opportunity where others see impasse.
Lack of resources: the middle market is underserved when it comes to access to credit and other financial resources and programs and simply knowing their needs. This is an underserved market that has the potential but not the attention and resources, like the middle child. Time to reinvent the US economy, create the dots and then connect them. Companies are at a point where they have to learn new rules of the game to remain relevant in the global economy. Let’s focus on the opportunities the global economy presents, and how we can tap into them and thrive. Not only survive. The American ‘let’s do it’ attitude and spirit has never been just about surviving!
Mona Pearl is a global strategic business development expert as well as the founder and COO of Beyond A Strategy, Inc., a company providing expertise to plan and implement cost effective and sustainable global growth that improves a company’s bottom line and helps realize seamless international operations. In addition to Beyond A Strategy, Inc., she has also founded and operated 2 additional businesses and sits on the board of several organizations. Past clients include Deutsche Telekom, Michelin, American Airlines, Philip Morris and Bacardi.
She is the author of Grow Globally: Opportunities for Your Middle-Market Company Around the World, has been quoted as an expert by CNBC, Oracle, Chicago Tribune, NPR/WBEZ, Microsoft, Bloomberg, Entrepreneur.com, and Crain’s Chicago and regularly publishes columns on global competitiveness in industry magazines, including Manufacturing Today and Management Today.