Global Business

No CEO wants to be known as a hypocrite.  But unfortunately, many are precisely that – here’s why.

There is an interesting conundrum that many companies face when expanding beyond their borders. A key reason for their success at home has been that they could take advantage of the homegrown business environment. They operated in a framework of laws, competition, and a well-understood social contract.

The challenge, however, is that when moving into a new market, companies are moving into an entire business environment which also includes foreign (to them) laws, competition, and a different social contract. They must follow one of two paths:

• Stick to their better-from-home approach, and hopefully “disrupt” the market to their advantage.
• Change their practices (and possibly ethics) to fit: When in Rome, do as the Romans do.

The key benefit of changing to fit is that the organization can truly take advantage of local advantages. The problem is when the local customs are fundamentally in conflict with home country ethics and laws.

The key benefit of bringing your ‘foreign’ perspective is that thinking differently can possibly bring a competitive advantage. And you don’t need to compromise your ethics.

While this is all relatively theoretical, there are practical implications to these choices.

Consider, for example, the development of the web and Social Media in China. This market is big, entrepreneurial, and as sophisticated as any in the west… except for their laws regarding censorship.  Local competitors (Baidu and Sina Weibo, for example) are thriving under these laws; reportedly Sina Weibo has 700 internal censors on the payroll.  It’s no surprise, then, when the international search engines and blogging platforms also become complicit in censoring their content.  Or when Twitter inserted a back-door “spying” entrance into their product.

Yes, social networks can be used for both good and bad. Witness the Arab spring, or how the police are using the tools to help identify perpetrators after riots. But let’s put aside this argument (net good / net bad), and speak to the obvious reasons why authoritarian regimes have problems with the tools: Social Networks are instruments of communication, collaboration, and community building. And when people are unhappy, these 3 C’s foment opposition, and sometimes even rebellion. It’s in the authoritarian interest to clamp down, control, and curtail (a different 3 C’s) the social web in their countries.

Many of the companies that seek to profit from those markets choose to be complicit, and bend to the local laws.  They are enablers of the “bad” 3 C’s – shame on them.

How ironic, therefore, that even if they feel uncomfortable with their complicity, many have similar policies internally themselves: closing access to – and monitoring – their employee’s social web access. For those unenlightened leaders who need it to be spelled out, choosing the right 3 C’s means greater connection to the market, greater collaboration internally and externally and a greater community of interest amongst clients and employees alike. This translates into higher employee engagement, better retention, more effective marketing, and higher sales. It’s hard to argue “open” in an international market, when their fears are shutting their social sphincter shut.

Yes, even the most enlightened organizations have concerns over productivity and business risk, so the need to control supposedly solves this problem.  These arguments are red herrings: the risks can be mitigated easily through policy, training, and communication. Unlike dictators who fear openness, corporate leaders would do well to embrace it – and model it – no matter how scary it may seem.

Is there a conflict between your organization’s policies externally, and the ground rules it enforces internally? In today’s world of many-to-many contact and community-building, philosophical alignment is no longer optional.  And without alignment, there is hypocrisy.

This week’s action plan: This parallel also works at the individual level, and well beyond just Social Media. If countries should be open, and corporations should be open, then surely we should be too.  (Are you?  Which 3 C’s are you most comfortable with?)

Note: The Make It Happen Tipsheet is also available by email. Go to www.RandallCraig.com to register.

Randall Craig