Seizing partnership opportunities in emerging markets
Chen Amit is co-founder and CEO of Tipalti.
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Srinivasa Ramanujan was born in 1887 in Kumbakonam, India. His father was a store clerk, his mother a housewife. Though clearly savant-like in his early math work, he had no formal math educational background. At one point, he failed out of school. When he sent a book of theorems to Cambridge, G. H. Hardy wrote back and began a five-year collaboration.
Ramanujan earned his BS degree and was ultimately named a Fellow of the Royal Society. Although he died at the age 32, mathematicians to this day are still decoding his work, including aspects related to string theory and the creation of the universe.
The point is this: There is human genius and potential out there, much of it yet undiscovered, even now, due to political, geographical and economic borders. With more than 7 billion people on the planet, there should be a better way to harness the talents around the world.
Partnering beyond your borders -- something many of the world’s leading multi-sided businesses and online marketplaces already engage in -- is becoming a low-friction way for those in less developed countries to add their value to the global economy.
While economics and business maturity are certainly factors to consider when deciding whether to expand beyond your borders, so are the opportunities. For marketplaces, it may be that a certain country can deliver unique, diverse goods or services. For media companies, it may be about gaining a local perspective or access to specific audiences. In the B2B space, the promise of a round-the-clock, cost-efficient workforce may seem attractive.
Ultimately, utilizing a global supplier base can help your business innovate, differentiate its services, improve competitiveness and scale growth. For these reasons, it's too important for business leaders to simply ignore.
So, what’s keeping businesses from getting contributions from emerging markets, and how do they overcome those obstacles?
Efficiency as a weapon against failure
Any partnering effort into emerging markets requires lean, efficient operations. Why? Two reasons.
Businesses that are not lean cannot effectively scale. Growing without a lean operation in place is sprawl, which results in gaps and failures. It’s essentially scaling with no benefit -- or worse, adding cost and complexity.
The other reason is more emotional and rooted in the morale of the business. Working within multiple countries while maintaining the sanity of everyone involved requires a realized process. Rules vary regarding communications, relationships, transactions, taxes, contracts, fraud and expectations. Expecting staff members to correctly adapt on demand to the thousands of differences involved in working with international partners is unrealistic and sets up your global initiatives for failure.
With more than 7 billion people on the planet, there should be a better way to harness the talents around the world.
Codifying (and ideally automating) as much of these rules into digestible frameworks and processes early on in your company’s maturity enables a team in New York to seamlessly work with partners in Frankfurt, Sri Lanka or Hong Kong. It’s less stressful and enables teams to focus on what’s important -- the relationships and results -- rather than impulsively dealing with value-reducing tasks related to each jurisdiction.
Efficient processes also are critical to reducing the internal and regulatory risks that come when working with remote partners. The propensity for errors, fraud and tax risk exposure increase across borders. As an example, do you know if a partner is on a terrorist watch list (OFAC, etc.)? What does the IRS require in terms of reporting to meet FATCA? These are not interactions that should be left to chance, and, likewise, they shouldn’t slow down the process. Eliminating the friction around those checks improves the overall execution of the business.
Structuring remote operations and visibility
Let’s assume your business knows it needs a footprint in a particular country. Maybe it’s as simple as hiring contingent development teams or establishing a supply chain that is meaningful to the business model. Businesses then have to decide: Do they set up a local office or operate remotely?
Developing nations have the added difficulty of contending with the scarcity of local business resources or talent, sometimes unstable political environments and infrastructure and, of course, lack of adequate banking and digital commerce. In most cases, your business will be better off if you can do without setting up a physical presence, particularly if the idea is to scale across multiple regions rapidly.
Ensuring visibility into overseas operations is key to managing a successful remote presence. What’s important when there are different regional entity structures involved is that you have a way to roll up that information and centrally manage them. For example, if there are subsidiaries, try to get each on the same platform to standardize processes. There certainly should be an element of localization built in, but having a common approach will make reporting and controls easier to maintain.
Prevent the best partners from churning
Some amount of partner churn is going to happen. It’s a numbers game. In emerging markets, those partners often have to deal with complex situations and their status may change abruptly. That said, the churn shouldn’t be because of your operations. Otherwise, you develop a reputation of being a difficult partner to work with.
Utilizing a global supplier base can help your business innovate, differentiate its services, improve competitiveness and scale growth.
Some partners will grow to be top performers, reliably delivering great service or desirable products. It’s imperative that they’re satisfied both in terms of feeling valued for their effort and in the frictionless way they work with your business. You without doubt will find superstars who are so hungry to make a difference, they over-perform. That’s your mathematician in the rough.
Partner churn also means you need to perpetually recruit. The strength of the partner network is in numbers, so you need to be able to onboard them rapidly and in a positive way. It increases the ability to find those superstars. It’s also why Uber, Lyft and Airbnb have continued to be reliable destinations for consumers. Suppliers are always there and ready, including internationally. And some may leave, which is okay -- as long as new partners join in greater numbers.
Innovation for the greater good
Bringing global talent into your own supplier ecosystem ultimately distinguishes your business from its competition and sets up your company for long-term success. And that is exactly why most of the world’s most innovative businesses have major initiatives underway to partner with the global workforce.
Doing so also steers the world toward a more optimistic journey. Giving people in developing countries access to the global economy can help alleviate everything from disease to political instability. With technology and a willingness to open ourselves to greater human contributions and promote shared prosperity, the business community has a great opportunity to make a world of difference.
