Is there a recipe for success in business, a tried and tested method of avoiding the pits into which others are wont to fall? Apart from the obvious need to apply common sense (alas, less common than it once was) understanding what you are doing and checking the facts before you commit yourself, each particular market or business will offer its own set of challenges. When it comes to operating in a foreign country there are additional cultural and linguistic factors, to name but two, to be taken into account. This was illustrated during a very interesting presentation by Professor Andrzej Kozminski, a professor of management and founder and president of Kozminski University (named after his father), on the dos and don’ts for foreign investors operating in Poland given at the British embassy in Warsaw to members of the British Polish Chamber of Commerce.
As you might expect, Professor Kozminski’s talk drew on both his academic and practical experience (he currently is one of two Polish Academy of Sciences members in management science and also serves as the chairman of supervisory board of Telekomunikacja Polska) to share with us both his insights into the functioning of those foreign companies that have invested in Poland and some of his ideas as to what such companies should do to be successful in the future.
The potential risk to the foreign investor clearly increases as the closeness of working with a Polish partner increases. Thus the risk profile increases across the range of possible arrangements from, for example, simple outsourcing through licensing, joint production and finally to what the professor refers to as the joint venture trap. This trap comprises a number of elements which might fall under a general label of lack of communication. The foreign investor may have a lack of understanding or knowledge of the Polish market on its side and be faced with a lack of understanding of the investor’s marketing expectations or strategy on the Polish side. The list is long: too high profit expectations v. too high pay expectations; a superiority complex v. an inferiority complex; stereotyping on both sides; poor communications skills and an over reliance on interpreters; a drive to impose the foreign culture v. resistance to cultural change; a “plantation syndrome” among foreign managers v. militant local trade unions; and, on both sides, poor negotiation skills. Of course, joint ventures can fail for other reasons as well (please see ‘Til death us do part).
It is fair to say, however, that the position outlined above is becoming a little dated now and that Polish management has come a long way since the early 1990s with a dramatic building up of managerial competence and an ever larger pool of good managers from which to draw. These are managers who have made the transition from basic survival as entrepreneurs, via learning skills though functional and process re-restructuring to a stage of continuous improvement where soft skills such as effective team work and leadership are brought to the fore. This is important because Poland has traditionally had a very hierarchical power structure with those having power maintaining a distance from those below. In the modern economy the dominance of vertical power structures is dangerous because innovation and new ideas are needed and these are more likely to arise in a more horizontal network of cooperation. For the foreign investor, remote control from abroad is unlikely to be innovation friendly – especially in the current economic downturn (although Professor Kozminski is optimistic about the Polish economy for 2013 seeing 2 per cent GDP growth).
But, as this is not the place for a continued academic discussion of management, what are the key dos and don’ts according to the professor? Do impose international performance standards – do not tolerate low local performance or productivity; do develop local mangers and apply a uniform pay policy – do not rely on better paid imported managers; do use English as the business language – do not have a bi-lingual business run by interpreters; do develop proper career structures for local staff – do not fall into the “plantation syndrome” with local glass ceilings; do adopt a “third” or blended culture for the business – do not try forcefully to impose a wholly alien culture which will simply generate resistance but, at the same time, do not simply tolerate the old culture; focus on soft skills not hard skills; do work on a combination of local and international market penetration – do not simply rely on exports; do develop a winning strategy and share the gains so that employees are able to see that individual effort brings rewards – do not take a short term opportunistic view. And, finally, do stay clear of local politics – do not become involved.
In essence success comes from effective management which at its simplest is about good communication and trust. Transparency helps to establish trust whereas a secretive management style induces mistrust and tends to cover up incompetence. It is also important to keep your word – nothing creates distrust more than broken promises.
Whatever the method your business adopts, following these general principles will help to make your investment a success.