With rumblings of a worldwide economic downturn on the horizon, more business leaders are looking for strategic ways to weather the storm. Mergers and acquisitions (M&As) are popular in some spaces, but executives are increasingly turning to joint ventures (JVs) to produce value. In fact, according to Boston Consulting Group, 60% of business leaders say JVs are more resilient during economic downturns.
Seasoned media executive and cross-cultural leader Wayne Borg agrees. He believes international joint ventures are the secret to successful global expansion — a crucial element for growth despite a shrinking economy. After successfully executing joint ventures in markets across continents, he’s learned what it takes to pull off a fruitful cross-cultural JV. Wayne Borg shares his blueprint for successful joint ventures that holds true in all markets worldwide.
Have a Clear, Shared Vision
Cross-cultural JVs allow executives to expand into a new market while leveraging the expertise of a local team. However, cultural and language barriers can get in the way if you aren’t careful. “What can happen is both sides will default to their national positions in a domestic context and go, ‘This is the way we do it,’ either because they’ve got a dominant position or a leadership position in their particular marketplace. So it’s really about how you break that barrier down,” Wayne Borg says.
The best way to remove cultural misunderstandings is to agree on a shared vision for the project. “I come back to having a very clear vision and a strategic frame with a very clearly defined value proposition that you can execute against,” Borg says.
It’s tempting to enter a new market and want to change everything, but over-eager executives often get ahead of themselves, jeopardizing their success in the process. “I think one of the beauties of emerging markets is there’s not necessarily a playbook and not necessarily a case of, well, this is the way it’s been done before. That gives you incredible freedom,” Borg adds. “But it has to be married with discipline so you’re not caught with legacy issues. And that gives you the opportunity to leapfrog, say, more mature markets in terms of how you position yourself, the learnings you can take, but aren’t necessarily something that mature markets could easily unwind from.”
Enter the Agreement With Humility
Wayne Borg often sees CEOs struggle to accept their partner’s perspective. It’s easy to feel like you have all the answers, but humility and a collaborative mindset are the key to international joint ventures. “Cultural understanding is critical. It is about collaboration, it is about hearing both sides. You’ve got to assume, if you’re entering into a JV, that you have respect for that other entity and want to work with them because you see the opportunity,” Wayne Borg says. “The world isn’t a homogenous place. There is huge diversity in cultures, in people, in understanding. What often is seen to be the standard or accepted practice in one part of the world can be quite alien in others.”
Instead of entering a market with preconceived notions of what that market needs, Borg encourages leaders to take a step back. Learn from local JV partners and dive deeply into the cultural context before making decisions. “What’s vitally important is not to impose your view of the world in those markets, and understand what the drivers are culturally, both at a society level but also at a business level, to inform your judgment and your decision making,” he adds.
Share Value and Mitigate Risk
Like any business deal, international joint ventures have their perils. “There’s always a risk,” Wayne Borg says. “Get as good an understanding of that marketplace, ideally with a partner from the market, and try to understand those dynamics.”
In Borg’s experience, taking the time to learn from a JV partner, as well as consumers, is crucial. “It’s understanding how that market operates in terms of customers, suppliers, value chain, and adapting accordingly,” he says.
The nature of the joint venture is also beneficial. Unlike an M&A, both parties have a real stake in the project’s success. “Everybody’s bought into this in equal parts. So from the get-go, everyone has the same motivation to succeed,” Borg says.
Joint ventures allow executives to share their wins and losses equally, making entering a new market less risky. Cross-cultural understanding is also improving JV outcomes. According to Boston Consulting Group, 92% of leaders received just as much value from the JV as they put into it — an 18% increase from 2014. As the world continues to globalize, boundaries between cultures will continue to dissolve and allow leaders to share their successes and failures with their international partners.
Crossing Borders, Sharing Value
International joint ventures are becoming an increasingly popular strategy for corporations to expand into new markets. “Regardless of borders, the world operates pretty much as a single market now,” Wayne Borg explains. Executives must be willing to set aside their preconceived notions and egos to leverage the full power of their joint venture. “I think it’s about understanding. It’s not one size fits all. Every market is different. Every market has its own peculiarities, nuances,” Borg says.
