Talent & Leadership

27 questions to create your country playbook when expanding internationally

For first-time CEOs and founders, the decision to expand internationally can be both exciting and daunting — as it should be. Expanding into new regions can spur growth and open up a world of possibilities, but it also adds a level of complexity that not every leadership team is ready for, especially without first-hand experience operating in that region.

In part 1 of my blog series on international expansion, I shared a strategic approach for how services firms can tackle international expansion, based on my own personal experience. It covered topics like when to expand, where to go first, how to work with partners, and ways to mitigate risks like culture dilution and financial readiness.

In part 2, I’ll dive deeper into what happens once you decide to make the move. Specifically, how to create a global operating framework that can support your expansion into each new country — what I call your country playbook.

What is a country playbook?

A country playbook is in essence an operating framework for international expansion, providing structure and information needed to expand into a new country or region in a disciplined, repeatable way. It’s the operating manual that brings your strategy to life.

A country playbook can align the leadership team with the new leaders on the ground in a new region. It can reduce risk, speed decision making and guide the new team to operate with the same vision for customer experience, culture and employee experience while still allowing for local flexibility.

While a country playbook should provide enough detail to answer the most common questions about expansion, it doesn’t need to be long or formal. It just needs to provide your leaders with the direction they need to understand and execute on your strategy—and feel empowered to make decisions that will benefit everyone involved.

What are the components of a country playbook?

There are two parts to a successful country playbook: a global overview and country specifics.

The global overview provides a high-level structure that can be used across countries, covering items like company positioning, sales differentiators, the scope of services to be provided, the customer value proposition, financial modeling and governance frameworks. This part of the playbook also includes information to help country leaders with hiring, providing clear expectations about alignment with your culture.

The playbook must also address country-level nuances linked to your overall strategy. For example, the specific roles you might need in-country for delivery versus what you can centralize through a center of excellence model. It might also include specific services or capabilities that best fit the customers and partner maturity in that market.
Since each country and situation is unique, this article will focus on the 5 areas that should be part of the global overview: 1) culture; 2) team; 3) services & go-to-market; 4) governance; and 5) financial model.

When thinking about each of these areas, look to expand through fractal growth. By this I mean branching off from an existing offering or point of strength, which helps to create consistency and alignment between regions. Below is an illustration for how this might look as you expand your market interactions, people processes and customer experience into a new country.

Culture

Solidifying and scaling your existing company culture should be top of the list when it comes to global expansion. You have to get it right, and so do the country leaders hiring your new team. Your country playbook gives you an opportunity to embed your existing culture into each new market from the start, weaving your mission and customer experience into the fabric of each country’s operating framework.

To help you get started, your playbook should address questions such as:

  • What is your stated vision, values and brand promise as a company?
  • When your company hires a new leader, how can the team make sure they’re aligned with your values and cultural DNA?
  • What are your norms and rituals as a company, and what can you/should you bring to the new region?
  • What kind of differentiated experience do you expect to provide to customers and employees in this new market based on existing brand expectations in other markets?
  • How can you translate your corporate culture into how you manage processes, performance and compensation while leaving room for local nuances?

 

Team

Thinking through how teams will be structured within and across regions in advance will not only create efficiencies of scale and limit conflicts down the road, it will also speed up recruiting and productivity. Your country playbook should provide guidance on how you will manage customer relationships inside and between regions, what kind of support will be provided from headquarters versus what talent is needed locally, and what you can serve out of nearby regions. This is especially important for customer-facing and leadership roles.

Certain economies of scale can come from centralization and filling some roles from nearby regions, however, these decisions must take into consideration regulatory, cultural and language differences between regions. You will likely want to fill in-country customer-facing roles (e.g. country management, sales, project managers, solution architects) by hiring local/native people, while leveraging global support functions for scale. Some companies will fly-in top experts or tap into global virtual delivery teams, or, when you have a first team in place and some traction, use nearshore and/or offshore facilities.

Your playbook should address questions such as:

  • What leadership roles are needed, and will those be hired locally or through existing leadership?
  • What is your delivery model? What are the services you need/intend to deliver locally or globally?
  • What is your partnership strategy for a given market?
  • How are you going to train your employees and manage their competencies?
  • How are you going to staff projects?
  • How are you going to structure work arrangements with subcontractors?
  • When it comes to forecasting how can you anticipate and prepare for demand?
  • How are you going to manage customer satisfaction?

 

Services and GTM

When it comes to the services, you’ll want to build a country-tailored portfolio mix and go-to-market strategy. This strategy should be based on the size and potential of the targeted market, the offerings most needed by your partner ISVs in that region, and the competition analysis you conducted prior to making the decision to expand. That portfolio shouldn’t reinvent the wheel, but instead be grounded in the services that already set you apart in your home market. For example, if 80% of your customer references are in the financial sector or are of a certain size, it makes sense to focus there in the new country.

Your playbook should address questions such as:

  • What specific services should we offer in each country?
  • What is the value proposition of those services?
  • To what extent will our offering differ from what we sell elsewhere in the world?
  • How does our pricing in this country compare to the rest of the world?
  • What markets or services do we want to say no to (e.g. public sectors, staff aug, etc.)?
  • What is your local plan to build/develop your customer-facing brand?

 

Governance

Governance frameworks and approvals should also be built into the playbook, breaking responsibilities down locally, globally and regionally. This part of the playbook should address who makes the decisions, and how that relates to your strategy and services.

Your playbook should address questions such as:

  • What level of decision making or approvals are needed when it comes to customer contracts?
  • How do we handle fixed-price proposals?
  • What are the thresholds on approvals and who needs to be involved?
  • Who makes the final decisions on hiring? Does that vary by role?

 

Financial model
Last but not least you will want to define your financial model and the budget implications of decisions being made. Your playbook should address structural models like how you’ll manage the P&L, and think through those decisions.

Your playbook should address questions such as:

  • Will we manage P&L by country, region or globally?
  • How do we align and create consistency between our P&L philosophy, incentives, compensation policies and governance?
  • How do we cope with intercompany subcontracting to ensure that countries/markets who host our expert resources are incentivized to support the start of new markets?
  • Who is financially responsible for budget overruns?

 

Once you have your global framework in place, you can dive deeper into the specific country-level detail. This should also be an evolving document. It will only continue providing value if it remains up to date and considers lessons you learn as you expand into more countries. So leave room for growth while ensuring your current playbook alleviates misunderstanding and miscommunication. Revisit the questions in here and add to those based on the situations that occurred in earlier rollouts and talk to your regional leaders to see what else would’ve helped them as they took their first steps.

If you’re a founder or CEO looking to expand internationally, and need capital or counsel to support your move, get in touch with Tercera. Or connect with me on LinkedIn with specific questions. We might be able to help!

Tercera adds two new partners

Former Guggenheim Partners Investment Banker Bill Petty, and Former Appirio CX and Marketing Leader Michelle Swan Join the Tercera Team

EVERYWHERE – April 8, 2021 – Tercera, a growth-focused investment and advisory firm specializing in technology professional services, today announced that Bill Petty and Michelle Swan have joined the firm as partners. Together, they bring decades of IT services experience to help Tercera drive forward the Third Wave of cloud computing. Bill and Michelle join Tercera CEO and founder Chris Barbin, partner Dan Lascell and partner Lisa Burton to support the firm’s investments in third wave cloud consultancies.

“Our goal at Tercera is to identify and empower the integrators, consultancies, and managed service providers who will lead the next wave of innovation,” said Chris Barbin, founder and CEO of Tercera. “Bill and Michelle have built, ran, advised and supported dozens of services companies over the last 20 years, and they bring pattern recognition for the opportunities and challenges our founders will experience as they scale their own business. They embody our mission and values, and will be invaluable partners to the entrepreneurs we back.”

About Bill

Bill brings more than 15 years of M&A experience to Tercera and will focus on the sourcing, execution and monitoring of Tercera’s investments. He joins Tercera from Guggenheim Partners where he was a Managing Director in the Technology Investment Banking Group. Prior to Guggenheim, Bill held investment banking roles with William Blair and City Capital Advisors and worked in KPMG’s Transaction Services Group. He has advised dozens of technology companies across the IT Services and Software markets on topics ranging from M&A, growth equity investments and IPOs. More on Bill here.

“Tercera is creating a new kind of investment firm, focused on the people that enable the third wave of cloud computing,” said Bill. “We are excited to partner with the founders and teams driving the next-gen IT services firms, and are confident that our counsel, connections and capital can help them become category defining leaders.”

About Michelle

Michelle brings to Tercera more than 20 years of branding, marketing and customer experience expertise. She will be responsible for guiding Tercera’s marketing, content and diversity & inclusion initiatives, the Tercera advisor and portfolio community experience, and helping founders amplify their own brand presence. Prior to joining Tercera, she founded and led Swancomm, a marketing communications consultancy supporting early stage product and services companies. Michelle was one of the earliest employees at Appirio, where she led corporate marketing, customer experience and initiated the company’s Customer Advisory Board. More on Michelle here.

“People-based businesses are the heart and soul of the economy, and the secret to success for some of the most well known technology companies out there. Yet they rarely get the attention and support they deserve. We aim to change that,” said Michelle.

About Tercera
Tercera is an investment and advisory firm founded to accelerate the growth of people-centric businesses. Specializing in the $460 billion cloud professional services market, the Tercera team is composed of invested operators who know first-hand what it takes to build and scale a successful cloud services business. Tercera (Spanish for ‘third’) is on a mission to identify the people and partners who will lead the next wave of cloud computing – the Third Wave – and provide them with the capital, counsel and connections they need to scale faster and take an outsized share of the market.

Empowering growth-focused businesses and people

We’re on a mission to change the equation for people-based businesses.

Companies and leaders come to a certain juncture in their journey when it’s necessary to rethink the approach that gotten them to where they are. Growing to $5M in revenue is not easy, but in those early stages, a powerful vision, a few talented people and customers and sheer brute force can get you pretty far. However, what might fuel initial growth spurts cannot necessarily sustain a company in the long-term. Growing an organization north of $100M takes a different approach and a different set of skills.

Not every leader is ready to scale their company beyond that first plateau, which is why the world is packed with hundreds of thousands of small professional services firms that do amazing work, but never get beyond $5M or $10M. As experts agree, it takes a growth mindset and more process-oriented approach to build something that goes beyond that, something that endures.

Our goal at Tercera is to identify those who are ready, who do have that growth mindset. And then to empower them with the capital, counsel and connections they need to grow bigger and faster than they could without help.

We believe capital is the easy part. There are plenty of equity partners out there, but finding one that really understands your space and can provide the specific counsel and guidance you need to get beyond those first few plateaus of growth is difficult. This is where the magic of our methodology and advisor community comes into play.

 

Tercera’s 5 Elements Methodology

 

We developed Tercera’s 5 Elements for Scale based on decades of experience operating and selling professional services businesses. It is the framework we use when evaluating potential portfolio partners, the methodology we use during our first 100 days of working with a partner to prioritize where investments can make a difference, and how we look at building out our Advisor network. Over the years, we’ve found that most companies are great in one or two areas, good in a couple more, but could use help in the others.

Our 5 Elements for Scale are broken up into (this should not surprise you) 5 areas:

Leadership & Talent: The people piece of the puzzle, always integral to the success of any company, is critical in a professional services company. In this area, we look at everything from the strength of an organization’s culture and diversity, to its recruiting and onboarding capabilities, to its leadership development and overall talent management processes.

Corporate Strategy: In early stage growth mode, many leadership teams lean more towards execution than strategy. For sustainable growth, you need both. This element looks at a firm’s strategic planning process, brand and marketing capabilities, sales and account management strategy, and how M&A and international expansion come into play.

Solutions & IP: The professional services firms that will lead in the cloud’s Third Wave will offer a different set of skills and delivery models than those who led in previous waves. Expertise in cybersecurity, AI, DevOps, and hybrid cloud operations are needed more than ever, and vertical IP and productized solutions are no longer nice to have, but must haves. This element looks at a firm’s overall portfolio, reusable assets, product roadmap and more.

Channels & Partnerships: For services companies, success often depends on going to market with the right ISV as well as creating the right partnerships to grow revenue, attract customers, and expand awareness. This element looks at a firms’ overall market positioning, alliances strategy, channel marketing and adjacent partnerships.

Operations & Processes: While this element may be listed last, we find it’s the one with which most younger services firms need the most help. Startups tend to look at process as a bad thing, but when it comes to scaling, having solid processes matters a lot. Those firms that are buttoned up in how they manage their financials, delivery operations, talent, marketing and sales processes have a big leg up on the competition.

 

Growth comes from all directions

While we believe this methodology can make a huge difference in preparing leaders and their organizations for that next phase of growth, if it falls upon deaf ears, it’s of little value. This is why we look for potential portfolio partners with a growth mindset — specifically, founders who are coachable and open to change. Not because we want to change everything about a company or tell founders how to run their business, but because every great company goes through periods of change, transition, and even reinvention. And we want to work with great companies.

When we say coachability, it means people who are open to feedback, self-aware, good listeners and lifelong learners. You’d be surprised at how easy these traits are to recognize, even in first meetings. Coachability is a key trait shared among leaders with the highest potential and it’s integral to building trusting relationships. People want to work with and for leaders who know their own strengths and limitations, who can acknowledge problems when they arise, and who surround themselves with others that have that same mindset.

If that sounds like you, and you are ready to do bigger things with your business, hit us up here.

Tercera’s belief in founder-led businesses

We believe strongly in the power of founder-led businesses for two main reasons.

First and foremost, we believe in founders because founders believe in their companies. Their business is personal to them, and that gives them a unique combination of vision, passion and mission that is essential to building something that lasts.

Secondly, data shows founder-led technology businesses tend to outperform companies who are led by hired guns. It isn’t always the case, but it’s the case more often than not. Studies featured in HBR and Reuters (among others) show that companies that still have a founder at the helm often do better in price performance, profit growth, innovation and recovering faster from a crisis.

 

Founders have a passion that fuels their mission

Founders will run through a brick wall to see their mission come to life. Whether it’s their entrepreneurial mindset, personal connection to the mission, or sheer perseverance, they’re virtually unstoppable, and that kind of passion is contagious with customers, partners and employees.

You can feel it in leaders who still helm the companies they founded: Jeff Bezos’ obsession with customer-centricity, Marc Benioff’s dedication to making Salesforce a platform for change, or Reed Hastings’ quest to reinvent entertainment. It’s not just the big guys either. Smaller technology players like Twilio, Okta, Slack, HashiCorp, who still have an active founder continue to outperform their peers and see huge valuations.

It’s this mix of passion and mission that keeps a company going even when there are only a few wins to celebrate — a situation every company goes through no matter how great it is. It’s what inspires other people to work hard, stick around, and treat every customer like the business depends on it. In professional services, where hundreds or thousands of consultants might be customer facing, and where recruiting and retention is a KPI, this mix is even more important.

Don’t get us wrong, the 1s and 0s are still important, and you still need to find great technologists, but people aren’t loyal to bits and bytes. They’re loyal to people. And founders — the exceptional ones — care about the people and the culture that binds the company together.

 

Freedom for Founders to Build and Lead

We don’t just look for exceptional founders, we also give them the freedom to do what they do best – build and lead. This is one of the reasons we typically choose to take a minority rather than majority stake in our investments.

As former operators and founders ourselves, we take more of an entrepreneurial mindset, not a strictly economic one. We’ve been there. We know the challenges and opportunities that come with scaling a professional services business. What it takes to grab market share and break through those plateaus of growth – getting beyond $10M or $50M to $100M and beyond. Breaking through those first few plateaus can be tough and many people do it, but the decisions and sequenced investments needed to navigate beyond $50M are considerably more challenging. We know what it takes to scale a services business, and how to sustain profitable growth over time. Part of that is capital, but that’s only a fraction of the equation.

Our role as invested operators isn’t to take over that journey for our portfolio founders, it’s to give them the guidance, capital and connections they need to navigate the journey for themselves.

Tercera balances the world of private equity in that we provide guidance to operationalize and scale a business, and the world of venture capitalism in that we come in early and help founders and ideas flourish.

If it sounds like the kind of partnership you’re looking for in your journey, hit us up here.