By Guest Author Tony Scott
In the recent past, in the US, Europe and Asia, there were simply too many companies chasing too few people — resulting in across-the-board shortages of the human capital skills necessary to build and grow technology companies. In the US, working for an Asian or European company was often viewed as a second choice, at best. US-based executives were concerned that they were likely to have difficulties managing across geographic and cultural gaps, and that their wealth creation opportunities through IPO were limited.
Today, of course, much has changed. Funding for new and growing start-ups has dried up — last quarter VC funding in Silicon Valley was at its lowest level in 10 years. The dream of IPO riches that drove so many into the technology sector has become exactly that for most — an unobtainable dream. Unemployment is up worldwide across all sectors, and the tech sector has not been spared. In Silicon Valley, estimates of unemployment top 10%, and the real rate of unemployment and underemployment is doubtless far higher.
But while the talent market has relaxed, it is important to realize that executives who can work effectively across multiple cultures are still in high demand and relatively tight supply. Most companies in core technology — such as semiconductors, networking, mobile devices, enterprise software and infrastructure software — must operate globally to be successful, and they have to have a plan for global expansion almost from day one.
The older model of US businesses going overseas was to have different, independent operations for each country, often with each country reporting directly back to the US. That may still make sense for very large markets, such as Japan, China, and the UK. However, an increasing number of companies are moving to pan-Asian or pan-European organizations to manage their activities across a wider region. The human capital skills necessary to be successful in that kind of an environment demand people who can easily work and interact with multiple cultures, not just those of their home country and the US.
Whether a company is from the US going overseas, or is a foreign company is coming to the US, perhaps the most critical factor to their success or failure is their ability to build a cohesive organization that can operate effectively in a global environment. Most VCs will tell you that they’d rather invest in a company with a B+ technology and an A+ team, rather than the other way around. Every technology center in the world is littered with companies who had superior technology, but failed because they didn’t have the right team. This is magnified when a company is operating across time zones, languages and cultures – and it can kill a young company.
In the next two parts of this series of articles, I will share a few case studies that will illustrate my point about culture and team building being so critical. I’ll try to disguise the companies to protect the guilty from embarrassment.