You’re the Boss Blog: The Risks of Expanding Into Australia, Part 2

Sustainable Profits

The challenges of a waste-recycling business.

In my last post, I wrote about our plans to open our 22nd foreign office in Australia. We have checked the very important first few boxes in our process to conduct a successful foreign-office opening with limited risk and investment — including finding a general manager, Anna Minns, who will start drawing a salary as soon as we start invoicing. Most important, we have a few partnership deals that are close to closing.

Our partnership deals rely on major brands to finance our ability to take their non-recyclable waste — cigarette butts, chip bags, etc. We have incorporated, and we have our Australian bank accounts set up. In anticipation of the deals closing, we have identified operational partners — a warehouse, manufacturers, etc. — to help us run our recycling operations. Pending commitments from our partners, we plan to introduce TerraCycle Australia this summer from a new office in Sydney.

The big question is not whether we will open but how successful we will be. This will depend primarily on the people we hire and how well we manage and support them. I’ve found that a business model that works in a few countries generally works well in similar markets, and Australia is a similar market to the United States. Australians speak English, and the economy functions under Western principles. Perhaps the country most comparable to Australia is Canada, and Canada is often the first foreign market that an expanding American company will enter, typically followed by Britain.

The role of a general manager evolves dramatically in the first few years; unfortunately, only about half of our G.M.’s survive the transition. In the beginning, Anna will have to manage everything from operations to client relations. We support this by having a team of global leaders, based in our headquarters in Trenton, N.J., who manage each department globally.

That means Anna will get support from Michael, our global head of client management; Kevin, our global head of operations; and 10 other leaders on a department-by-department basis. Doing this gives us global cohesiveness and allows us to have multiple people overseeing our people and operations. There can be instances where a local G.M. may think everything is going well but our department head thinks otherwise. This redundancy is critical, especially when we are asking an individual to take on such a wide range of responsibilities.

In addition, we ask each team to submit detailed monthly reports. The reports are sent to every staff member and reviewed by the senior team on a monthly basis. Those notes are then forwarded to every other employee to make sure everyone knows how we are doing. By maximizing oversight and transparency, we are able to offer the best possible support to our local G.M.’s, and we can also keep track of what is happening in our far-flung markets.

That’s especially important because the role of the G.M. will change quickly for Anna as her business unit grows. As she brings on more partners, her budget will grow and she will be permitted to hire more employees. When this happens, her role will evolve from doing every function herself to managing a team.

We opened our office in Mexico in 2009, for example, and today it has 14 people. As you can imagine, the role of our G.M. in Mexico has changed dramatically in the past few years as the office has grown. The growth of the office was not a smooth ride — in fact, we changed G.M.’s four times.

Our first Mexican G.M. was terrific when he was working in Trenton but he struggled in Mexico — not everyone is cut out to work remotely. We then hired a young entrepreneur I had met while giving a talk in Hermosillo. He was 20 at the time, but I generally don’t worry too much about age (I started TerraCycle at 21 and am 31 today). But it turned out that getting a business off the ground and running it was too much for him, and we agreed that a transition would be appropriate. We went through one more G.M., who resigned because of the pressure, before we landed our current G.M., Isaac, who has done a fantastic job the past few years.

Hiring can be tricky for any position, but it’s especially tricky for a position that will evolve in a market that you may not fully understand. For me, the biggest lesson I have learned opening offices in 22 other countries is that the success or failure of a foreign office will be determined almost entirely by the abilities of the talent that you deploy there.

Tom Szaky is the chief executive of TerraCycle, which is based in Trenton.

Article source: http://boss.blogs.nytimes.com/2013/03/21/the-risks-of-expanding-into-australia-part-2/?partner=rss&emc=rss