Globalization is Survival: Becoming Global as an Anecdote to Stagnant or Declining Markets

By Steven M. Worth, President at Plexus Consulting Group, LLC

The Milwaukee-based American Society for Quality (ASQ) is an individual membership society composed of corporate quality control officers as well as consultants. During the heyday of the total quality management (TQM) frenzy of the 1960s through the 1990s ASQ grew enormously fast. It bought and furnished its own building and filled it with the staff needed to serve a burgeoning membership base. But in the 1990s the novelty and sense of critical urgency of quality control started to wear off throughout the United States as corporations and management consultants turned their attentions elsewhere. This resulted in a gradual decline of ASQ’s membership that continued unabated through 2007. With no end in sight for this decline that persisted over a decade whether the economy was strong or weak, ASQ’s leadership decided that the time had come to look at markets outside the United States, which up to then had been considered as ancillary to their main interests.

ASQ prudently decided to research their options before choosing their path. They started by undertaking qualitative and quantitative market research starting with their overseas members. What they wanted to know was how they were perceived in markets outside the United States. Which products and services were most desired, which other organizations they were competing with in these various markets, and how their governance and operational structures were perceived in terms of their efficacy and relevancy to the needs and concerns of these markets?

What they found out was both good and bad. The good news was that their products and services fit very well with the needs of most overseas markets—particularly those markets in developing countries that traded heavily with the United States. Developed markets such as those in Western Europe and Japan were less enthusiastic as they felt they had their own resources and organizations that suited their needs just fine.

The bad news was that, regardless of market, ASQ was perceived to be a very US-centric organization—one in which foreign cultures and language and needs that were different from those in the United States were simply not understood or appreciated. In other words, although there were clear opportunities in overseas markets for ASQ to become more active, no one familiar with ASQ believed it had the institutional culture or structure to be able to do this effectively. Furthermore, while some liked that the “A” in ASQ stood for American, a significant part of the world believed that this label was restrictive and would hinder ASQ’s growth in their market beyond the limited sphere of US-based multinational companies that had a presence there.

In effect the ASQ realized that it had two markets abroad: one consisting of the employees and customers of U.S. multinational companies or those companies that otherwise traded with the United States; and the other was employees of indigenous companies that had an interest in quality quite apart from anything to do with the United States. While ASQ might have a quick advantage in penetrating the first market, the second market—which was and is much larger—was inaccessible to them unless they shed themselves of their US-centric structure, identity, and approach.

Following this primary research, ASQ undertook comparative market research using widely available secondary sources for the purpose of identifying the best markets for them to target. The best markets were identified as those that met the following criteria: they were large; they were growing quickly; they had a significant trading relationship with the United States; they were open legally and culturally to penetration by international associations; there were no competing organizations present; and ASQ had already identified potential partners and members that could facilitate their market entry.

Using the results of this tiered research, ASQ identified and prioritized the top four markets that they should target: China, India, Brazil, and Korea. Mexico and Canada were added to this list because, although ASQ already had a sizable presence in those two countries, they were treated operationally and in terms of ASQ governance structures as if they were part of the United States. To the extent ASQ knew it would have to restructure itself to accommodate the global opportunities identified in these four countries, they knew they would have to give special care to ensuring that the same principles also applied to the way ASQ worked with Mexico and Canada.

ASQ’s solution was to design operational and governance structures that allowed them to work effectively in the two types of overseas markets that had been identified. In other words, overseas members could continue to have a close relationship to the US side of ASQ if they so wanted; but indigenous markets could opt in favor of a generic ASQ International in which there was no “American” connection in name or in substance in any aspect of the operations or governance structures.

ASQ staffed up the international part of its operations with multilingual and internationally experienced staff, and it created a separate legal entity—ASQ International and a separate international governance body to ensure the direction would remain on track. Ultimately, three-year business plans were drawn up with budgets and measurable goals for each of the targeted markets.

Two years later the greatest economic downturn since the Great Depression hit the world’s economies. While ASQ’s US operations declined significantly with the onset of the recession, this decline was offset by the rapid growth of their international programs. In effect ASQ has experienced the same phenomenon as almost every global organization—that during times of economic turmoil, the organizations that do best have the widest market base, with global organizations tending to do better than those that are focused on just one national market.