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Locals devise ingenious solutions, aid U.S. firms

When you have a Russian problem, you need a Russian solution.

Americans often refer to themselves as great entrepreneurs and innovators. U.S. companies tend to outspend almost every other country on research and development, and American CEOs often refer to themselves as "chief visionaries."

Yet, the great American ingenuity often pales in significance to the creative problem-solvers we meet in foreign markets.

In one instance, a large U.S. mining firm was setting up offices in Rumania. It encountered enormous stumbling blocks.

The first problem came from the local telephone company. It needed several cumbersome documents to be filled out in triplicate, and there was a six-month waiting period to get telephone services established. This was before the days of GSM cell phones, where one could simply use American, French or Dutch phones.

Consultants suggested solutions such as handing out equity in their firm, employing a government official on retainer, bribes, gifts and seeking justice in the Rumanian courts.

The research office it was establishing sat in a primarily residential apartment building, as the "office" was really just a converted apartment.

As the Americans were figuring out how to break the news to headquarters, one of the Rumanian local hires came up with an instant solution. He suggested they contact their residential neighbors and ask if a phone line could be strung from their apartments -- so the firm could use the phones during the day, when the phone owners were at work.

Naturally, they would pay for this service. And the payment that was agreed to was more than these apartment dwellers were earning each month. As you can imagine, the neighbors were lined up to help out.

So the phone company's long lead time was much less harmful than had been predicted.

Another time, while touring a Russian LPG (liquid petroleum gas) company near St. Petersburg, we noticed a warehouse full of tractor tires and engine parts. Since none of these were used in the filling or distributing of LPG tanks, we had to question the need for this equipment.

We were told these parts were hard to obtain east of Saint Petersburg. Thus they were a valuable commodity that could be used to trade for gasoline, fresh water and safety equipment (all goods the LPG company had trouble buying on the open market). Again, this was a local solution that made complete sense.

Americans often refer to themselves as great entrepreneurs and innovators. U.S. companies tend to outspend almost every other country on research and development, and American CEOs often refer to themselves as "chief visionaries."

Yet, the great American ingenuity often pales in significance to the creative problem-solvers we meet in foreign markets.

In one instance, a large U.S. mining firm was setting up offices in Rumania. It encountered enormous stumbling blocks.

The first problem came from the local telephone company. It needed several cumbersome documents to be filled out in triplicate, and there was a six-month waiting period to get telephone services established. This was before the days of GSM cell phones, where one could simply use American, French or Dutch phones.

Consultants suggested solutions such as handing out equity in their firm, employing a government official on retainer, bribes, gifts and seeking justice in the Rumanian courts.

The research office it was establishing sat in a primarily residential apartment building, as the "office" was really just a converted apartment.

As the Americans were figuring out how to break the news to headquarters, one of the Rumanian local hires came up with an instant solution. He suggested they contact their residential neighbors and ask if a phone line could be strung from their apartments -- so the firm could use the phones during the day, when the phone owners were at work.

Naturally, they would pay for this service. And the payment that was agreed to was more than these apartment dwellers were earning each month. As you can imagine, the neighbors were lined up to help out.

So the phone company's long lead time was much less harmful than had been predicted.

Another time, while touring a Russian LPG (liquid petroleum gas) company near St. Petersburg, we noticed a warehouse full of tractor tires and engine parts. Since none of these were used in the filling or distributing of LPG tanks, we had to question the need for this equipment.

We were told these parts were hard to obtain east of Saint Petersburg. Thus they were a valuable commodity that could be used to trade for gasoline, fresh water and safety equipment (all goods the LPG company had trouble buying on the open market). Again, this was a local solution that made complete sense.

However, this particular Russian was well-connected with local government officials and our Russian clients. There would be no way to maintain business continuity if we replaced him with another manager. It seemed we were stuck with him.

Therefore, the only solution was to bring in a strong, Western-trained manager to serve as his director of operations. As chief operation officer, this new manager would have signing authority on deals and be responsible to keep headquarters informed. Additionally, his Western training enabled him to communicate the nuances about the Russians to our firm, and vice versa.

Too often we look at a foreign work practice, see perceived injustices within it and try to make changes.

When acquiring a factory in Indonesia, the European buyers thought the first thing they would do is motivate their lackadaisical workers by changing their pay scales. This seemed to be a natural win-win situation. The staff would double their earnings from $1 to $2 per day. The firm would get its first choice of new hires drawn by higher wages, a much more loyal work force, positive local press and high moral praise back home.

The end result of this plan surprised everyone. When the first Friday payday rolled around, there didn't seem to be much rejoicing by the employees. The staff received their paychecks rather nonchalantly. They took their pay home. The next Monday, the work force was gone.

While the European management was stumped, some Indonesian management was dispatched to the workers' homes.

After some research, the firm learned the workers thought they were being paid to take off an additional week (as they had enough money to live for two weeks now) and would return in one week's time expecting their jobs back.

The Europeans weren't able to change the local "living paycheck to paycheck" culture. And the Indonesians were more motivated to enjoy their time instead of accumulating wealth.

Learning local motivations would be the Indonesian solution to an Indonesian problem.

Before you start business here or abroad, use our Lessons from the Road.

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