Navigating uncharted watersJanuary 2017 | News
Kevin Perrett, CEO of PTS Consulting Group, talks about the lessons he has learned as the company has expanded globally. PTS Consulting Group specialises in helping organisations around the world to exploit IT innovation during business transformation and to change processes.
Kevin’s career at PTS began more than 30 years ago, before he led an MBO of the company in 1990. Since then, he has presided over the internationalisation of the business, which now operates from 14 offices in Europe, the Middle East, Asia and North America, enabling it to work with clients anywhere in the world. Those clients include 17 of the world’s 20 largest investment banks, with PTS working on projects in some of the world’s most iconic buildings, including the Willis Tower in Chicago, the Abu Dhabi Securities Exchange, the International Commerce Centre in Hong Kong, and the ‘Cheesegrater’, the ‘Gherkin’, the ‘Walkie Talkie’ and The Shard in London.
Our ability to find the right people to launch and establish the business in each new market is the biggest single factor in whether it will succeed there. I’d always expected our first overseas office to be in New York, but I couldn’t find the people I wanted out there, so in 1995 we launched in Tokyo instead; we didn’t open in New York for another eight years. We look for local leaders, though they might be expatriates who know the market well, and we reward them in line with the performance of the business at a Group level, because we want them to focus on the wider interests of the company.
It’s important not to be too rigid about how you move into a new market. Having opened the office in Japan, I realised that expanding overseas wasn’t as daunting and difficult as I’d expected, and we used a similar model to move into Dublin and Hong Kong. But sometimes you do need to think differently: in New York, we found you really needed to be New Yorkers to get the business, so we made an acquisition there rather an organic move. That approach can work, but you then have to work really hard to impose your business culture.
New markets often present a culture shock, but the key to success is understanding and respecting that culture rather than assuming your approach to doing business elsewhere will work. For example, it took us longer than expected to win business with local companies in Japan (we had no such problem with Western firms), because we had to build strong relationships with potential clients; we had to prove to them that we were committed to their market for the long term, that we could be trusted to do what we claimed we would do, and that we wouldn’t just pull out if the going got tough.
Having a global strategy doesn’t mean we have to be in every market. Our aim has been to create a Group that can work in any market in the world, or across lots of markets for a single large client, but you can achieve that with a ‘follow the sun’ strategy where you have offices in strategic locations in each region of the world. It’s a hub and spoke idea that clients understand.
It’s easy to fall into the trap of thinking a new overseas venture will give the bottom line an instant boost, but very often you have to be patient. In Asia, in particular, you have to take a long-term view – the pay-off is that clients are very loyal; once you’ve convinced them to do business with you, they’ll stay with you for as long as you keep delivering, rather than shopping around on price, as we often see in Western markets.
Not every overseas venture goes according to plan, but it’s important to look at the positives and to learn from your mistakes. We’ve been working very hard over the past three years to overhaul our US business, by broadening the client base and the type of work we do there; in hindsight, I should have supervised the project personally because we probably didn’t hire the right people for the tasks that needed doing and the financial performance was initially disappointing. But we’ve stuck with it and we have now got the business right; and, on the plus side, we’ve hugely improved its governance and financial management.
One of the difficult things about operating in certain markets is their unpredictability. That doesn’t have to be a problem but if you’re working to a business plan that depends on fixed forecasts you may run into trouble. China is the classic example for us – we’ve been there for a number of years, and we’ve had ups and downs, but I’m still not sure exactly how the business will perform. We’re very excited about our partnership in the Chinese education sector, which has the potential to be huge, but I’m not basing any of our forecasts on it turning out that way.
I’m an entrepreneur at heart, even though I’m now running a large international business. One of the issues I’ve always struggled with is how to step back and be confident that the good people we’ve hired will deliver the performance we need. Even now, I have a very personal style of management and I probably have too many direct reports – you have to learn how to delegate.
Stable and solid funding is crucial to businesses expanding overseas. In Japan, for example, we made substantial investments when we entered the market and it was important to do so to prove our commitment to the market – but it was some time before we saw a return on that investment. In the US, we knew that we needed to reshape our business but we also knew doing the job properly would require additional funding. That’s when we began talking to BGF.
Saying no to certain markets is just as important as embracing others. After 30 years, we’ve worked out which markets suit our business and our culture best. We have a very profitable business in the Middle East, for example, and we’re where we want to be in Europe. Asia and the US are important to us too. On the other hand, we’ve looked hard at markets such as Brazil, India and Russia and decided they’re not for us. There are some great opportunities in those countries, but they’re not the right fit for our business.