Companies benefit from boards made up of individuals with experience in a variety of situations, including those the company faces regularly as well as others that may become new opportunities and risks. It is clear how directors with international business experience can help companies operating in global markets — they already are familiar with helping businesses that operate in an international environment and can apply their knowledge to related issues that come before the board. But what about companies with mostly or exclusively domestic customers? There, too, a directors’ international experience provides extra value and can even create competitive advantages
International experience takes many forms, such as physically relocating to another country for a period of time to work there, frequent business visits to suppliers or customers in other nations, or extensive virtual work with colleagues and partners in other countries. That experience is more valuable if the work is not just transactional but instead involves developing relationships and learning about the culture — both business culture and in general. Even better, the director may have also taken advantage of the opportunity to better understand the market, technology adoption, strengths, challenges, similarities and differences from their home culture. It is worth asking board candidates questions about these activities to better understand the depth of their international experience.
So, how can firms that do not have significant (or any) international customers also benefit from the global experience that some directors can bring to the table?
End customers. While your direct customer may be local or elsewhere in the same country, their customers may be based in another nation or selling to multiple countries. Understanding the implications of this, including the specific economic environment, trade rules, logistics and government regulations, is key to their success and therefore impacts the level of business they may place with your firm. A director that understands that can provide additional value when discussing strategies, new products, risks and opportunities.
Supply chain. Your firm may manufacture domestically, but many supply chains extend across borders. Your raw materials or purchased sub-assemblies may come from another country or may be processed in several countries before reaching your country and then your factory. But if one looks further down the often complicated supply chains that are a reality in modern manufacturing, even if your direct purchases are from local factories, those facilities may be sourcing some of their parts or materials from a foreign location. This means that what happens elsewhere could dramatically impact your supply chain and thus your ability to manufacture products and deliver them to customers. These challenges range from different ways of doing business, geopolitical instabilities, logistics delays (think the Suez Canal blockage), or intergovernmental disagreements. A board member experienced in understanding (and even dealing with) these risks and guiding company executives through effective ways to address them — both proactively and in response to actual occurrences — provides a valuable benefit to the firm.
Awareness of global trends. Directors with international experience, especially those currently connected to (or collaborating with) associates abroad, can gain early insights and recognition of trends that may directly or indirectly impact your business in the future. This allows the company to better consider possibilities and plan accordingly. For example, board members with strong networks in China and other countries had an earlier and more complete awareness of the impacts of COVID (factory closures, mobility restrictions and changes in spending patterns), which could help a company in another country prepare for potential effects on its business. Less dramatically, trends in consumer behavior can often be observed in one country before becoming evident in other countries, allowing the potential for improved planning and reaction.
Perspective. A board member who has collaborated with business partners in other countries has often been exposed to a broader cross-section of ideas, especially if he or she has been more deeply engaged with those people and companies. Different cultures approach the various aspects of business, such as negotiations, contracts and risk, in varying ways. Awareness of and experience in these aspects of business provides the director with new solutions for challenges and different questions to ask when discussing issues related to company governance.
Preparations for the future. While the company may not have international customers, operations or suppliers now, it may have some or all of those in the future as it grows and conditions change. A director experienced in these areas can better contribute to the strategy, budget and risk discussions related to international expansion or clarify the effects of a shift in the supply chain to include key suppliers in other countries.
Companies cannot always predict all the opportunities and threats that will present themselves. It is therefore important that the board consists of members with a variety of experiences and areas of expertise, as indicated on the skills matrix. Even for domestically focused firms, it is critical that fluency in international business is one of those skills and that it is exhibited by one or more of the board’s members.