Learning from Successful Companies: Navigating Business in Developing Countries

Interestingly, I have been addressing and teaching this subject extensively in Africa, specifically because the economic climate in a developing country is entirely distinct from that of developed economies.

Challenges in Business Ownership in Developing Countries

First, it is crucial to emphasize that owning and running a business in most developing countries is not for the faint-hearted. Over the past 22 years, both at Shell and Chevron, and later through my consulting and teaching in graduate business schools, and my facilitation of the Stanford Seed Transformation Program, I have gained insights into the BIGGEST challenge for businesses in the developing world, which is the absence of the rule of law. Predictable arbitration in business disputes is almost non-existent, and contract law is mostly just on paper. For instance, a government contract might stipulate payment of 15 upfront and the remaining 85-90 days after completion; however, it is not uncommon for the government to delay payment for 4-8 years, or even cancel existing projects when a new government takes office.

Government Policies and Business Challenges

The next major challenge is the sometimes hostile or outright business-killing policies enacted by the government. These policies are often drafted by either barely educated officials or those motivated by greed and self-interest. It is not unheard of for officials to sell the entire country to the highest bidder for a mere ‘brown envelope.’ For example, a West African country recently revoked import licenses and granted exclusive import privileges to a few foreign companies, with the result being corruption and favoritism.

Additionally, different foreign exchange rates are applied to different importers of raw materials, depending on how closely they are associated with the President’s family or the Central Bank. These hurdles make building significant businesses in countries like those extraordinarily difficult, yet achievable.

Lessons from Successful Companies in Developing Countries

Despite the challenges, there are a few lessons that can guide entrepreneurs on their journey:

1. A Bigger WHY

The worst reason to go into business is to make money. Instead, you must have a WHY that’s bigger than the financial gain. This WHY will help you endure the inevitable tough times and challenges that come with running a business. Each morning, it should inspire you to wake up with renewed energy, ready to meet the day’s challenges.

2. Strong Leadership

No business can surpass the quality of its leadership team. Hire the best and be prepared to pay generously to retain them. Continuously read and grow yourself to have the knowledge and skills needed to lead effectively.

3. Superior Customer Service

Serve your customers better than any other competitor in your industry. Overdeliver consistently to build a strong brand and customer loyalty.

4. Un-compromising Ethics

In many developing countries, it may seem impossible to be entirely ethical. Yet, you must be 100% ethical. Beware of the taxes authorities and never deceive your customers. Integrity builds trust and builds lasting business relationships.

5. Emphasis on Culture

Invest more in teaching and communicating your company’s culture than in any other aspect. Culture, particularly organizational culture, is often undervalued until we start our own business.

6. Structured Systems

From day one, build well-structured systems and processes. Continuously refine them as you learn and document what works and what doesn’t work in your business model.

7. Seek Professional Guidance

Your entrepreneurial tenure is far too short to try to learn and do everything on your own. Hire a coach. The very first step I took when I quit Shell was to hire an entrepreneurship coach. This significantly reduced my learning curve, and I never go without a coach when scaling business beyond my current performance or leadership capabilities.

Welcome to the adventurous yet richly rewarding world of owning your business!