IW500: Canadian CIO Delivers Cautionary Tale About Internationalization

The CIO of a Canadian heavy equipment company delivered a warning about what happens to companies that fail to take local customs into account when doing business internationally: What happens when your contractors just stop showing up?Mike Cuddy, VP and CIO for Toromont, in Toronto, Canada, was remarkably candid about some of the challenges Toromont experienced as it expanded its business into China. Every company has some business initiatives that end badly -- if you're not stumbling every once in a while, you're living too cautiously, a rule that applies to life as well as to business. But most people try to bury their setbacks, so it was great to hear Cuddy talk candidly about Toromont's.

Cuddy spoke at a panel on Tomorrow's CIO at the InformationWeek 500 Conference.

Toromont is a supplier of construction equipment, power, refrigeration, and process systems. Several years ago, it launched a Chinese business, but is now pulling back, after finding it consumed much more management time than it anticipated, and diverted management from focusing on the company's core business, Cuddy said.

One of the missteps the company made had to do with the local culture, Cuddy said. For example, one day the local IT company in Beijing that Toromont used for tech support stopped providing services. It didn't tell Toromont -- it just stopped showing up.

Toromont looked into the problem and discovered that the Chinese company wasn't showing up because it wasn't being paid. The IT department looked into it further and discovered that Toromont stopped paying the Chinese company because the Chinese company installed Windows and didn't deliver the software licenses to Toromont. The whole thing was a series of misunderstandings.

Manjit Singh, CIO of Chiquita Brands, said companies doing business in other countries need to make sure to partner with local managers to help cross-cultural barriers. Often, companies try to transplant successful teams from one country to another, and find that to be a recipe for failure without local partners, because of cultural barriers.

Also, managers need training in local customs. For example, most Americans doing business in Asia get told that Asians don't say "no." However, American managers need to do more than learn that one point -- they need to learn Asian communication styles, so the Americans can operate effectively and get the information they need to do business.

On the other hand, while countries differ from each other, countries aren't unique, said HP CIO Randy Mott. Developing countries have elements in common with other developing countries, countries with successful markets have things in common with other successful countries. Successful international companies need to find a single business model and stick with it, while also tailoring it to local customs and needs.

"There's probably no country that doesn't have another country like it," Mott said.

This blog's content was updated Sept. 17.