When In Rome
Michael Rooney was so nervous about learning a foreign language in college that he switched his major from chemistry to electrical engineering just to avoid the language requirement. Fifteen years later, the 36-year-old president of Boston Systems Office (BSO) in Waltham, Mass., speaks French fluently, as well as a little Russian and German.
The motive for hiring a tutor to learn French was simple: "If you're doing business with Frenchmen, it pays to speak French," says Rooney, whose nine-year-old company manufactures microprocessor development systems -- software used by engineers to develop microprocessors so that they can perform such diverse tasks as running a computer, turning on a microwave oven, or monitoring a jet engine. Last year, out of the $3 million worth of development software sold by BSO, half came from export sales generated by more than 20 overseas sales representatives operating in almost two dozen countries, including Japan, Korea, Australia, and most of Western Europe.
While some companies involved in foreign trade choose to pay a premium to delegate the exporting responsibility to a third party -- such as an export management company or a trading company -- Rooney has relied instead on a network of sales representatives who get paid strictly on commission. Partly, he believes, BSO's products are too technical for most export management companies to understand. Furthermore, using reps allows BSO to spread its risk. "Once you give a trading company the territory -- and it's usually not just one country -- you're committed to doing business through them," says Rooney. "If the company rises or falls, it affects many more customers than the loss of one agent." Despite the advantages, however, setting up a network takes time and energy -- more than Rooney originally bargained for.
During the mid-1970s, Rooney signed up his first overseas representatives at U.S. trade shows. He sent them plenty of sales literature and then sat back to wait for a rush of orders. The orders came, but in a trickle. Lack of sales, Rooney now admits, resulted not because of a tough market (which was growing at a rate of more than 30% a year) but because of ignorance. "We didn't know what we had to do with reps to make the relationship work well," he says.
Then, in 1979, Rooney participated in the Small Business Export Program of the Massachusetts Port Authority (Massport), developed in 1977 in conjunction with the Smaller Business Association of New England to assist small businesses in foreign trade. Not only did Massport brief companies on such confusing subjects as licensing, shipping documentation, and foreign business practices, but the program also arranged foreign trade missions for a select group of New England companies each year. On week-long missions, partly financed by Massport, companies met with potential buyers and distributors, lined up by the office's agency in Antwerp, as well as with organizations interested in licensing arrangements, joint ventures, or direct sales.
To qualify, Rooney first had to demonstrate BSO's export potential, as well as show that the company's financial and operating resources could meet increased production demands. For every 100 companies that apply, only 5 or 6 are chosen. Rooney was picked because, like fellow participants, he ran a company that Massport perceived had excellent export potential but little export know-how, and even less confidence in itself as a foreign trader.
"A lot of our companies act like they're going to Pluto," says Kathleen Hagan, manager of foreign trade for Massport. "They're not sure there's life east of Chatham, Mass., or west of Albany, N.Y." The program, she explains, "takes businesspeople by the hand into the market so they can see distributors in their natural habitat."
The group traveled together to Belgium, then split up to visit respective customers and distributors. "More than anything, the trip convinced us that you've got to meet reps in their own world," says Rooney. On his whirlwind tour through seven countries in five days, Rooney discovered, for example, that Europeans are even better than Americans at publishing high-quality literature that makes a company look like a million-dollar operation. Only by walking into their offices, explains Rooney, can you find out the true story.
U.S. businesspeople are mistaken Rooney also discovered, in their belief that "everyone speaks English," or in dismissing the importance of understanding a foreign country's customs. "It's impossible to understand what someone is saying, even when they're speaking your language, unless you know the background. that causes them to pick those words." Rooney recalls making an appointment with a German representative who asked him if he were making a "German appointment" or an "American" one. When he asked the German what he meant, the agent replied that if it were a German appointment, both men would arrive at exactly the same time. If it were an American appointment, however, Rooney would arrive 15 minutes late -- but with a very good excuse.
In 1982, Rooney spent more than three months traveling overseas to meet with representatives, attend trade shows, hold seminars, and talk to important customers. Unlike many entrepreneurs who find it hard to leave the office even for a week, Rooney believes that being away is healthy for everyone. "I want people to learn to work without me," he says. "I don't want to always be the arbitrator." He has also divided sales and marketing into three groups -- marketing, domestic sales, and international sales -- to reflect each group's different function. For example, BSO's eight-person domestic sales force does all selling by telephone, with no support from manufacturers' reps. The international manager concentrates exclusively on overseas sales, which means communicating daily with representatives by telex.
For Rooney, meeting with reps on their own turf, learning the language, reading up on a country's history and culture, and being a careful observer have all helped cement his relationships with foreign customers and reps -- but he admits he is still learning. After a recent dinner in France, his French agent pointed out that Rooney's "American style" way of holding his fork and knife made him look like a truck driver. "Now," says Rooney, "I never eat first."