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July 03, 2014 Article 6 min read

Tell me a bit about Urban Science.

We apply science to solve previously unsolved mission-critical challenges where large amounts of data are available and scientific analysis can make a difference. By applying the scientific method, we can help our clients—largely automotive—sell more products, improve profitability, and increase customer loyalty.

In what geographies does Urban Science operate?

We have 17 offices in 12 countries, including the United Kingdom, Germany, Brazil, Mexico, China, Japan, Australia, and India. We serve more than
40 countries worldwide from those locations.

Is your international strategy to grow organically, via acquisition, or both?

Our growth rate has averaged 20 percent per year over our 37-year history Most of that growth has been organic (although we have completed two notable acquisitions, including one in Germany). We see that strategy serving us well in the automotive sector through 2018. At that point, we believe we’ll need to be in at least one other vertical market—potentially pharmaceuticals, financial services, franchised retail, and/or health care—to continue on that trajectory.

Tell me about your strategy for entering a new vertical market?

It’s applying our current processes in the automotive vertical to a different vertical where the math applies and the data are generally of same type and available. In order to accelerate that growth, we may enter those markets through acquisition and then merge our analytical capability with our acquisition partner.

When did you decide to take the company global?

It was in the mid-1980s. We entered the United Kingdom at the request of a client. A couple of years later, we went to Germany. There’s been a steady cadence ever since; on average, we enter a new country every two years, our most recent being Brazil last year.

There’s a difference between “international” and “global.” “International” means that you have disconnected presences in many places; “global” means having a specific way of operating each of those locations. In our case, it’s an eight-step process for solving analytic problems everywhere in the world. All of our offices operate the Urban Science way.

How do you assure your model is embraced and used across all of your locations?

Communication and training. You can’t just take 10 people off the street with the proper credentials, hand them an Urban Science badge, and then expect them to run that business the way we do elsewhere in the world. For example, once we decided we were opening an office in Brazil, we hired two Brazilian college graduates and invited them to work at our U.S. headquarters for two years. We worked closely with them and trained them in all facets of our operations. Then, once the office opened, they returned to Brazil to help launch that office. That model has worked very well for us all the way back to our first international location in the UK.

Can you share an international success story or two?

One of our big successes was securing a global contract with a manufacturer in Germany and then leveraging that relationship in many countries around the globe. While we already had an office in Germany, we made a strategic acquisition that further expanded our relationship with that particular client. With the common analytical process previously described, our clients can compare the performance of dealer networks across countries. That’s very powerful.

Another success has to do with Mexico. When we first entered that market, the availability and quality of data we were used to in the United States wasn’t available. Without quality data, our new office began to struggle. We’d done some research using shared sales data across many brands. Our Managing Director had some contacts and experience acquiring data; we had the experience of maintaining it and analyzing it. We worked with and convinced a number of different OEMs in Mexico to contribute their sales data to a pool. Today this database has become the mainstay for the entire industry and, in some ways, is superior to what we have in this country in terms of timeliness and detail. This has become our cornerstone strategy in countries where data timeliness is critical.

Are there some countries where it took more advanced planning to prepare for entry than others?

China was a bit more challenging. To do business there, you need a presence, but you can’t just put up a sign and expect the customers to beat a path to your door. As in many countries, relationships are very important. We spent a great deal of time visiting and getting to know decision makers. It was further complicated because not only did we have to develop relationships with the global car makers but also their joint venture partners. Plus there were regulatory issues and cultural issues that took more advanced planning than we anticipated.

What pitfalls should companies considering going global look to avoid?

There are quite a few. First, you have to understand the regulatory and tax environment—how you pay taxes, how you file recurring reports to the government and what the content of those reports needs to be, local employment laws, etc.

Another pitfall is assuming that communication won’t be an issue. With different time zones, language and culture, effective communication is a challenge. Without a communication strategy, it’s impossible to provide an integrated, coordinated service on a global scale. Yet you can easily spend significant dollars on airplane tickets and hotel rooms to bridge the distance between over “there” and “here.” Somewhere in between is the right answer.

You’re saying don’t just rely on technology for communication.

Right. Technology can help you maintain relationships, but face time is required to build them.

Another pitfall that bears mentioning is to make sure you understand the treasury activity available—how are you going to get money into and back out of the country? Transfer pricing can also be a challenge. If you don’t handle the tax/filing regulations correctly, you may not only own more tax than you thought but also penalties and interest that can be extraordinarily high. This is why it’s critical to have experienced legal and accounting counsel.

Any final advice for other service-based organizations looking to operate outside the United States?

It’s going to take longer and cost more than you think. But these are necessary investments. Our belief is that if you aren’t global today, you’d better think about how you’re going to be or plan on being acquired by a global company.

Companies go global for a simple reason: economy of scale. When you’re active in these markets, there’s more opportunity for economy of scale and, on top of that, more opportunity for better, more extensive relationships with global clients. Our global clients would much rather do business with other global service providers; that gives us a competitive edge, regardless of the country.

The world is global. No longer is competition only stemming from competitors in your home country; it’s all over the world.

Absolutely. One more piece of advice: oftentimes the tendency is to follow a significant client into a country. (We’ve done that on more than one occasion.) Even though, in doing this, you’ve demonstrated a tremendous commitment to and support for that client, there’s still the potential that local companies with local relationships could become a competitive threat. You have to understand the potential for this and constantly focus on business development so you’re growing. If you only have that single customer in a new market, you’re always going to be at risk.

What’s next for Urban Science?

We’re going to continue to focus on our five-year plan. We see the “B” word in revenue in the next decade.

Are you looking toward any additional countries?

Our clients have asked us to be in 100 countries by 2019.

That sounds like a tall order!

Well, we’re already serving the major countries. Once you’re active in 40 of the largest countries, the 60 remaining countries seems reasonable to us.