When clients are talking with me about new market entries I always start with the strategic question should you do this? Yes or no? A lot of times I see leaders of organizations who are going by gut. “We should be there,” or, “We should be over in China.” “We should be in Europe.” It is exciting, I mean it is really thrilling to think about new frontiers and going out there but I think it is very, very important to first ask the strategic question of should you do this? Sure it is fun, but is this the best business decision you can make? Yes or no and why? Be able to back it up. Be able to see how it is going to grow revenues and profits beyond the expense of entering new markets and it is also fair to look at what is the danger of not entering new markets or not entering new markets in a timely fashion.
So first is the strategic question and then secondly when an organization is entering a new market it is really important to have a specific champion. It can be an initiative that the entire company is involved with. There has got to be one person, one person who is driving it, one person who is responsible for making these things happen because otherwise we end up with the tragedy of the commons where if everyone is responsible for it no one is.
Also, when I talk about a specific champion it is not necessarily so it be someone who is separate from the organization. I know that when I was at a conventional building material supplier and my responsibility was to bring us into new markets and that was to bring us into with green builders because I introduced the first green building product line in the country at a conventional building materials supplier. I was separate from the organization. So I was a specific champion for making that happen but being separate from the organization made it also seem like an option and I was separate from the organization because the CEO hadn’t really bought in. He wanted to see what I could do alone first and then if that worked out then we could work within the organization. So my job really as a specific champion for this was to integrate myself and my work into the organization as much as possible. So if this is truly where the organization wants to go into a new market it becomes a part of everyone’s job. It becomes a clear part of everyone’s job. It is not just one person’s responsibility but it is integrated into the organization.
Next, when looking at new market entries especially on a global scale it is important to look at the structures that are available to you, the alliances. If you are going into a country, say you are going into China, what you need to look at though is a lot of companies that have said, “We are going off onto our own.” They haven’t been hugely successful because they need to have a local partner.
Now a lot of companies have also been unfortunate with their joint ventures in China and so it is really important to look at all the structures that are available to you, the alliances that are available to you, and the people who make up part of the alliances and how you are going to really navigate that.
Finally looking at new market entries is to look at your IP projection. This is especially important when developing countries or in countries that have sort of different values maybe around intellectual property. It is important that when you are negotiating you don’t need to necessarily bring out the crown jewels. What you are able to do is maybe instead of having your top of the line IP out there you are able to bring something that is new to the market but not necessarily the absolute cutting edge and so phasing in IP that way and then also creating structures that will enforce good behavior with IP.
So those are in a sum the new market entries. Look at the strategy, have a champion, make it part of people’s jobs, look at the structures and alliances that are available to you and then finally find ways to protect your IP.