November 18, 2017 dan@danherman.ca

Some nuance to the mantra of ‘going global’

We make a big deal about the need for Canadian firms to go global. Our dismal export performance – as noted here – requires it.  However in so doing we need to be realistic. We can’t simply expect to land in a foreign market and do business the next day. Sure, if you have a product that’s out of this world you might be able to, but for the most part today’s emerging markets aren’t empty vessels waiting for our technologies. Rather, as education rates, levels of R&D investment and general increases in economic development rise across the developing world, their ability to compete in high-tech markets is increasingly on par with ours, if not beyond.

Take for example Indonesia, where I happened to have spent last week on vacation. Home to 250 million, the country’s economy is projected to grow at 5% in 2015, and its middle class is currently estimated at 75 million people. It’s one of the many ‘next’ markets that our companies are supposed to be flocking to. This market opportunity however isn’t an easy one, especially for tech companies as the country (which tweets the most in the world) has quickly developed a local tech scene that is very competitive.

This means that the mantra ‘just go’ needs to get balanced with a push for education to be able to compete in these markets. While it’s true, as Sir Terry Matthews told a luncheon crowd in Waterloo this week, that if you don’t go global someone else will and will get better experience as a result, the cost of going global means you need to be able to take advantage of doing it. And if you don’t understand local market needs, and local cultures and context, your ability to build that ROI is going to be limited.

This is especially true given the rise of innovation clusters in many, if not most, emerging and developing economies. Over the last year I’ve visited tech clusters in Mexico City, Singapore and Jakarta. It’s increasingly hard to distinguish what advantage we have in a global economic race. The ideas and entrepreneurs I’ve met there are nearly indistinguishable from those I see here. Take for example the finalists for the recent TechinAsia startup arena contest. 

While in Jakarta I met with some people from EastVentures and asked what was driving this relatively nascent tech competitiveness. They noted that it’s driven in part by the advances in education and STEM noted above, as well as by the return of former émigrés to the US and Canada. They’re coming home with ideas and experience from the Valley or elsewhere, and applying it to market opportunities in an exploding middle class that they understand quite intimately.

So while it’s correct that we need to redouble our efforts to sell into these markets. In so doing we can’t place the cart before the horse. If we’re going to compete against those who have a more in depth understanding of a market – based on proximity or origin – then we need to do everything we can to chisel that advantage away.

Immersion is the best means of doing so and in the short-term we can cheat our way with soft landing programs that allow for immediate introductions to markets. However winning in the long-term will mean building far more in-depth understandings of new markets before we leave home. Going global needs to be built into university and college curriculums, if not before. As I’ve written elsewhere, that our students travel so little is a major problem and a long-term competitive disadvantage. Initiatives such as Wilfrid Laurier University’s new technology management program and its focus on global experience are part of the answer, so too is University of Waterloo’s co-op program that sends over 2,000 students abroad every year (albeit just 10% of the total number of coops, and over 50% are to the US).

Ultimately we need to see these become orthodox parts of our long-term education and economic training pathway.

(Posted originally at http://deepcentre.com/blog/go-global-but)

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