One of the most profound things that I have realized about New Zealand business strategy in the US market, is that we do not focus our laser tightly enough on the target. We flit around from opportunity to opportunity being all things to all people in a way that is just gosh-darned un-American.
New Zealanders, and New Zealand businesses, tend to generalize. We are good at doing a little of everything. I found during my career in the US that this was actually a very useful personal skill – I could be dangerous in a lot of different areas.
New Zealand companies are often like this too. Agile, innovative, inventive and willing to roll up our sleeves and do things that other companies will not. There are a lot of positives in this model if we recognise that this approach to business will limit our ability to scale. Please read the following from the point of view of scaling a business the way that American businesses are built to scale.
Being ‘Jack of all trades’ is often deadly for Kiwi businesses in the US. Businesses in the US (assuming that you are aiming at the corporate/enterprise market) value specialization with the deep understanding of a particular area that goes with it.
For instance: Tech companies who start with the NZ market typically make products with broad feature sets because in NZ, you have to be able to do a little bit of everything. However I have found in the US (warning – gross generalization ahead) that the most successful companies are those that focus on really deep expertise in a specific feature area.
Great examples of successful New Zealand businesses in North America include Pushpay, which is tightly focussed on one very specific part of the payments market. WhipAround is another good example of a Kiwi tech company with real focus (and no coincidence, it was founded by ex-Pushpay folks). WhipAround does one very small thing very well – it helps professional drivers do a quick safety inspection on the vehicle before they drive (they do a quick ‘whip around’ the vehicle).
Competing companies tend to offer a number of features, where WhipAround does one really well. The beauty of this strategy is that they can be the very best at something (vehicle inspections), and limit the capital and operating costs of trying to be everything.
Don’t be everything, when you can be something.
Understand what it is that you do very clearly, and only say yes to the business that fits in that box. Say no to trying to please customers who are outside that box, and you will scale much faster.
Of course, it’s easy for me in my tower to tell you to say no to customers and money when you obviously need that revenue to make the next payroll!
But I’m serious. Every business has limited brainpower, money and time and if you spend those resources on customizing your product or service to every new customer, you will run out quickly.
Of course, in the heat of the action, you will rationalize doing these deals because they pay so the short-term upsides are tempting. The downsides are harder to see – slower growth and fewer deals in the long run.
Examples:
- An enterprise customer promises you 1000 monthly active users, if only you will host the system in their own datacenter, not in the cloud. This requires significant engineering work, which they have offered to pay you handsomely for.
- I would advise you to say no. Saying no in the first instance might flush out the real requirement that they have (which probably has nothing to do with the physical location of the servers). If they will not give up their position you will need to understand the full opportunity costs of doing this – including the forever costs of maintaining two code bases. It will lower your growth potential.
- I’ve been there and made the decision to cave to their requirements (and made myself feel better with high monthly fees and a big upfront payment). But it was the wrong decision. The damage done to our product roadmap in the medium and long term was not worth any kind of money.
- A fictional example: a company that might make hospital management software in New Zealand probably needs to cover all aspects of the hospital including patient and staff scheduling, billing, medical notes and records, staff timesheets and insurance management and billing.
- However in the US it is likely that these areas are actually handled by specific software applications. For instance, medical coding and insurance billing is a very specific area and there are likely to be applications that specialize in coding and insurance. A kiwi company with a broad, but not deep, feature set, will be a poor match for the market needs.
A final note (jargon alert): if you are a tech company, build strong APIs, microservices, SDKs and documentation. Be the most open-and-easy-to-connect-to system. Don’t get greedy and try to put walls around your system or your data or make it hard to integrate because you have not matured. Be open to getting a small but valuable part of the overall pie. A reputation for being difficult to integrate with will follow you in the market. Set standards for openness that others must follow.
The lesson here is that you need to make sure that your service is well matched to the specifics of the market you are targeting. The market may want depth and specialization rather than the breadth and ‘do it all’ approach that you may be used to at home.
Hoboken Consulting 