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One
theme underlying some recent failures is the lack of traction made from
forays into the United States market. There are plenty of other good New
Zealand companies who have suffered the same fate over the past few years
(in both bull and bear markets). While the US market may be somewhat introspective at the moment, and understandably so, it is still one of the most significant market opportunities for many New Zealand software companies. In some cases early wins may be achieved. Buoyed by early success, New Zealand companies often ramp up their US initiatives only to fall into the "chasm" (a reference to Crossing the Chasm by Geoffrey Moore). The resulting "bad-luck" stories often blame the US failures on high costs and low exchange rates. But high costs and low exchange rates are not the reason for failure – they are market conditions known at the outset. A US marketing strategy is a tricky business. There are set-up costs, corporate structures, tax complexities, sales and channel strategies just to name a few. Each New Zealand software company independently navigates these issues. Why? Often I hear of software companies talking of their US or Asian initiatives as though they are the only New Zealand companies to have done this. Where is the commonality of effort and experience? How can we leverage our joint experience for the benefit of the innovative companies with small capital bases which are behind them in the pipeline? Mark Jeffries is a director of software and technology companies, chairman of the Tuanz e-business group and a representative on ECAT, the government's e-commerce action team. mark@jeffries.co.nz Compare this "do-it-alone" environment to the flourishing incubator environment in New Zealand. It seems we have grasped the need to encourage, support and cluster innovation at home but not in our key markets. That is not a criticism of the incubator phenomenon – but it is an introspective approach and needs to be enhanced with complimentary initiatives in our target markets. After talking with many senior managers within New Zealand software companies, I have no doubt there is a need for a "leveraged" approach to some of our key markets. I am not talking about a cooperative – but I am talking about something which is tangible and practical. We should establish a physical "beachhead" in key markets – pilots could be in the US and Singapore. Maybe these can be worked through or in conjunction with TradeNZ. These facilities would offer serviced offices for New Zealand software (and others) companies. The facilities would provide access to know-how relevant to that market: Corporate structuring, tax, intellectual property protection, marketing and distribution strategies and so on. One of the prominent ideas coming from the knowledge wave conference was the concept of identifying and leveraging New Zealand capability (expats) which already exist overseas. That strategy would also compliment the beachheads. The beachhead suggestion is an extension of the domestic incubator model – the next logical step. They are market facing incubators for New Zealand software and other exporters. Given the level of innovation on the home front, I suspect there will be no shortage of companies lining up to participate. Lets not all independently re-invent the wheel. There are common or generic issues which so many companies face. Facilities and know-how can be leveraged for all to use. This type of environment would provide support and a sense of community for New Zealand companies competing in a foreign market. The goal would be to give New Zealand software companies a "leg up" – allowing them to spend more time and money concentrating on the end game – their customers and prospects. Earlier this year Intaz teamed up with Oracle to have its SafeTnet software included in its e-business suites.
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Reprinted from NZ InfoTech |