As many of you know, Avinash Raghava is a persuasive individual. So when he approached me first to write for Product Nation, after some hemming and hawing, I agreed. On a recent call, he told me that nice though my writings have been so far, he was hoping I could help our readers with specific issues related to entering the US market. He is absolutely right and I will start looking to him for guidance on what topics might be of interest to our readers. One of the first things we agreed, I’d write about is how companies should think about entering the US market. So here goes.
I have been associated with the Indian IT business since 1989 and so I have seen the peaks and the troughs over the years. The IT services business and its offshoots into KPO and BPO have thrived over the years. And even now, if you are an entrepreneur and have a captive client, you can make a 20% return on your top line with some work and a tailwind. It is the product or IP related business that is a different animal.
I was fortunate enough to have the opportunity to understand the product business during my rather long stint with i-flex (now Oracle Financial Services). I had patient bosses, excellent coaches and the opportunity to understand three very different geographies – North America, Asia Pacific and Latin America. There are a few lessons I learned along the way and I am happy to share them with you. This is not an exhaustive post on the subject by any means, just some thoughts. Here is the first set of lessons learned:
Lesson #1 – Stay away if you can, it may not be worth it – Entering the US market (or any foreign market for that matter) is a big, messy, expensive proposition, if you think you will make money from day one, think again. It will take time and commitment to make it work. For example, in my previous life, it took investment from our company in a full blown sales and marketing organization, PR, analyst coverage, partners etc for close to over two years before we saw anything resembling success in the US. Latin America was a different story, the company did it half heartedly and did not invest in what was needed. Needless to say, we weren’t too successful in that geography. Entering a foreign market is not for the faint-hearted, it will take time and resources AND there is no guarantee of success.
Lesson #2 – Product business is not like the services business – Given the extensive experience that Indian companies have in the outsourcing world, it is no surprise that many startups are founded by folks with a services background. And since they have a services background they bring some of that mindset to the table. The challenge is that the product business is different in just about every way that matters to the services business. The approach to selling, the pitch, the implementation, support, partnerships, the list goes on and on. Unless the management is willing to change its outlook, this will cause you problems.
Lesson #3 – Awards are great, case studies are much better – I often come across promising companies in India that have been recognized for the excellent work they are doing. While awards are great, they are not enough to mitigate buyers’ concerns around vendor risk. Remember, you are an unknown quantity for the buyer, and as the old saying goes – “Nobody gets fired for buying from IBM”. That is where case studies come in handy. If you have a multinational client, try and enter a foreign market through one of their subsidiaries. I know this works because I have used this strategy before. If you don’t, perhaps you can build case studies around a business reason that will resonate with similar companies in overseas markets.
Lesson #4 – Get your story straight – One of the biggest challenges I see for Indian companies is around messaging. Most startups are founded by techies. As a result, the messaging is very tech heavy. I suspect the current crop of buyers is suffering from an overdose of “Cloud”, “Enablement”, “Web2.0”, “Enterprise-class”, “Multi-Tier” and “Mobility”. The problem is that when everybody ends up sounding exactly alike, nobody stands out, and the message doesn’t address the problem they are trying to solve directly. A good message should be free of geek speak (to the extent possible) and to the point. Always remember that to the buyer you are relatively unknown, highly risky and you have a short time to grab the buyer’s attention. If you can’t even get them to understand what you do, well, good luck with closing the deal. This is hard and requires skill. There are people (like me) who can help you with this but it is critical that you do it.
Lesson #5 – Have a plan but be willing to change – When you are trying to get a foothold in new market, it is very tempting to get opportunistic. You leverage your contacts and get that first critical deal. That is how you get into a market, but what you do after that depends on whether you have thought about it or not. I encourage my clients to think about going after prospects that make sense in the larger scheme of things. In a significant departure from the services way of thinking, product companies can’t be everything to everyone. You have to think about what you are about and what business problem you are tackling. Based on that, you form a hypothesis and a plan. Then you test it out in the market. If it works, you are golden, if not, you tweak it. The point is, you can’t go after anything that moves: you don’t have the resources for it plus it WILL dilute your brand. Get opportunistic within your framework and you will already be ahead.
These are just some initial thoughts. Remember that like anything else in business, there are no guarantees. What you want to do is to increase the probability of success. Do companies succeed without the points I have listed above? Sometimes. Do companies fail even after they do everything above? Sure.
I can’t promise you success if you follow my advice but you’d be ill advised to ignore it. If you have thoughts, experiences or comments, please do share.