The traditional approach for a small country keen to export more of its world-beating software is to focus on market niches: types of companies or specialist applications.
A team of MBA students from the US's renowned MIT who toured New Zealand intimated that local developers lacked focus and felt that we should solve a specific problem in a specific market before moving on. But is our generalist, big-picture natures a secret strength?
Software entrepreneur John Blackham (below) and MIT candidate Justin Steinman to thrash out the issues.Recently a team of MBA graduates from MIT's Sloan Management School put our indigenous IT sector under the microscope. While they gave us a good report, they said we need to do better in a number of key areas if our IT entrepreneurs are to generate the level of GDP increase required to support the pension aspirations of the nation's aging baby boomers.
Their first issue -- the need for focus; if it is to succeed, an IT company must focus its activities on a small niche, a specific vertical market. That’s textbook stuff.
Then, in an Archimedes-like moment, I realised that in this issue lies an opportunity for the New Zealand IT industry to be different; to break out of the mould and use what is an inherent national strength to establish its own brand in the global IT market.
Our cousins in the US and European markets are forced by the size of their organisations to compartmentalise their activities. The term silo is generally used to describe their organisational model. This leads to the development of managers and employees who know little outside their own silo. It makes for the slow propagation of new ideas through an organisation since it is difficult for anyone to get a top-down understanding of what is required, especially in a new IT system. In this environment people are forced to focus, otherwise they are dealing outside their area of competence.
The nature of our small local market, on the other hand, means New Zealand is populated by generalists; people with a good understanding of the complete picture. This is regularly recognised by visiting experts, such as the MIT Sloan team, who view New Zealand as having excellent innovative products; ones that work because their creators understand the bigger picture. But while we may have a track record of developing great software products, we fail to turn this to economic advantage. Let us change this situation; turn our perceived lack of focus into a strength in the market. Make our broad competence, and the ability to turn this into marketable product, our value proposition.
We have the main ingredients for success. The London Business School's Global Entrepreneurship Monitor tells us that we are one of the most entrepreneurial nations in the world and the Heritage Foundation from the US tells us that we have one of the best environments in which to do business -- despite what our business lobby groups might say. We need a bold new move: apply innovation to our entrepreneurialism and challenge the conventional wisdom about narrow focus so that we can leverage our own natural strength -- broad focus. But how?
New Zealand tech companies must develop what New Zealand customers demand and then, as Israel has done with the communications and security products developed for its environmen -- as MIT notes -- peddle that to overseas customers.
Israel has benefitted from a strong Jewish business community in the US. A more representative comparison might be Finland. I have a friend with a software company doing a US entry right now. He tells me the things that the Finnish government is doing to get their tech companies into world markets are not so different to ours, though they are throwing more money at the problem.
One thing I have learned from past experience with start-ups is that there is nothing like a good team to take a company far, fast. While good leadership is essential, success comes from the ability of the team to make the right decisions to move the business forward.
Let’s make the partnership between Peter Jackson’s movie making and Richard Taylor’s Weta Digital the norm rather than the exception. Let’s give our traditional industry sectors, such as farming, a technological shot in the arm, double its productivity and then double it again, and then honour the people who achieve it.Blackham is head of Auckland software company Xsol and founder of Fact (now Geac).