Michelle Rodger: Don't leave technology on a wing and a prayer

Published on Saturday 28 March 2009 16:13

SCOTLAND'S reputation for innovation took another step forward last week following the launch of a £29m initiative that aims to unearth the next generation of young computing talent.

Finding Scotland's answer to Bill Gates and Steve Jobs is the task of the awkwardly named Scottish Informatics and Computer Science Alliance (Sicsa). The moniker may lack catchiness, but the idea is sound: to develop next generation internet, artificial intelligence, software engineering and neuroscience from 10 universities and bring the best emerging technical innovations to market.

According to Colin Adams, director of commercialisation at Edinburgh University's School of Informatics, Scotland boasts a massive pool of talent, is home to many of the world's leading researchers, and has a strong track record in bringing technical products to market.

So, no shortage of skills or smart ideas. But the real challenge comes when companies and their inventor-owners attempt to export these technologies globally.

Some companies try and fail, and in many cases are too scared to even have a go. The fear of internationalisation and the lack of knowledge about other business cultures and environments, has left many with burned fingers and a large hole in their balance sheets.

Entrepreneur Alastair Balfour cites the example of a company that sent a top salesman to Boston, spent $100,000 opening an office and then thrashed blindly around the States for 15 months, ending up with one order for $10,000 which later burned out. The salesman returned and told his board that the American market wasn't right for them, that it was structurally different and that their product needed to be changed to cope with the needs of the Americans.

Not true, says Balfour, whose company 2in10 specialises in transforming ambitious Scottish tech companies and helping them to grow globally, particularly into new markets in America, the Middle East and the Far East. The salesman just didn't approach the market correctly. He hadn't tried to find a better way into the market, such as finding a channel partner, or a distributor or VAR (value added reseller) to form a partnership.

Balfour says our early stage tech companies are depriving themselves and the biggest market economy in the world of the chance to build something of bigger value by not following the basic rules of exporting. That's where the knowledge and support of businesses such as 2in10 are hugely valuable.

Part of their strategy is a partnership with a US tech marketing business, Milestone Strategies, which identifies specific opportunities for Scottish businesses and then works hand in hand with 2in10 to secure them.

The partnership is key; access to knowledge of international markets, cultures and global business networks and contacts is hugely valuable. But it's the first step that's the most important, and that's recognising that the characteristic that makes these tech companies entrepreneurial and innovative is the very thing that holds them back.

Success requires a change in focus for the company, from technology to markets. Many businesses remain focused on how great their technology or product is, rather than highlighting what problem it solves, how many people have that problem, and whether or not there is anything comparable in the market.

Balfour says it's a cultural issue in Scotland: we have fantastic technology but the majority of people running tech companies are technologists and professors first and don't necessarily have the sales and marketing expertise required to understand the market processes at home and abroad. He cites an American survey that revealed how chief executives with a marketing or sales background grow businesses with three to four times more value than those run by technology-based managers.

It's a change in mindset, which isn't recognised quite as widely as necessary in early stage companies. Donald McLaughlin, director of Cisco, Scotland, reinforces the 2in10 advice. He believes there is a great opportunity for technology businesses to enhance their success by taking more of a sales perspective. McLaughlin insists that the selling opportunity be considered all the way through the product lifestyle; even from the point of inception, he says, businesses should be thinking about the sales potential and how best to exploit it.

ScotlandIS executive director Polly Purvis goes further, saying the most successful global exporters are those businesses that build the company from scratch with a view to international trade. But she says we need to do more to support indigenous tech companies to export successfully.

ScotlandIS is setting up a new exporters' group, which will share the expertise and experience already gained by larger member companies with the newer companies so they don't suffer the same hard knocks on the way to success.

According to Purvis, the number of member Scottish companies exporting to the States is growing, up to 33% from 25% the year before – and that's despite the effects of the credit crunch.

As domestic markets are shutting down or declining in the current economic climate, many companies are now looking to international markets for new opportunities. 2in10's Balfour says there are markets for new tech products which haven't been affected by the economic downturn; homeland securities, defence, clean energy. If your business has any applications in these areas, now is the time to pop them on an international stage.

"We have never been busier," he said. "We continue to be really encouraged by the number of companies going for it."