Size doesn't matter for Kiwi pioneers

Alan Nunns wants to talk about the size problem.

It's a given most New Zealand companies heading off overseas are small. Gnat-sized, many of them.

It's likely they will come up against potential customers, partners and competitors who are far larger.

That's why New Zealand Trade and Enterprise has pulled expatriates like Nunns into its Beachheads programme, which brings together New Zealand companies with private sector advisers with international networks.

Nunns is a California-based Aucklander who spent 24 years in the oil industry, starting as a research geophysicist and ending up a general manager of technology and IT strategy for Chevron before retiring in 2006.

Getting in the door at a giant enterprise like that could be the making of a small start-up business, but many don't know where the door is, let alone how to knock on it.

"Some New Zealand companies have positioned themselves so they don't have to deal with big corporate IT procurement. Some still have to, and to do it you have to be well-prepared," says Nunns.

"Our message to companies is you need to understand the internal processes, understand as well as you can the internal culture, which normally reflects their operational imperatives in some way, but use your smallness and likeability as a New Zealand company and New Zealand people to position yourself to get help from them."

He says big companies selling to other big companies often do a bad job. "A well-prepared small company that is prepared to get down on the ground, ask questions, seek help, and really listen to what the customer wants in an RFI or RFP process and come back and be targeted and do deployment very well - those companies have got a potential advantage."

The Beachhead programme is aimed at globally ambitious companies with revenues of at least $5 million aiming for $100 million. Nunns says because of the nature of IT, software companies with even lower revenues can also qualify, as long as they have exceptional opportunities and an experienced management team.

He says the programme can help companies assess which particular markets to go into and how to hire staff on the ground. "The United States is not a single market."

He says successful companies are not only clear about the business problem they are offering solutions to, but pick their geographical markets carefully. From that a number of strategies offer themselves: is it better to set up offices or seek distributors? Or build the product in New Zealand and sell it over the internet?



Overseas advisory boards can also work well, particularly for firms targeting the UK. "It's very powerful in the UK because there is such an emphasis on old boy networks."

Even though the United States and most of the rest of the world is in recession, some companies will succeed by using scale to their advantage.

"Typically, New Zealand companies are second or even third-tier, they have much bigger rivals, so what can they do in the current environment to mitigate that?

"They can adapt quicker, and some of the things these successful Beachhead companies are doing is reacting quickly to the changing environment.

"They are looking at moving their pricing to a subscription model to get around the capital constraints customers are under, they are being aggressive about the compensation plans for their sales staff, they are being aggressive about which niches are important to go after.

"Financial services and retail are not good places to win business, but energy, utilities and infrastructure are staying the course with some constraints.

"A lot of New Zealand companies are in practical areas closely related to assets, such as infrastructure and projects, so they tend to do quite well."

He says New Zealand has strengths in the interface between physical processes and IT, an area of high investment in optimisation and automation.

"Our creativity is high, our practicality is high. New Zealanders tend to develop practical products. The challenge is, though, that New Zealand solutions generally come from left field or from an underdog position."

Nunns laments the lack of co-operation between New Zealand companies going into the US market.

"Sometimes you see where they should be co-operating, sharing intelligence, operating together more, and you question why they are not merging into a bigger company where they can share marketing costs, share assets, share intelligence.

"New Zealand IT companies tend to be single-product companies, but any company of size in the US tends to have portfolio. The only way to do that in New Zealand is merge products or put them under a common investment platform."