By Mona Pearl
Picture this: A Swiss-owned company looking to market an innovative technology product into the United States, a market that was identified with the biggest potential and appeal for these products. The R&D took place in Israel, using high-tech components from South Korea. The management team was based on three continents. What is different about this scenario? This is a startup and not a mature company that is looking to grow globally. This is a story about a startup that was born global.
As trade borders become seamless and the world becomes more dependent on technology, entrepreneurship is a major driving force for growth in an increasingly competitive global market. As a result, more startups are being born with a global orientation. Technology, coupled with ease and convenience of communicating across borders and time zones, accelerate and encourages visionaries from different parts of the world to team-up and collaborate with others; take advantage of global opportunities and be more in-tune with customer demands. This all results in the creation of new products or services that transcend borders.
Rise and shine, visionaries and entrepreneurs. This is where future opportunities lie. What do you need to have in place to be global from day one and beat the traditional corporation structure to the punch?
Recently, we are seeing businesses which function globally from the moment they start their operations. These companies are born with a global vision and serve global markets, referred to as “born global companies.”
The global technology advances and international business competition have given rise to a new entity, the born global company, a company that adopts a global perspective and engages in international business from or near its inception. Many of these companies become international competitors in a very short timeframe, using their nimble structure and global networks.
Unlike traditional companies which start their operations locally and expand slowly into global markets, becoming multinational later and then becoming global, born global companies establish a global operation from the very start. Their mission statement, corporate vision, business strategy, organization structure and business operation are all geared toward globalization.
The emergence of born global companies is fairly new and is not limited to any country. The first of the born global companies are from developing nations or from nations with small local markets. Today this phenomenon appears to be fairly widespread, but very limited in U.S. entrepreneurial circles. Irrespective of the country of their origin, these born global companies share certain common traits.
New Story, Old Challenges
Penetrating and developing an international market requires an entrepreneurial philosophy and drive — the same kind of philosophy and drive behind every successful startup business. Following that logic, America — the birthplace of the modern entrepreneurial spirit — should perform well in global business. Also, with its multicultural diversity, theoretically it should improve its chances for global success.
However, American businesses fail at a rate of three to four times the rate of other countries in their ability to expand globally. Even worse, the majority of U.S. businesses never make an attempt. Of all the obstacles to success abroad, the greatest hurdle is simply mind-set. Our entrepreneurial drive, vision, and expertise just don’t compensate for our lack of global perspective, drive and success.
To support this, we can look at the yearly data published in the Global Entrepreneurship and Development Index, where the United States plays a major role.
2013 Global Entrepreneurship and Development Index – Top 10
1. United States
Even though we rank No. 1 in the Global Entrepreneurship and Development Index, U.S. entrepreneurship is pretty much confined to U.S. borders. The index captures the contextual feature of entrepreneurship across countries. It doesn’t measure how many ‘born global’ ventures each country has.
Born Global Entrepreneurship is still in its infancy in the United States. When exploring whether to incorporate a global perspective and angle into the company, many entrepreneurs gaze with trepidation at the process and surrender to fear before making an earnest effort. The main problem is mind-set. But this problem also contributes to a lack of experience, talent, and confidence when navigating the global terrain.
Global Innovation and Entrepreneurship: The Future
Based on the information available, innovation and entrepreneurship will continue to expand in the future across borders because of the following six circumstances:
1. Global market conditions. Trade barriers are easing. Economies are interdependent. Communication via the Internet has never been easier or more accessible. These conditions drive political reform, cultural transparency, social progress, and a great deal of wealth creation.
2. Entrepreneurial mind-set. Entrepreneurs have the ability to see, understand, and take advantage of evolving markets. The entrepreneur’s ability to think differently, use insights, see what others don’t, envision what doesn’t yet exist, and identify opportunity when it’s ripe — these are the prized qualities of today’s entrepreneur, and when adding the ability to do all that across borders, cultures and technologies, we are clearly witnessing a new exciting, challenging, and demanding era. Wayne Gretzky of National Hockey League fame helped state it succinctly when he said, “I skate to where the puck is going to be, not where it’s been.”
3. Eroding confidence in established institutions. The recent world economic meltdown is removing any last confidence that most people had in governments, large enterprise banks, and other financial entities. The resulting mistrust will lead to reinventing ourselves as individuals, communities, countries and societies. As such, many more entrepreneurs will be joining the field.
4. Shifting business environment. Large-scale firms are synonymous with bureaucracy, which tends to stifle innovation. In response, the business environment is shifting to accommodate the needs of its rapidly changing market players. Innovation and entrepreneurship are beginning to flourish around the world and will likely take the form of much smaller, yet bolder companies. Knowing and catering to this is how entrepreneurial ventures beat corporate giants to the punch. Any company, large or small, that continues down the same path it has always taken will find it to be a losing proposition.
5. Entrepreneurial collaboration. Also, on a global scale, there will be more entrepreneurial collaboration, which in turn will make shared innovation between countries a far more common occurrence at the company to company level — not just at universities and research institutions.
One of China’s approaches for creating an innovative nation is the Technology Business Incubator. China’s mission is to nurture “technopreneurs” and technology-based startups. Business incubation is considered a viable option for countries that want to expand economic opportunities.
6. Growth of environmental and sustainable engineering technologies. A growing consciousness about the value of protecting our world will fuel the demand for products and services that can accomplish this goal.
Positioned for Success
Born global startup companies are greatly positioned for successful global growth, and here are the top reasons why:
1. In a global context, startups have nothing to lose but the whole world to gain. They are nimble, their founders are risk-takers, adventurous, and can usually be under the radar while competing globally on a scale that provides them with a competitive edge.
2. They are more flexible, innovative and able to change and adapt much faster than the large multinationals. That is a combination of size, layers of management as well as corporate culture that are entrepreneurial and forward thinking, as opposed to risk adverse characteristics of large corporations.
3. The leadership in smaller companies is more entrepreneurial, intimately involved and in-tune with the daily operations and by having fewer layers to go through, can adapt, move and act much faster. Born global companies tend to have innovative cultures and knowledge-based organizational capabilities. In many cases, the core team that started this venture is still around, and there is more of a tight and personal corporate culture that plays very well in other countries around the globe.
4. Top management/founders have global work experience and have established an extensive and reliable network with other companies abroad. This network allows them to offer services or become a supplier of OEM parts to other global giants.
5. Global startups are flexible on their operations, i.e., they are willing to do a variety of tasks and services in order to survive in business. Organization encourages learning from all its engagements.
6. Global startups are cross-industry, cross-functional, and more comfortable with change, adaptation and constant learning. Employees have multiple skill sets, which helps organizations to be flexible and fast moving. Unlike large organizations, global startups do not have large specialized departments in middle or upper management areas. Any specialization will be limited to technical/engineering areas only.
Catching the Wave of Global Entrepreneurship
Entrepreneurs around the world have much more in common than executives or any other business leaders/operators. Born global companies have developed a unique corporate culture, which can be best described as a “global culture,” and a set of skills and attributes that play very well in international business:
§ A ‘let’s get it done,’ and ‘hands on’ approach
§ Openness, sensitivity and awareness to other national cultures
§ Cross-industry skills that translate in the ability of filling-in and working in a plethora of functions
§ Comfortable with uncertainty, and actually thriving under these conditions
§ Open minded and possess the eagerness and desire to learn, improve and grow while working as a team to achieve a common goal
§ Commitment to the project requirements while the work day is driven by accomplishing goals and not by traditional work hours
§ A strong sense of need for success (not just the fear of failure)
§ Knowledge of multiple foreign languages
§ The tendency to choose and craft a strategy based on their core competencies. The driver is growing the core business to the target market. A born global firm is a venture launched to exploit a global niche from the first day of its operations, and caters to a globally diverse niche from day one. The strategic plan outlines the global launch activities, while the group may run it from the home country, or even have a collaborative management team across borders.
§ The ability and skillfulness to raise capital from around the world, utilizing their global networks
§ Distance isn’t a factor, they build their staff with the best employees from all over the world
You cannot afford not to think global, especially if you are in the technology field. It isn’t enough to have great technology. You need to be able to understand, adapt, and create the right solutions for your markets. Identify your customers across borders, which require a deep global business and cultural understanding, and all from day one.
Seeing opportunities in the global marketplace requires the right perspective. Acting on those opportunities requires the right skills and entrepreneurial instincts. Both of these, perspective and skill, take time plus experience to develop and mature. Most important, they require intentional learning and curiosity to explore. Learning should be a deliberate response to every experience, every environment, and every opportunity. Then, through daily business activities, develop a global lens that transcends culture, borders and mind-sets.
Mona Pearl helps build, fix and grow companies with entrepreneurial mind-sets that face complex challenges across borders; and charts and coordinates programs and actions that help them become competitive and sustainable internationally. Pearl is the author of Grow Globally as well as other books and articles on global competitiveness and growth. Connect with her at .
This article includes excerpts from Grow Globally: Opportunities for Your Middle-Market Company Around the World. Copyright (c) 2011 by Mona Pearl. Re-printed with permission of John Wiley & Sons, Inc.
Illustration by Photokanok at Free Digital Photos.net