New Zealand companies can learn lessons from those using agility, speed and adaptability to penetrate international markets and out-manoeuvre bigger, slower, overseas organisations.
That's the opinion of Adjunct Professor Peter Lee, from the University of Auckland's Centre for Innovation and Entrepreneurship, who says some New Zealand companies are finding a profitable path through entrenched competition and unfamiliar operating environments overseas.
"New ways of doing business can often result in innovative business models which disrupt traditional market structures," he says. "This can give New Zealand companies an advantage over indigenous businesses, provided they connect with these new markets and potential customers."
He says some skills being taught in the Masters of Commercialisation and Entrepreneurship programme were being used to gain advantages to bring business success by continuously adapting and coordinating resources according to changing circumstances.
"Competitive advantage and survival is often now derived more from the ability to adapt than any other competence. Success does not necessarily belong to the organisation with superior resources or position but to the one which adapts fastest to uncertainty and disorder."
Lee says such organisations can use three main methods to do so - disruptive business strategies, agility and collaboration.
One New Zealand company in the US is successfully using a disruptive strategy by applying a fresh perspective to testing the infrastructure for transmitting power and broadband data.
Failure of that infrastructure can have devastating consequences on essential services; the annual cost of trying to prevent that is US$10 billion and rising. ARC Cloud Software spotted a way to use portable imaging technology to detect defects - but their technology edge wasn't enough; they still had the barrier of a highly regulated, established industry dominated by domestic providers.
They took a smart step, says Lee, evaluating customers' business practices and realising they could add value by transmitting their digitised data directly into the cloud, meaning customers could combine it with other data to gain a system-wide view.
"The result of this bold and disruptive strategy has been rapidly growing early revenues based upon testing and increasing value for a business based upon software as a service," he says.
Small companies should look for vulnerabilities among incumbents typically geared towards existing customers rather than emerging markets. Incumbent businesses are usually streamlined to achieve that limited objective extremely well - but are increasingly threatened by smaller and more agile organisations adapting better to change.
PowerbyProxi was an example - an entrepreneurial New Zealand company with products focused on large global markets which enable industrial equipment and portable electronic devices to be charged electromagnetically without cords and plugs.
Their customers, including some of the largest in consumer electronics, want that capability in their products so they meet rapidly changing expectations of consumers in time for their next product launch.
PowerbyProxi relies not just on intellectual property, says Lee, but develops agile processes to be responsive in a continuously changing market. They set up a product council, bringing together engineering, product development, marketing and sales to focus the whole organisation on a few important products.
It meant PowerbyProxi remains relevant, succeeding by repeatedly providing the right products at the right time for their demanding global clients.
"Attackers simply need to exploit fundamental differences between their rival's speed and adaptability and their own," says Lee. "Importantly for New Zealand companies, many of our relatively small companies are characterised by agile management, with no large and powerful organisational units to dismantle; new skill sets and experiences are readily assimilated."
New Zealand companies often bring fresh new ideas and products to a collaboration in foreign markets but lack the necessary local knowledge and reach to be effective.
Henderson-based Revolution Fibres uses electro-spinning technology to create nano-fibres from a wide range of materials, used in everything from air filters to fishing rods and cosmetics. They have large international customers in high growth markets with products including medical devices, electricity storage and advanced materials.
They have limited ability to deliver finished products but instead provide customised nano-fibres for clients to integrate into products themselves.
"In many cases, their innovation has resulted in their effectively becoming the R&D arm for their larger clients in partnership relationships - often integrating with companies not only much larger but also with different business models and operating cultures," says Lee.
"Revolution Fibres has cultivated the ability and spends the time upfront to do this well. They include intellectual property as part of their business model and have cleverly combined their contracted services with the ability to accrue intellectual property around their products.
"In this way their value to customers increases with every transaction, giving them the combination of early revenue and an asset base which grows with use.
"These companies have identified a value proposition disrupting local paradigms, developing an agile organisation to exploit change and business models enabling effective collaboration with incumbents."
# Peter Lee is speaking at a breakfast event on Thursday, October 29 at the University of Auckland Business School entitled "Capturing value from new ideas in international markets". For more information and to register, visit the Business School website.