August 15, 2021

Export is a model game, forget the product

Use some of those 75% of the resources you spend on innovating your product on the business model instead. Particularly in exports
August 15, 2021

Export is a model game, forget the product

Use some of those 75% of the resources you spend on innovating your product on the business model instead. Particularly in exports

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Put boldly, early stage exporters start out with hypotheses of copying the sale of the product to a new market. They then leapfrog the critical steps of defining an export (business) model and rush to the

market to learn that their aspirations and dreams hardly come true. There are considerable risks of going to a new market – this is why only 1 out of 4 are successful within the first year of export.

First start all over with understanding the customer

“It is the customer who determines what a business is. What the business thinks it produces is not of first importance. What the customer considers value is decisive, and it is never a product. It is always utility, that is what the product does for them.” Peter Drucker

So, it makes perfectly sense to optimize the product / market fit before you commence. Addressing new customers requires that you repeat the customer validation process

by asking customers in the new market about the value they derive from your product. Only then can you start to replay that value to the next customers because it will resonate with them.

Then forget about the product

But as much as product / market fit is rarely the result of a single defining event – it is definitely not an operational theory or model. Unfortunately, the majority of scaleup CEO’s make the mistake of remaining glued to the product and its evolution – and thus smash hit into all the risks of exporting – even those exporters with incredible revenue under their belt.

Now, you have to cross that chasm into the export model evolution. Understanding the customer value in depth will lead you into

adjustments of your export model – as long as you appreciate that the export model is dynamic – “when it rains, it pours”…

Remember, sustainable scale – I assume this is why you would export in the first place – is not a necessarily millions of users, a great product, or the best user recommendations. Sustainable scale is the act of translating that new insight on customer value into a revenue model and a repeatable process that delivers that customer value over and over in your export market.

Design your go to market strategy

So, how do you introduce your business model that is completely foreign by prospective channels? It isn’t easy – and any thorough answer would be complicated to nail in two sentences. But you cannot neglect the go-to-market strategy as a key export challenge. Do you know of any successful company that doesn’t dominate a distribution channel? Right.

So target your distribution channels: Do you want to be ’hands on’ and in control of your relationships with your final customers / buyers or take a ’hands off’ approach and let an intermediary manage the transaction? Would you prefer a hybrid of both approaches? What does that look like? Define your prospects (e.g., OEM manufacturer, distributor, importer, sales representatives, etc.) accordingly.

Consider LinkedIn as a primary source – the tools to narrow down your search are quite exhaustive. And of course, trade shows and related directories can be supportive as well.

As you move towards new distribution channels, why should (s)he take on your unfamiliar product without traction in the market?

Often the answer is by providing a point of reference that makes it easy to understand the new product. Perhaps you will have to conduct the first sales yourself to visualize the business opportunity to future distribution channels and educate prospective distributors on the new offering.

But that in itself is rarely enough. Your value contribution must address not just end-users but also the channels driving your product towards the end-users. So, how can you make it easy for the distributor? How can you add value to the distributor’s business? Your export model must address this in a convincing manner.

And make it stick

To make it actually work, not just by model design, but in real life – you must consider your management and organisational capacity. You have finally reached a stage where the business model design has been tested and seems to make sense. But some of your employees will provide barriers to change for many (good) reasons and others will prove to be efficient change enablers. How do you sell the idea of change internally, how do you recruit the experience and know-how required to undertake a successful transition towards export business, how do you

achieve early stage results to foster further motivation to go on, how do you make the processes an integral part of your everyday life..?

With the right human capital your company will know that the go-to-market process is of iterative nature. You will have to continuously challenge your key assumptions – or hypotheses – to fine-tune the model and to constantly adjust to market dynamics. The further the mental distance between your export market and your company’s DNA, the higher the importance of working with the hypotheses.

These are all vital parts of making it real. It is tough. And rewarding. Perhaps. There are ways to reduce the significant risks and free yourself and your resources to start perfecting your export model. Let me know, if you want to know how to increase your chance of success from 1 out of 4 – to 2 out of 4.