Industry Segment Identification

In the volatile high-tech growth market, there is constant talk of waves and trends. If we had to suggest the next wave, it would be developing products and market strategies to address worldwide markets, i.e., globalization. This wave will bring major opportunities for assisting in planning and adjusting products, catalogs, websites, etc., to reflect the local language, culture and business practice.

What specific industry group will realize the benefit of this new wave of opportunities? Is it the language translators? Localization consultants? Internationalization planners? Strategy consultants? General business planners? Who should a corporation turn to when considering moving into the international space? It is not clear whom to call for the answer, and it usually falls to anyone who says they can provide the strategy, the project plan and the service.

Another question is when to call. In our experience, localization planning and support have been the last skill to be called, and then primarily for language translation. A typical company “strategy” is to get up and running in the US, then set up in the UK to “establish an international operation”, and eventually translate certain languages as market demands warrant. The cry from localization consultants and professionals is always: “It’s more than just language” and “They always call us too late”.

Although times are changing and many corporations are aware of the need to develop international plans early on, this approach is still prevalent, probably for the following reasons:

• British is usually the only foreign language spoken by American project managers.
• Translation is often the only “globalization” issue at product marketing and planning meetings.
• Localization is not considered a business driver.
• There is a false sense of market acceptance of existing English language offerings.

How, then, do we move into higher decision levels in a corporation? How do we get the early attention of CEOs, corporate planners, and marketing executives? What are their concerns? To attract the notice of key executives at the right level and the right time, a service provider must look more like a solutions provider. This means expanding technical skills to assist with globalization evaluations and strategies. Indicating to executives how to organize internationalization and localization should really be part of corporate strategy and planning. It means developing an ROI analysis based on various alternatives. In short, the value-added has to extend beyond products and services into tools for making market decisions and setting priorities.

To be included at this level we need to be recognized as bringing this value. Part of this recognition might require a unique identification or name, to provide consistency, and to give corporate planners a target to call and analysts a market identifier.

There are several major companies in the LISA community that have already recognized this need and have developed strong messages and valuable offerings. However, each uses its own unique identification to differentiate and to attract. As a result, we appear fragmented.

Globalization Solutions Providers – GSPs

For purposes of this article only, I would like to use the term “Globalization Solutions Provider” (GSPs) to identify those companies that provide a full range of services enabling other companies—primarily B2Bs—to enter the global markets. Such services include the familiar translation, internationalization, logistics, and legal services, but also planning, business modeling, market mapping, strategy development and selection, as well as other services that can assist a company in making decisions on markets and timing.

The speed of successful globalization will depend on the skills and availability of GSPs

Strategy for Local Markets is Key

Much has been written about globalization, and many analysts and consultants have published market data indicating huge new opportunities. For example, Forrester predicts that by 2004 about 50% of online sales will take place outside of the United States. Global business e-commerce revenues should grow from USD 185 billion in 2000 to USD 336 billion in 2001, USD 684 billion in 2002 and USD 1.26 trillion in 2003, with B2B commerce being near 80%.

Making products available to global markets is certainly not new; major corporations have had successful global market programs for years. The “new” aspect is the driving force generated by Internet e-business predominately in the B2B/SME (small and medium enterprise) sectors. This is not the local or regional electrical or plumbing suppliers. But rather B2B, transaction and applications have utility applicable in other markets, thereby providing new sources of revenue for a company in any domestic market to move into international markets.

There is no question regarding the general global market opportunity in all service and product sectors. The key question is to determine which markets to enter, when to enter them and with what degree of product and service localization. Along with user interface and language issues this includes sales process, supply, delivery, CRM and all other factors that relate to the pertinent business cycles and business models.

There is no “one size fits all” in localization strategy, and business models will need adjustment. Each market, each service, each product will need to be assessed for each company, and specific strategies will need to be developed. The more appropriate the local strategy, the more chances for success. This planning impacts timing, resource management and eventual revenue and profits. It can be the difference between success and failure.

New Wave of Opportunities

The move to globalize will generate opportunities in three key business segments, each offering specific opportunities for the LISA community:

• B2Bs (applications, B2Cs, content, transaction, service, etc.)
• VCs (investment companies, angels, incubators, etc.)
• GSPs (localization consultants, service providers, translators, etc.)

New Opportunities and Challenges for B2B

B2B, applications, content and transaction companies have almost unlimited markets open to them worldwide. The incredible acceptance of e-business in all countries is generating opportunities on a massive scale. There is support and push from all sectors, including government and politics; at a recent G-8 conference in Japan, political leaders initiated a program to provide aid and support for poor countries.

However, success will not be automatic as in “make it and they will come”. Local clients and customers want an experience that relates to the way they do business, and B2B enterprises will need to offer this. Many new issues unknown today will be generated when they seek advice as the segment expands and matures. Sales and marketing will make the difference. E-mail marketing programs that might be the cornerstone of a US strategy might be unaccepted or not have critical mass or may need to be formatted totally differently.

In addition, most analysts predict that multilingual sites will be mandatory for US companies serious about winning in the Internet economy. There are more than 150 languages recognized by the UN and another 2,000 more used around the world. Deciding which to use and how and when to do so are questions that service providers must be able to help with.

Unlike large multinationals, SMEs cannot experiment; they cannot spend six months and USD 5.0 million and then just drop a project. They have to get it right the first time. Therefore, planning and advice for both market launches and ongoing operations is needed from GSPs who can offer experience and know-how. Equally important is the ability to adjust plans quickly and seamlessly.

New Opportunities and Challenges for VCs

There was a 70% increase in VC investments in Europe last year, representing more than USD 6.0 billion in technology ventures, about USD 2.0 billion in software and about USD 1.0 billion in Internet projects. Obviously, there are opportunities for many VCs, angels and incubators to invest and realize significant gains. In particular, investors should consider two major segments for new investment opportunities: new global offerings from B2Bs, and new offerings from GSPs.

However, to take advantage of this international growth, business investors will have to add even more concerns to their already difficult and complex analysis and selection processes. Such concerns include government, legal and regulatory issues, as well as different business models, cultures, processes and marketing and sales approaches. However, the effort will be well worth it. There is an abundance of data indicating a huge potential for global business, and as businesses push towards global markets, either as expansions or start-ups, there will be an enormous demand for technology and services that enable the globalization of Web and e-commerce solutions. In addition, global markets and users add many additional requirements in the area of localization.

Increase in Technical Due Diligence

VCs will therefore need to understand and assess the general components involved in globalization and the specific localization strategies relevant to their investment target. They will need education and advice, and the skills that GSPs can provide. This is not new for many of the larger VCs who are currently developing offices worldwide to be able to add local content to their analysis. The significance of the potential of this global market is too important to ignore. However, VCs will look to GSPs for more than just a single service, and the latter will therefore need to expand their offerings beyond translations, etc., into more general consulting and strategic advice.

New Opportunities and Challenges for GSPs

Equally, given global demand, one of the most significant opportunities will be for service companies that can help enterprises design, develop, build and market the most appropriate strategies and develop the appropriate products and strategies to successfully compete in the international area. Since localization at SMEs will be performed on a project basis, the assistance of outside firms will be sought. This generates significant opportunities to expand existing departments and products.

Obviously then, globalization and the availability of the Internet present major new opportunities for B2B or applications providers. But, this new expansion requires investment and planning skills that a GSP can provide. These include elements of analysis not usually found in the offerings of current single service providers. What is the specific target market map? What is the market challenge? What competitive advantages should be exploited? What are the resource requirements? What are the best launch strategies? This is the growth opportunity for service providers to offer more than translation. Companies should form alliances if necessary as it is important to offer a comprehensive service that includes the optimum strategy as well as the tactics to accomplish the job. An alternative route would be a merger or acquisition.

Meeting the GSP Challenge

If you expect to be successful when starting a new venture or undertaking a major expansion in the globalization space (or any other space for that matter) you should have a plan—i.e., a specific strategy that relates to the target markets and to your unique issues and resources. Before they will commit funding prospective investors need to be convinced that your undertaking has a large market opportunity and that your team has a solid, well thought out plan to achieve success before they will commit funding.

The problem is that there is little help available for project teams in how to think through the development of the plan/strategy. Journalists provide the latest hot ideas, consultants will give advice or even do the plan for you, and business plan guides will give you the macro, “essay question” menu. However, what’s missing in all of these cases is the team’s common “structured thinking”, what iCAP calls the “Geometry of Success”. This process supports and ties together the business plan surface and provides real team focus leading to effective strategy. Its absence is partly the reason why business plans, although required, are typically murky, poorly received and often not read, and why so many presentations to VCs “unravel” when probed. More importantly, it is a significant reason why start-up teams are not successful.

What, then, is this “structured thinking” and why does it seem to be missing? Structured thinking is to be found in the probing questions of the prospective investor or strategic partner, in the entrepreneur’s reactions and decisions on the fly, and in the investors’ review meetings. The problem is that it occurs over too much time as investors “live” the plan, and it comes too late to help many projects. iCAP condenses this process down to a series of concentrated steps which can build a Geometry of Success in an extremely short time.

The Geometry of Success

At iCAP, we have drawn upon years of experience working with project teams in large companies, with start-ups, and with investors, and created a comprehensive, proven process-based tool set. This allows optimal application of structured thinking at the start and during the development of projects, in order to keep the team out in front and improve the odds for entrepreneur and investor. We assist companies and start-ups to determine what the unique and optimum geometry or strategic plan is for success in their particular situation. This is done by applying a unique tool set that iCAP has built based on over 20 years’ experience at the corporate level, combined with a study of the key reasons for project and start-up failures.

The following discussion gives a schematic outline of the process we use, along with some questions and ideas that should help you and your team begin your structured thinking and build your Geometry of Success. However, this is not something you do and then put on your desk or shelf for display while you “get back to running the business”. Rather, it is a living process that, after establishing the foundation for the business, can be easily updated for critical mid-course corrections and adjustments as market opportunities and problems present themselves. This process is applicable with or with out a business plan, and can be used to build the basis for a comprehensive plan or used to test an existing one.

The thinking behind any project can be judged by looking at four major “HUBS”, which we believe are unique to each specific project or company and which form the basis for building a successful Geometry of Success or business strategy for that project or company:

• Opportunity and purpose
• Definition of success
• Analysis of environment
• Strategy development and action

Without completing these four hubs, you will not have done the critical structured thinking necessary to produce a viable strategic plan for your project or company.

1. Opportunity Identification

This is a critical first step. As noted, to be valuable and to be able to successfully expand in global markets, you need a comprehensive offering. However, you should not try to be all things to all people. Pick your specific market by analyzing your unique strengths. What are your overall specific target markets? What are the general trends? What are your special opportunities? What is the unique and identifiable value that you and your team bring to the opportunity—ideas, products, people, technologies, patents, partners, etc? Perhaps you have special knowledge of a geographic area or of unique issues, e.g., in transportation or logistics. Perhaps you have special partners. You should be able to summarize your opportunity in a single simple statement that can be used for investors, employees and partners. Without clearing up this initial positioning step the business will miss a critical focus.

Following agreement on the opportunity, the next major step is for the principals to agree why this business should be launched, why they want to participate, and what their personal expectations are for results. Build a list of “whys”, expected results and personal benefits. Not obtaining understanding at this level usually results in targets being shifted subtly; this is similar to having two or three different helmsmen on a ship, each moving in “their desired direction”, which only impedes forward motion.

2. Definition of Success

Every venture has one or more founder/investors. These are the individuals who will have invested ideas, time, capital, etc. to initiate the project. Each has his or her own individual expectations about what they each want to get in return for their investment. However, whatever the differences among these various expectations, this group must agree on a single, common, explicit definition of success for the project. This definition of success then becomes the “contract” for the management team. Regardless of the overlap between the founder/investor group and the management team actually running the project, the management team must have a single, common, explicit definition of success that they have “signed up for” and are committed to fulfill. This is not the strategy or the “how” the success will be achieved, but rather the very specific definition of what must be achieved to declare success.

The concept is simple and almost everyone would agree with it. However, the lack of this step has caused the demise of many projects. The primary reasons for teams not adequately addressing this point are:

• It is easy to agree superficially without checking definitions, semantics, etc.
• Group process is not usually available, so the alternative is bilateral conversations and written documents that never achieve effective common agreement.
• Teams are reluctant to “waste time” on something so “obvious”.

iCAP has found that the following process works well when building a definition of success. Using data from the previous work, you need to develop answers to these five questions:

• What is the time horizon for achieving this success?
• What business are you going to be in?
  This is the business that the marketplace will put you in, i.e., where the marketplace will see you, not a segment that you may target or emphasize but the “ballpark” that the investor/founders will allow the management team to play in.
• What are the boundaries of the business?
  These are typically geographical, but they could represent an industry or technology segment within which the management team is allowed to pursue the agreed business.
• What market share of the agreed business will the venture have at the end of the time horizon?
• Are you going to be dominant, the leader, a leader, a significant player, a niche player, or have created a beachhead?
• What other results are necessary for the venture to be considered successful at the end of the time horizon?
  These are typically financial, and may include revenue and expense levels, profits, staffing, turnover, etc.

Remember, this is not a promotional piece. This must be a definition of success that each investor/founder agrees to be satisfied by and that the management team buys into and commits to fulfill within an agreed period of time. This is needed to enable all participants to agree on whether the venture has been successful.

3. Environment and Situation Analysis

The more that is known about a market, the greater the accuracy of the strategy or approach. iCAP has found that in all cases where executives, planners, or start-up partners announce that they “disagree” on strategy, it is usually traced to a different view of the environment. Once an accurate understanding of the environment is developed, everyone easily moves to a single strategy. These environmental issues refer to facts, issues, and conditions that could impact—positively or negatively—progress toward accomplishing the definition of success.

During workshops, iCAP spends a great deal of time ascertaining that there is a complete understanding of the environment that the project or company will operate in. Here is a simple process that is safe to do at home:

• Develop a comprehensive list of all possible factors without evaluating their impact or significance. Consider all factors which in any way could support or impede progress toward fulfilling success, such as market, competition, staffing, political climate, transportation, logistics, image, etc.
• Analyze the impact of all of these factors on driving or restraining progress toward accomplishing the definition of success.
• Compile these factors into categories based on their significance toward advancing or hindering progress toward the definition of success. For example, you might exploit an opportunity to help progress toward a goal or objective, need to overcome an obstacle, eliminate or reduce the impact of a risk, or meet a specific need. It is important to note that a factor or issue can be both an obstacle and an opportunity at the same time.

4. Strategy Development

One of the weaknesses found in most projects is to select a strategy from a public menu. Key elements which must relate to the specific project are the target market map, revenue map, market demand focus, demand profile (create, cover, compete), and resource matrix. You need an outline of various launch strategies along with alternatives. You also need operating strategies for when the launch strategy has been successful.

The hub, strategies, is the connection between the definition of success and the environment. In all too many projects, planning is just one of the items on the list of things to do, and has very little to do with what people actually do each day. Once it is done, there is a feeling that “Now I can get back to the other things on my list”.

The main reasons for this are:

• Planning and strategy development are not done effectively or rigorously enough to determine implementation or operational requirements.
• Planning is done for purposes other than to determine what should be done—presenting to investors, for example.

The management team is responsible for developing and executing strategy—the optimal path for the venture to take from where it is today to fulfilling the definition of success. Full and complete strategy development enables the team to list the key accomplishments that must occur for the venture to travel this path, i.e., what must get done, by when. In addition, the team must identify who on the team is responsible for getting what done. Each member of the team commits to fulfilling his/her role in the execution of a single, common game plan. With this in place, each is then able to allocate tasks and make assignments that actually implement the strategy.

The tests of an effective strategy are as follows:

• It delivers on the definition of success
• It is unique to your specific company and environment (not just a good idea from the journals)
• It includes several alternatives, in order of priority, that achieve results
• It can be easily adjusted and mid-course corrections can be made.

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Raymond P. Kasbarian is Managing Director of iCAP Global Inc. a New York based consultancy that using a proprietary tool set assists companies and start-ups in building their optimum geometry or strategy for launch and operational success. Prior to joining iCAP Mr. Kasbarian was VP Operations Europe for a US software company. He was also founder and CEO of IMT Multilingual Systems and created ARABIX, EURIX, FARSIX, and other products. At iCAP he is currently working with an international team developing a virtual incubator and international fund for GSPs and for B2Bs seeking to go global. He can be reached at rkasbarian@icapglobal.com. Company information is at www.icapglobal.com.