Professor Catherine Welch from Trinity Business School told the Future Human audience about the risks facing technology companies in an interconnected global economy.
“We are more interconnected than ever, but we are also more divided,” said Professor Catherine Welch, Trinity Business School’s first chair of strategic management, in her keynote address at Future Human today (May 13).
Speaking about the future of business, Welch explained the paradoxical nature of the risks companies face due to internationalization. While it has become easier for a business to set up a website and go global, it is also riskier than ever to do so.
Welch noted that technology companies in particular have an additional set of risks when it comes to expanding, not only because of the volatility the world is currently facing, but also because “innovation is inherently risky.”
“You don’t know if your technology will actually end up doing what you want it to do,” he said. “And even if you solve that problem, you have the next problem, which is, it may work, but do customers really want it? Often that’s something you just figure out a little too late.”
To adapt, Welch said tech companies have to reduce risk. Companies still have to work to go global as “we have global markets, technology is global”, but the risks must be taken into account.
How can you get this? Welch said “it depends,” drawing laughter from the crowd when he added, “That’s the classic academic answer, isn’t it?” He explained that it depends on the type of technology a company is trying to bring to market and provided two contrasting examples.
SaaS style companies
The first example of a company was represented in a Future Human chat by the fireplace yesterday with Intercom co-founder Des Traynor. Welch said SaaS and software development companies don’t typically work with innovative technology, but rather offer “novel applications and recombinations of existing technology.”
He added that this allows companies to start globally very quickly, initially with a very optimistic outlook, finding customers all over the world excited about the new product.
But the problems start when these companies try to get away from these early adopters and try to develop a presence both offline and online.
“That’s when it starts to get really expensive,” Welch said. “Not only that, but you have to invest in this presence often before you get a return. For some companies, this is not going to be a period where they survive, so it’s a real pressure point for companies and getting it right is very difficult.”
To reduce risk, Welch said these companies should plan for “lean internationalization,” which is finding profitable ways to create value by expanding.
Welch gave the example of Australian software company Atlassian, the maker of Jira and Trello, which was able to build a global reputation without a large sales and marketing team, but through the power of word of mouth.
“I’m not suggesting you go out and fire your sales and marketing team,” he said. “But what I’m suggesting is that you have to think very carefully about where you’re going to invest.”
deep tech companies
The second example Welch gave was deep tech companies, which have a different set of risks and pressure points.
“These are companies that are trying to bring to market a product that is based on a scientific breakthrough,” he explained. “So these are companies that are new to the world and their product is new to the world.”
Welch said the biggest problem for these companies is that it can take decades to bring something that is a breakthrough innovation to market. The example they gave was the vaccine manufacturers.
“These companies, which are now household names, were practically on their knees by the time Covid-19 first appeared,” Welch said.
“The rest is history, but it’s just a reminder to us that this kind of technology, these kinds of innovations, take a long time to come to market, if ever,” he added.
This often means that the early innovators are “not the ones reaping the rewards” of the new products they are trying to launch. He added that these companies need investment, people who have faith in the vision and “patience, a lot.”
For these companies, the best way to manage these risks is to “learn from those who have been there and done it before.”
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