Angry, I know you have worked with business all over the world and now you are settled here in Australia you seem 'Angry' about the fact that businesses here are not taking advantage of opportunities for growth on the world stage.
Angry - what are your top 10 reasons why many Aussie businesses fail to thrive internationally?
Angry says ...When you say why Australian businesses fail to make it in the world, I assume of course that you speak of businesses that are successful in Australia, but somehow fail to establish themselves overseas. More
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When you say why Australian businesses fail to make it in the world, I assume of course that you speak of businesses that are successful in Australia, but somehow fail to establish themselves overseas. I assume further that you're talking of businesses that offer a knowledge-derived product - a solution or a product that embeds unique knowledge, be it in biotech, medical devices, or information / communications technology (ICT), or perhaps in disruptive mechanical engineering, or in the field of sustainable or renewable energy .. not some dirt dug out of the ground and fed to a world eager for ore or gold or diamonds or bauxite or metals or whetever dirt can be refined or smelted into today.
Also - there is a divide between small companies and larger corporations, who face both common and different sets of issues. A lot of the points below will inevitably perhaps especially apply to smaller businesses, because they often are the ones who try and go overseas for the first time.... but not exclusively so, by any means.
And yes, we need to export far more (our debt to overseas creditors stands at something like $540 billion dollars and counting, more than the combined value of every single last vehicle on Australia's roads. By Western world standards, this is less foreign debt per capita than a few other Western countries, but given Australia's natural blessings and the true quality of its R&D and innovation sectors, it still is a scandalously high figure.) We need to export more knowledge and know-how, rather than mostly dirt we dig out of the ground - an unsustainable proposition in the long run.
It's a bit tempting to draw comparisons between Israel and Australia.
Israel is an excruciatingly small country (about 400 - four hundred - times smaller than Australia in size - compare with a country like France, about 14 times smaller than Australia) and one fourth Australia's size in population terms - a country with no mineral wealth to speak of, no land space to grow wheat or sheep or whatever (mind you, Australia makes more money every year by selling education to overseas students than it does by selling sheep, so sheep despite the cliché is really but an afterthought.) Israel is world class when it comes to deploying, selling, and putting its grey matter to fruitful use worldwide. Fact: more US patents are awarded every year to Israeli companies than to European companies (that is, from the whole EU combined, with a population exceeding 400 million) Fact: more IPOs take place every year in the US of Israeli companies than of EU companies.
Australia should be a bit more like Israel, a bit less like Europe.
Australia's intellectuals traditionally engage in intellectual pursuits and do not pay heed to business ramifications. When I was - long time ago, I believe things have begun to change now - a research fellow at a University here, people who discovered things - new processes, new molecules, new ways of doing or harnessing useful things - could not wait to go out there tell the world, to submit and present papers in forums, to broadcast to the whole world & share the news, show perhaps what good world citizens they were and how they contributed to the commonweal of mankind.
Tipping off competitors who'd make a meal out of their ideas.
Then I moved for a while to Long Island, New York. Came across über-bright post-doc students, who already had 7, 8, 9 patents to their names. At the time, few people in Australia even really knew or cared what a patent was (there is a vestigial leftover of this, by the way: Australians never learnt how to pronounce the word correctly, it's pronounced paytent here, but it's pahtent everywhere else).
So ten reasons ?
In what follows, please forgive me for quite outrageously generalizing. Understand that I cannot before every generalizing sentence take the usual precautions and deploy all the qualifiers, without making this all tedious and repetitive.
Here goes.
Reason 10: Unwarranted cultural cringe : we underestimate ourselves, and do not attach sufficient value to the truly world-class knowledge we routinely generate.
9 -
We overestimate the other fellow. We have the reverse problem to the Americans' who occasionally are apt to think, if it was not invented in the USA, then it's likely worthless, mayhap arose out of some primitive benighted place & stead where people are still years behind the times, where people wear funny garb and speak in tongues. Here, it's the reverse: we idolize the other place, we prefer shoddy European shoes to sturdy Tasmanian ones, we import bottled water from Europe for crying out loud, and so forth.
Go figure
8 -
We overestimate the difficulty, the barrier to entry, and the upfront effort needed. A corollary of the previous, certainly.
7 -
We are lucky. In some foreign eyes, this would translate as : we are lazy. We love to take it easy. This is a great country, with a great outdoors and great mates. We have a barbie on this weekend. We'll get back to work later. Chill out.
6 -
We don't have a sense of time, of seconds relentlessly ticking by, of urgency. This translates into so many ways. Organise a get-together here, and they'll all be late. Really late. In Germany or in the US, they'll be on the dot. Identify an opportunity, and you just know that the likelihood is sky high that a potential competitor, in a US or EU lab somewhere, is working away on the same concept, has had the same insight, the same epiphany or eureka moment, and that time is of the essence to be the first past the post and not an also-ran, a me too.
And yet .... time shall not be pressed in this country. This is a leftover from our happy-go-lucky days, the perverse flipside to the Lucky Country. We don't apprehend that everything in life, and life itself, come with an expiry date. We don't grasp that everything occurs within a sliding window of opportunity, and that that window in business will slam shut sooner rather than later. Carpe Diem is a truly foreigner's phrase. We think we have all the time in the world.
We are so wrong.
5 -
Particularly rife in, but not limited to, the SME arena, we often believe that if we are excellent in one area, it automatically qualifies us for everything else, and anoints us as experts in any field we choose to call ourselves experts in. First and foremost, it makes us great managers - our excellence in one narrow field of endeavour makes us Masters of the Universe.
The exact moral equivalent of, say - hey, you're an interpreter in German, right? so please translate this text into Japanese for us, thankya.
You have no idea the number of entrepreneurs I have come across who have invented a truly innovative and disruptive concept within a given narrow field, and automatically presume that this qualifies them as captains of industry, as entrepreneurs extraordinaires, and as know-it-alls in all fields, irrespective of their actual crass ignorance within such fields. By 'crass' I mean that they not only do not know the answers: they do not even conceptualize the questions. There is little understanding both of the specialization of knowledge and of its drill-down depth in all fields, not least the fact that business management is a hard discipline unto itself that cannot be improvised.
"The Australian" newspaper ran an article on Nov. 24, 2007 whose main thrust was to say that it does Australia no good to spend more on science and tech-related R&D unless and until Australia learnt how to parlay all its generated knowledge into viable businesses and dollars, and hence that any additional research dollars would be far better spent in acquiring business knowledge rather than in yet more science.
Some of our MBA programmes themselves tend to be subpar (more on that below).
A corollary is that we are very suspicious of people who know how to do it. I have come across managers who pay ample lip service to wanting to go and sell overseas, but when faced with the actual prospect of doing so come up at once with all kinds of excuses why no, why they can't possibly, with the well-worn hoary litany of losers' excuses - they don't speak the language, cannot find qualified people who actually, say, lived there and understand the business ways there, the networks and the processes and the procedures and so forth.
I think the truth is - they can't be bothered. Going overseas - paying the price in effort - would take them too far out of their comfort zone.
We're in the business of another day, another dollar here, mate. We're not in the business of another day, another million dollars.
Present them with people who can, then watch carefully - as they lift their brow suspiciously sizing up and down an avis so rara that, really, he or she cannot actually exist, (a rara avis who of course is not an unseldom bird at all, there are a million Australians resident overseas at any one time. In fact, the putative new employee or contractor is just a professional who put in a bit of effort and of initiative and perhaps suffered from a bit of early-years wanderlust-tinged wild oats, turned it all into usable experience and knowledge. Expects his background and investment should pay off in his homeland Australia because yes, ladies and gentlemen, Australia can use, nay is in dire need of his or her profile ) and observe how they regard him or her from the depth of their suspicious eyes as if they faced a latter day Ned Kelly, an unreformed mountebank, a speaker-in-tongues, a fraud, a pretender a cheat.
The very next day, the selfsame manager will be interviewed by the press and publicly bemoan yet again & ponderously pontificate as to how he cannot find qualified people to help him conquer the huge, and potentially hugely lucrative, markets overseas.
4 -
Abolish Austrade ? We might be mendicants.
We have been conditioned to believe that authorities know best, that there is a higher authority in the land that always knows better and upon whose shoulders the mantle of initiative belongs.
We may really be Socialists, or perhaps Social Democrats. Nothing wrong there in political terms - hey, this is a democracy -- but two areas where socialism does not work is evolutionary biology and competitive business. It's starkly competitive, not collaborative, out there.
Risks are risky, bets can be, Heaven forbids, actually lost. That wouldn't do now, would it?
We be askers, did not the word use to be "thiggers" - but why do not we ask of ourselves instead of asking someone else ?
We thig, we beg, we panhandle, we skelder, we fleech, we stretch out our arms towards the government with the loof of our hands facing up, expecting an authority figure somehow higher than ourselves to hand out in their wisdom and authority and ruth and compassion, the pennies and alms that we will wisely invest to well-organisedly conquer the world out there, as per well laid plans that took ages to hatch and that follow an intelligently laid, cast-in-stone strategy.
Maybe we should read again, and take to heart, Eric Abrahamson's 'A Perfect Mess'
Maybe we should not be conditioned to rely on grants or programs.
Maybe we should get off our seats and try and make things happen right now, as opposed to waiting with bated breath for word from the government on how our grant application is faring.
Don't we forget that said authority might take ages before granting funds, that we risk being corrupted by the whole process - forgetting that those who make it in business are invariably those who risk, those who do not wait, those who act - seldom those who fill out forms? Haven't we been swaddled for years in the somewhat delusional coccoon of yet another grant, yet another form in triplicate, isn't our foreign debt higher than ever after all these programs? Abolish most of the aid programs outright, I say.
Try this - foster a culture of higher risks. Perhaps of lower taxes. Foster a culture where, just as in the US, every last little village and thorpe and hamlet have their very own VC aggressively investing in and defending their own community. Do away with the deeply undemocratic culture of cadging favours from the government, of being told what to do.
5 -
Improve our MBA programmes.
I realize that I'm treading on eggs here, please do not get me wrong: There are very fine MBA programs in Australia, but there also are a few who fall short - perhaps not through their own fault at all, so let's look into this a bit.
First, a bit of a background on MBAs, the Master of Business Administration higher education tuition programmes that are meant to shape a nations' managers.
There are basically two philosophies as to how to train tomorrow's business leaders for their future jobs, as examplified on the one hand by the Harvard Business School MBA program, and on the other hand by Stanford University's MBA curriculum.
Most MBA programs incidentally are a bit of a blend of both approaches.
At Harvard, no textbooks of any kind are prescribed during the course: the program consist in putting the student, over the course of the 2 year program, through 800 business case studies (3 case studies a day! ) which will give the Harvard MBA graduate an immense hoard and reserve of 'business experience' by proxy: in other words, the Harvard MBA graduate, regardless of how young he or she may be, comes out of the program a very seasoned executive: a 27 year old student, say, far more experienced than a 55 year old senior executive. That's the idea, and it works.
And the program is exhausting, a considerable physical as well as intellectual and psych effort. A grind.
Now for Stanford. Stanford recognizes that to be predictably successful in business, you must have a very broad command of just about everything across a very wide spectrum: you must not only be able to crunch numbers and use a spreadsheet, but for instance have at least an instinctive grasp of the laws of physics or engineering, so as to be able to recognize at a glance whether a proposed system or solution just might work or not, and hence whether it's appropriate to spend time exploring it; an instinctive grasp of HR, of psychology, of geography, of all the stem-to-stern elements that contribute to business outcomes and enable success or foreordain failure.
This is where I saw Australian MBA holders fail. I saw a thorough lack of understanding of engineering, sending some business managers on wild goose chases. Or, a blithe and fundamental disregard and lack of appreciation of the laws of reciprocity and of quid pro quo in business, ensuring they'd seemingly score short term gains (well done, John ! You're a negotiating champion!) but doom their enterprises by choking their suppliers and hobbling their stakeholders by denying them totally their ability to deliver value.
Now it could simply be that admissions to these MBA programs are too lenient, that only applicants with a more solid background should be taken in: I do not know.
All I can say is that I've seen US Ivy League MBAs in action , and they do not suffer foolhardy schemes lightly, nor do they chase windmills. They're sharp, focused, no BS artists they.
And in this globalized world - you're up against them.
I have seen alumni of certain Australian MBA programs fail on these criteria. Time to raise the bar - our future depends on it.
3- Yet another minefield ..... Australia's VCs are too risk-averse.
Now I understand the business and financial ecosystem Australia operates in, e.g. that there is immensely less money floating about in Australia than is the case in the US, plus other factors, not least of which is Australia does not have the power / clout America can bring to bear (as in - America can play with its currency in ways we cannot) and I understand too that the impact of any losses would be - indeed, has been in the past - more severe here than in the US.
And yet ..... one is reminded e.g. of an article by Jim Plamondon in The Australian Anthill magazine, where he compared the yield of US VCs to that of Australian VCs, re-normalized to make the numbers comparable. Quote: At (the US Internal Rate of Return), Australia ’s early-stage investments would have delivered almost a billion dollars of profit instead of, well... nothing Unquote
Now there are many reasons for this underperformance. It is not my place to go into this and make enemies of entrenched interests - suffice it to say that I belive we can do better.
2- In its regular surveys and analyses, Fortune Magazine identifies the reasons behind businesses failures, or why some CEOs fail and some don't.
The number one reason why businesses fail is, somewhat surprisingly, the lack of, or faulty, internal communications: the marketing department does not communicate well with product development, or sales staff do not report back properly, etc.
The reason number one why CEOs fail is because they engaged in cronyism: they gave a friend or a family member a job because the friend, the brother-in-law badly needed it, they felt warm and compassionate doing it, but - the in-law or friend was sorely underqualified for the job.
I see instances of that here - where the relatively tolerant Australian inner market takes it in stride: the incompetent in-law does not sink the business.
Then the business deploys overseas, puts the son-in-law in charge of the effort (Yessirree, he does have business experience,didn't he spend a whole summer hiking in Scotland: and he gets shredded to pieces out there. I told them in advance. In vain. And the headtstart the business enjoyed in its niche in the world markets just evaporated in the wasted time it took to retire Johnny from heading up the overseas effort. Yet another failure chalked up.
1- Coming to factor number one, one is reminded of the elective Small Enterprise course at Harvard Business School.
They teach you ten rules to maximize your odds of making it - of being successful - should you decide to strike out on your own and start your own business.
Rule number 10 is' Do not ever run out of money'.
Then there are 8 further rules, and the last class finally gets around to rule number 1. Rule number 1 comes with an admonition, which is 'You are welcome to forget all 8 rules apart from Rules 10 and 1.'
Rule number 1 is 'Do not ever run out of money'.
And that clinches our first rule : let us never underestimate ourselves, and the contribution we can, and should, make out there.
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