We are in the risk business. As service providers we continually examine whether we are taking
appropriate levels of risk to secure the outcomes promised to clients or indeed in some cases if we
are taking any at all where we may be mandated not to do so.
But among the biggest risks we take, inexorably intertwined with client requirements, are those
relating to how we decide to grow our businesses internationally. Constrained by limited resources
and cost of capital considerations, we are naturally inclined towards development plans based on
what is familiar as the least risk option. Therefore, the normal starting point when it comes to
thinking about international market growth plans is to focus on our most successful current strategy
or product.
This is when it becomes important to consider the origins of a currently successful product or
strategy. The chances are that it was incubated in the home market due to a combination of what
was at that time a core internal competency when viewed from the perspective of a supportive
client, who may have been a parent or sister company.
For the organisation intending to grow into international markets from such domestic origins this
raises two interesting and related points to consider. Firstly, does this area of competency remain a
core one in the business, especially as it relates to the potential for transferring it to international
markets? The danger is that by remaining overly focused on this area of expertise there is a risk that
the organisation overlooks what we would call a competence gem (not to be confused with GEM)
that may be lurking in a corner of its business. This leads to a second matter worthy of
consideration, namely the client.
It is an inescapable fact that a service supplier is less likely to shine the light of discovery on an area
of huge potential within its business if it does not fully appreciate the characteristics of a market it
may wish to penetrate. So, the need to explore client requirements in markets one is considering
moving into cannot be overstated in our view, given that it will lead to committing an entire
organisation to what could prove to be a misguided and costly product-led expansion strategy. It
may seem an obvious mistake to avoid, but our experience suggests that it is a recurring error made
by service providers.
This is all the more remarkable when one considers that we are an industry awash with potentially
useful data that prides itself on both the resources it commits to research and on its understanding
of risk.
