The challenges tech companies face from a more connected world

13 May 2022

Trinity Business School's chair of strategic management Prof Catherine Welch. Image: Conor McCabe Photography

Prof Catherine Welch of Trinity Business School told the Future Human audience about the risks tech companies face in an interconnected, global economy.

“We are more interconnected than ever, but we’re also more divided,” Prof Catherine Welch, Trinity Business School’s first ever chair of strategic management, said in her opening remarks at Future Human today (13 May).

Speaking about the future of business, Welch explained the paradoxical nature of the risks that businesses face from internationalisation. While it has become easier for a company to set up a website and go global, it is also riskier than ever to do so.

Future Human

Welch noted that tech companies in particular have an added set of risks when it comes to expanding, not only because of the volatility that the world is currently facing, but also because “innovation is inherently risky”.

“You don’t know if your technology is actually going to end up doing what you want it to do,” she said. “And even if you solve that problem, you’ve got the next problem – which is, it may work but do customers actually want it? Often that’s something you only work out a little too late.”

In order to adapt, Welch said tech companies have to de-risk. Businesses still have to work towards going global as “we have global markets, technology is global”, but risks have to be taken into account.

How can this be achieved? Welch said “it depends”, drawing chuckles from the crowd when she added, “That’s the classic academic answer, isn’t it?” She explained that it depends on what type of technology a company is trying to bring to market and provided two contrasting examples.

SaaS-style companies

The first company example was represented in a Future Human fireside chat yesterday with Intercom co-founder Des Traynor. Welch said companies in SaaS and software development don’t usually work with groundbreaking technology, instead they offer “novel applications and recombinations of technology that’s already out there”.

She added that this allows companies to start out globally very quickly, with a very optimistic outlook initially, finding customers who are enthusiastic about the new product around the world.

But the problems begin when these companies try to move away from these early adopters, and try to develop an offline presence as well as an online presence.

“That’s when it starts to become very expensive,” Welch said. “Not only that, but you have to invest in this presence often ahead of getting a return. For some companies, this is not going to be a period that they survive, so it’s a real pressure point for companies and getting it right is very difficult.”

In order to de-risk, Welch said these companies need to plan “lean internationalisation”, which is finding cost-effective ways to deliver value when expanding.

Welch gave the example of Australian software company Atlassian, the maker of Jira and Trello, which was able to develop 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,” she said. “But what I am suggesting is you need to think very carefully about where you’re going to invest.”

Deep-tech companies

The second example Welch gave were 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,” she explained. “So these are companies that are new to the world and their product is new to the world.”

Welch said the biggest issue for these companies is that it can take decades to get something that is a breakthrough innovation to market. The example she gave were vaccine manufacturers.

“These companies, which are now household names, were pretty much on their knees at the time that Covid-19 first hit,” Welch said.

“The rest is history but it just is a reminder to us that this sort of technology, these sort of innovations, take a long time to get to market, if they ever do,” she added.

This often means that the first innovators “are not the ones to reap the rewards” of the new products they’re trying to launch. She added that these companies need investment, people to have faith in the vision and “patience, a lot of it”.

For these companies, the best way to handle these risks is “learn from those who have been there and done that before”.

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Leigh Mc Gowran is a journalist with Silicon Republic

editorial@siliconrepublic.com