This is not the first time that techniques and processes have been shared between the technology world and other business areas, for significant improvements for the receiving party. As an experience business leader, you are likely familiar with the Lean methodology which originated in the Japanese automotive industry and has spread to many other fields, especially to the software industry. As the Lean methodology became more prevalent, AGILE methods were born in software development. Its principles are simple: avoid getting involved in long term projects with tunnel vision, where you realize at the very end that your design was incomplete, that you spent a lot of money in the meantime, missed the functional objective, etc. Common sense.
Agile methodologies to be applied to B2B software vendors' global expansion
Today, we see the agile approach can and should be applied to other areas, and in particular to the international expansion of small and medium-sized software companies. In this field, if the Waterfall approaches of the discipline, i.e., the traditional 6, 12, 24 months plans, with pre-market research, study trip, feedback from the study trip etc. were working, our recommendation would not be towards a more agile approach. But no serious observer of the sector can say today that the software industry is exporting well.
The main agile precepts of software development apply here in the same way. Work in sprints, prototype, confront the reality of the field, set things right. Next sprint... This empirical approach is good. The off-ground conceptual planning, less so. The chance that you will succeed in selling internationally with a waterfall approach is thin to none.
Traditional internationalization strategies for B2B software vendors are rarely successful
Of course, you will receive expensive advice from knowledgeable agencies on how to proceed step by step in a reasonable and orderly way. But the truth is that if these traditional methods worked, we would have many more software companies and innovative technology companies of all sizes, able to sell on every continent. But we are far from it.
It's no coincidence that VCs, who have a track record of discrete successes and far more failures in international ventures, recommend that their portfolio investments go international right away, to get established quickly. Discussing ad libitum from your home country on what strategy to adopt, how to modify your website, what foreign regulations to watch out for, is synonymous with a V-cycle. All of which is unlikely to lead to the success of a particularly essential stage in the development of your company.
However, VC means investment. The VCs thus push you to invest the funds they have given you in largely riskier approaches. It's normal, it's their philosophy. A particular recommendation of theirs is in general for a co-founder to relocate in the country. That’s a fairly classic scheme that has been the most effective of all international expansion scenarios to date, as long as you accept more or less equity dilution, more or less control on their part, and to put it simply, to follow their agenda. But apart from the fact that it only concerns a minority of hand-picked start-ups, the approach remains risky and only a handful of companies will hit the jackpot, which is fine with the VCs.
Agile methodology for international expansion is less risky, less expansive, and more efficient
In contrast, an Agile approach is much less risky. By relying on the growing acceptance of B2B software and technology buyers of a mainly digital buying channel* and obviously relying on the development of SaaS, a lot of frictions have already disappeared today for a software company to start a sales cycle with a foreign prospect, remotely. It is much less risky, less expensive, and more instructive, because at each remote meeting you do, you keep learning about your local prospects, about the way they perceive your products, about the competition based on their questions about your positioning; in short, you learn how to handle objections without leaving your premises.
Given this market dynamic, it seems reasonably certain that this way of selling software should develop rapidly. Of course, B2B software vendors will have to change some internal habits to facilitate this evolution and should force themselves to do so. However, the possibility of being able to develop an international business stream that they manage themselves, without the high risk of a local presence, is particularly attractive for those who know that their innovations are eventually not only intended for the local market.
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* 2021 McKinsey’s research on B2B decision makers confirms that omnichannel is not simply a trend, nor a pandemic workaround—rather, it is a critically important fixture for B2B sales globally.