Challenges facing tech companies from a more connected world

Professor Catherine Welch of Trinity School of Business told Future Human audience about the risks that technology companies face in an interconnected global economy.

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

Speaking about the future of business, Welch explained the paradoxical nature of the risks businesses face from internationalization. While it has become easier for a company to create a website and go global, doing so is also more risky than ever.

Welch noted that tech companies in particular have an extra set of risks when it comes to scaling, not only because of the ups and downs the world currently faces, but also because “innovation is inherently risky.”

“You don’t know if your technology will actually end up with what you want it to do,” she said. “And even if you solve this problem, you have the next problem – which is, it might work but do customers actually want it? Oftentimes, this is something you don’t practice until it is too late.”

In order to adapt, Welch said tech companies need to get rid of the risks. Companies still have to work towards going global as “we have global markets, and the technology is global,” but the risks must be taken into account.

How do I achieve this? “It depends,” Welch said, drawing a chuckle from the crowd as she added, “That’s the classic academic answer, isn’t it?” She explained that it depends on the type of technology the company is trying to bring to the market and provided two contradictory examples.

SaaS-style companies

The company’s first example was represented in a fireplace conversation at Future Human yesterday with Intercom co-founder Des Traynor. Welch said that companies in SaaS and software development typically don’t operate with groundbreaking technology, but instead introduce “new applications and recombinations of technology that already exists.”

She added that this allows companies to launch globally very quickly, with a very optimistic outlook at first, and to find enthusiastic customers for the new product around the world.

But the problems start 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 the prices start to get expensive,” Welch said. “Not only that, but you have to invest in that presence often before you get a return. For some companies, this is not going to be a period to last, so it is a real pressure point for companies, and it is very difficult to get it right.”

In order to eliminate risk, Welch said these companies need to plan for “flexible internationalization,” which looks for cost-effective ways to deliver value when expanding.

Welch gave the example of the Australian software company Atlassian, the manufacturer of Jira and Trello, which has been able to develop a global reputation not 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’m suggesting is that you need to think carefully about where you’re going to invest.”

deep tech companies

The second example given by Welch was deep tech companies, which have a different set of risks and pressure points.

“These are companies trying to bring a product based on a scientific breakthrough to the market,” she explained. “So these are companies that are new to the world and their products are new to the world.”

The biggest problem for these companies, Welch said, is that it can take decades to get something that’s a great innovation to market. The example she gave were vaccine manufacturers.

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

“The rest is history, but it’s just a reminder to us that this kind of technology, this kind of innovation, it takes a long time to get to market, if that ever happened,” she added.

Often this means that the early innovators are not “the ones who reap the rewards” of the new products they are trying to launch. These companies need investment, people to believe in the vision, and “patience a lot of it,” she added.

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

10 things you need to know straight to your inbox every day of the week. Sign up for daily summarySilicon Republic summary of basic science and technology news.

Leave a Comment