Background
The fifth and final interview was held with the Chief business development officer (CBDO) of the company Z. The company operates in the field of software and offers customer tailored software solutions. Two founding members founded the company in 2016. The actual business started in 2017, when in addition a CEO was hired to join the company.
The CBDO has been working in the company approximately for two years. Currently, there are 15 employees in the company.
The CBDO described that the core values of the company include openness and fairness.
The customer pays for development, maintenance and for the company to act as their partner. The CBDO explained that this is not a typical way to operate in the software
73
market, and this enables the company to compete with entities that may otherwise not be possible.
Growth, competitiveness, and internationalization
The CBDO told that company Z is still a small company. The expectation is that there will be strong growth and the primary growth market is the domestic market. The first step is to increase the size of projects and continue to strive to maintain long-term accounts. The growth comes from the private sector. The CBDO explained that they know Finland is a small market and the company sees potential in increasing the markets to a more international direction.
“We see the potential that small sections could be increased towards international direction…we may not be opening an international office in the first place, but if there was a local partner or operator whose subcontractor we could be, then it could provide ways to open up the market.”– The CBDO of company Z
When discussing when the planning of the internationalization has started, the CBDO told that last year was when they started to think about it and there are probably several background factors behind that. One factor was partners.
“We had partners who do international business, one asked if we are interested to go and do international cases with them.”– The CBDO of company Z
The CBDO also mentioned that they are taking part in a Business Finland project, where the aim is to implement international pilots. In the background, the company Z began to wonder what kind of market they could get a foothold in. After all, the aim was to find opportunities to increase cash flow and, in that sense, to get bigger projects. When discussing about the current stage of the internationalization, the CBDO describes that small first steps have been taken towards internationalization.
74
“We have a consultant who prepares for example the most suitable way for us to reach the German markets, practically, who scans companies for us from there…the consultant has good contacts and has set up meetings for us with the local, Finnish-German Chamber of Commerce, with Business Finland representatives and also with a few local companies.
These are the kinds of openings that have been made, it is Germany to which we are now placing more emphasis.”– The CBDO of company Z
According to the CBDO, another preliminary direction of internationalization has been Russia. The CBDO continued that company Z has a vision that it would be valuable to have a partner abroad, who could take cases and acquire subcontracted development from the company.
“With another partner, we had the plan to go to St. Petersburg; we applied for a joint project but did not receive funding for it. They are a big enough and well-known partner, so with their lead we would have achieved a position to take part and to learn from that market and overall, how to do internationalization in general.”– The CBDO of company Z
Next, we discussed about the decision making of the internationalization. The CBDO told that in practice, the management team, which includes the company´s CTO, CEO and CBDO, makes the decisions. Together, they analyze the situation and make the necessary decisions. The CEO has the supreme power but in practice, the management team manages the decision-making by discussing together. Related to the personal background of internationalization, the CBDO describes it mostly coming from previous work in an educational organization. The CBDO mentioned also being involved in a large international project before.
“…There are many international projects that I have been preparing, taking part in the collaboration, acting as an expert in some of them. At that time, I met many international parties and had discussion and negotiations with them. This is the most significant experience base.”– The CBDO of company Z
75
Concerning international networks, the CBDO mentions that they see the gained connections for example with the Finnish-German Chamber of Commerce as very useful.
“…Doing business usually requires a party like the Chamber of Commerce, Business Finland or then a direct contact with those companies…” – The CBDO of company Z
The CBDO continued that they have not had so many networks in the target markets beforehand. For example, in Germany, the company has a consultant. In the company Z, the process has gone through a reliable domestic partner, as their own knowledge of the target markets has been modest.
“…We knew this person but we did not, for example, know the German market - the same in the direction of Russia that things have been done with our partner before, but we ourselves were not familiar with the Russian market. Then it has gone through a trustworthy domestic partner and ourselves we have had a very limited amount of knowledge and understanding of the markets we are going to.” – The CBDO of company Z
Next, we discussed about the strategy of internationalization. The CBDO highlighted that currently the primary focus is on Germany. In the Business Finland project, the company is also expecting to get to bigger cities of Southeast Asia or Central Asia with the help of the consortium.
“…Focusing on Germany on what the Business Finland consortium could open up… they are perhaps the main lines at the moment what is being promoted.” – The CBDO of company Z
The CBDO explains that strategically the goals of the company Z are first to gain the ability to learn through seeing what works, how it would work and in turn what does not work.
76
“We would be able to make cases with someone local and through that we would first gain experience in how they are handled and how the collaboration and communication works…and then we would be able to get those local references as well and quite carefully we would start scaling…” – The CEO of company Z
The CBDO tells that they did not need to make any huge investments at this initial stage.
At the next stage, when they know in more detail what would work and what can be scaled, the idea is getting more funding for it. Through this kind of experimentation, the company wants to promote the internationalization.
Motivational factors for internationalization
Motivational factors that have affected in the internationalization of the company could be identified from the interview even though the CBDO describes that it is a question that has not been thought about that much. As the main reason, the CBDO describes the motivation to growth.
“Of course, the main reason is that a corporation is supposed to make a profit, so we obviously want to grow our business and we have seen that a bigger market is one way. In principle, we are able to export the same things that we have tested in the Finnish market to the international market.”– The CBDO of company Z
The CBDO mentioned that concerning Germany, the SMEs there are 10 times bigger than SMEs in Finland. This would allow the company Z to increase the size of the projects and that is something the company sees as a key mean of growth. As continuing the discussion about the motivational factors that have affected in the internationalization of the company positively, the CBDO mentioned the regulations of digitalization.
“Well, at least in the EU, we have seen it easy that all the regulation related to digitalization...the GDPR and other, they are uniform, it is easy to operate in that area. It is at least clear what guides us to work with EU countries.” – The CBDO of company Z
77
As another positive driver, the CBDO mentioned the potential of the target markets.
“…Then a positive driver is also that it surprised us, that e.g. Germany, which is considered an advanced country, is in some places 5-10 years behind Finland in digitalization. It opened our eyes that we have huge opportunities in taking something we have developed here to there...” – The CBDO of company Z
When discussing the impact of personal background to internationalization of the company, the CBDO ponders not knowing whether it has had an effect.
"…I don't think the personal factors have had much effect, or if so, they've had an effect on the background in a way you haven't really understood that they do." – The CBDO of company Z
Next, we discussed has the state been supporting the internationalization operations of the company. The CBDO mentions that indirectly they have gained support through the Business Finland project but besides the project, not that much. In addition, we discussed how the state could support the internationalization better. The CBDO mentioned funding.
“In certain situations, the funding is certainly good, Business Finland seems quite good when I have scanned through their funding…it seems quite promising so I don't know if there are major shortcomings, although it will become clearer when we are there ourselves…” – The CBDO of company Z
The CBDO also mentioned that for example, the fact that Business Finland has the role of having global networks and through those networks opening doors and presenting local networks to companies. This is something to make even clearer that such a thing is possible and what it means.
“For example, what surprised us is that marketing on the German market must be handled very differently than in Finland, and what kind of things are offered and how to do things differently. I'm sure they won't be surprises other than for first-timers and putting that kind
78
of matters together and bringing them out would certainly be good.” – The CBDO of company Z
Challenges of internationalization
When we discussed about the challenges in the beginning stage of internationalization, the CBDO told there are both, internal and external challenges.
“There are internal and external… internal, for example, to Germany one needs to be much clearer as an example concerning the value proposition and have much more productized solutions what is going to be offered…and if our core business is to make customized solutions to complex problems, then it is really difficult to commercialize. We noticed that we may not be able to describe what are doing, how we are doing and what the value is in it. It was perhaps a surprising observation and challenge.” – The CBDO of company Z
The CBDO mentioned that they have other small company challenges, for example where to find time to think about the matters and prepare the necessary materials. The CBDO continued that after all, internationalization and making the contacts requires many discussions that lead to following discussions, and they can take quite a long time before something becomes concrete. At the same time, the contacts should be kept warm throughout the process and it all takes time.
“At some point we will certainly need investments in them, and think about where that money will then come from and at what point it will be sought funding and whether it is really the right moment at that point...” – The CBDO of company Z
The CBDO continued, that as they are a small company, they need to be able to point out why the company is an interesting party and communicating and convincing this is also a crucial matter. We discussed whether there are challenges that can be transformed as benefits for the company. The CBDO told that the smallness of the company enables them to be agile.
79
“In a way, that smallness has come up in some conversations as we’re not quite the kind of fist workshop…that we probably aren’t going to go down right away, clearly show that we’re growing…it creates faith that we can still do something and then when small enough, we are agile. When you can translate it correctly, it is a clear advantage...” – The CBDO of company Z
When we discussed about factors challenging the growth, the CBDO mentioned two challenges: scaling the sales and securing the resources.
“In practice, in our situation, we do not have any actual sales... it is based on word of mouth type...we have a good reputation, we have been recommended, and that is how we get contacted. That has been enough so far. We have now woken up to the fact that this may not be enough in the future. If you want to scale the project portfolio to a larger size, you need to scale the sales.” – The CBDO of company Z
The CBDO continued about the importance of securing the resources.
“…We scale exactly as much as we have the resources. We must hold on to the experts, we must find new experts all the time and be able to raise their level of competence, but at the same time develop production methods so that they scale and develop efficiency.” – The CBDO of company Z
When discussing what kind of support is needed for internationalization, the CBDO refers to the need of contacts as it makes no sense to go and proceed with cold contacts. The CBDO continued that the most important part would be that someone would be able to introduce the company and would know what is favorable.
“…Of course, it helps tremendously to have a local contact who knows the local businesses and knows how they operate there, and that knowledge of the whole culture is crucially important.” – The CBDO of company Z
80
The CBDO explained that in that sense, it would currently be easier for the company to make movements for example in the direction of Russia, because they have two native Russian citizens as employees. Through them, it would be easier to understand how the market works there.
When discussing whether being familiar with the support services available for internationalization, the CBDO ponders probably being aware of the most important ones, but not knowing all of them.
“I think there’s a lot of things in the target countries, for example, that you don’t recognize.
But perhaps the most important of Finland’s services are familiar in some way.” – The CBDO of company Z
Future operations
When discussing about the future growth of the company, the CBDO mentions that this is a factor that is not perhaps that specifically determined yet. At this stage the idea for the company is to get that large that it is profitable and makes overall sense.
In addition, we discussed about the best tools for internationalization. The CBDO remarks that from their perspective, customer relationship management is required.
“…Of course, some kind of CRM is required to be able to manage those networks and to be aware of what you’ve been talking to whom and keeping it under control… Almost the worst mistake is allowing some contact to get cold… the instruments involved in that are needed.”– The CBDO of company Z
In conclusion, we discussed whether the company Z has been peer-to-peer sparring with other companies. The company has not done much of peer-to-peer sparring with others but sees some potential in the possibility. The CBDO continued that overall, it could be useful
81
to learn from others rather than learning it through the hard way. The CBDO explained that above all, it is important that the companies would be the same style in terms of size and similar industry.
“Not that much peer-to-peer sparring. Yes, it certainly could work. If we would find another company in a similar situation, we could find ways for example to take it forward together, it could be quite fruitful…and we could then share the risk a little and bring together the expertise of both…” – The CBDO of company Z