Our previous post in this series argued that Scotland’s updated Digital Strategy for 2017 and beyond should focus on measurable business outcomes, not box ticking. We should not be measuring the success of publicly funded digital support programmes by the number of companies attending digital workshops or receiving one-to-one support. These are not business outcomes.
There are only three main reasons why companies should transform digitally:
- To increase sales.
- To reduce costs.
- To build a quality customer base. (It is the quality of a company’s customer base, the strength of the relationship it has with high value customers and its ability to leverage those relationships (‘up’ and ‘cross’ sell) that provides the foundation for sustained growth and competitiveness).
From a business perspective, these are the only three KPIs that matter in measuring the performance and impact of a new national digital strategy.
Given the small size of the Scottish domestic market, there needs to be a global dimension to this. The updated national digital strategy for business should be driven by three core objectives.
- The use of digital to support the global market expansion of Scottish companies; to increase sales in international markets.
- Improving the international competitiveness of Scottish companies by applying digital technologies internally to reduce costs and improve productivity.
- Building a quality customer base in overseas markets, providing a strong foundation for sustained growth in export earnings.
With this in mind, we urgently require an Export Support Programme ‘fit for purpose’ in a digital era.
Export Support in Scotland: Stuck in a 30 Year Pre-Digital Time Warp
The promotion of SME internationalisation has been a major policy objective in Scotland for at least three decades. The underlying rationale has been based on the following propositions:
- Having a strong base of SMEs competing in international markets is critical to national economic prosperity and job creation, especially in an increasingly global and inter-connected world.
- SMEs face a range of internal and external obstacles when trying to expand abroad (e.g. lack of resources, time, knowledge; fear of the unknown; product/service suitability for foreign markets; export paperwork and documentation; risks; tariff and non-tariff barriers to trade; export finance etc).
- Public sector support is required to help overcome these barriers.
Over the years, a very wide range of Export Support Programmes have been introduced aimed specifically at SMEs. These have included online guides to exporting; assess your company’s readiness to export; one-to-one export surgeries; export training and skills development; access to overseas market research reports; export finance and paperwork; export awards, events, workshops, conferences; trade missions; the Smart Exporter Programme and much more.
Having worked in this area for over three decades (see ‘International Market Entry and Development’ book published in 1989), I would contend that Export Support Programmes in Scotland are stuck in a 30 year pre-digital, pre-social media time warp. At best, lip service is being paid to the global marketing threats and opportunities presented by digital disruption and the need for Scottish SMEs to transform digitally to succeed abroad. Most of the advice and support currently available is not much different from our 1989 book.
It is time for a major rethink of our approach to SME export support.
Digital Supported Globalisation
Used effectively, digital technology and social media can help to overcome many of the traditional barriers to SME exporting leading to the more rapid internationalisation of the sector. Unfortunately, and despite decades of support, SMEs in Scotland are nowhere close to leveraging the full potential of digital for ‘going global’.
As the Government deliberates on its new national digital strategy, there is an urgent need to digitise Export Support Programmes; to equip SMEs with the digital knowledge, skills and confidence for using emerging technologies to support globalisation.
This HAS to be core to the updated digital strategy for business.
There is an urgent need for action in three main areas:
- To increase sales: It is imperative that our SMEs utilise the full potential of digital and social media marketing tools for supporting sales growth in overseas markets. A wide range of issues are important here including: the use of digital and social media tools for keeping 'an ear to the ground', for export market research; building overseas brand awareness and reputation through content marketing; active participation in international marketing ‘hub’ sites and communities; building online relationships and partnerships; use of social selling techniques e.g. Linkedin Sales Navigator; e-marketplaces for direct online selling in international markets; use of digital and social media for supporting trade missions, making the right connections before you go; ensuring that your digital footprint projects the right brand image. In highly competitive global markets, you do not get a second chance to make the right first impression so why is your digital presence so poor?
- To reduce costs: The application of digital technologies internally to improve efficiency, reduce costs and become more internationally competitive; to build a unique Digital Operating Advantage difficult for overseas competitors to copy, becoming a more flexible, agile, responsive business. Leveraging the full potential of opportunities being created by big data and predictive analytics, automation, additive manufacturing, Internet of Things and so on for improving global competitiveness.
- Underlying business model: The opportunities presented by digital disruption for rethinking your underlying business model for overseas markets, whether an established company or disruptive start-up.
The 80/20 rule should apply here. We should be concentrating digital export support on companies with the ability and motivation to succeed in global markets. We need to move away from the comfort zone of ticking boxes in terms of the number of companies being supported, most of whom will never internationalise.
As always, comments and feedback are very welcome.
Ps a big thank you again to everyone who has liked, shared or commented on the previous two posts in this series. I really do appreciate that. Take care. Jim H