Wednesday 14 November 2018

We can't win on price, so we need to use innovation for success

Two thirds of the world's consumer class will be in the emerging markets of Asia, including China, but an Economist Intelligence Unit report says that Ireland is not well set up to sell directly to consumers in Asia
Two thirds of the world's consumer class will be in the emerging markets of Asia, including China, but an Economist Intelligence Unit report says that Ireland is not well set up to sell directly to consumers in Asia

On a recent trip to New Zealand, I was asked to participate in a business speed-dating event that was being organised by a local agency called Grow Wellington.

The purpose of the event was to invite local entrepreneurs with growth ambitions to meet a variety of international experts who could offer them advice regarding their business development.

People had five minutes to talk, then a bell sounded, and the entrepreneurs moved onwards to the next international expert.

The most noticeable feature of meeting with the local entrepreneurs was that the common traits that they shared -- they all were seeking to offer uniqueness to their products or services, plus every one one of them was seeking to either start or increase export activity.

The strength of their commitment to innovation and international sales was quite remarkable.

It should be noted that such traits are not a common feature of the New Zealand economy as they suffer significantly from isolation and physical distance from other markets.

Indeed, while exports of goods and services are 50pc of GDP for the average OECD country, they only represent 30pc of GDP for New Zealand.

However, in recent times the government agency NZ Trade and Enterprise has worked particularly hard to increase exports through a variety of support mechanisms.

This experience in New Zealand came to mind as I read two recent reports regarding Ireland.

One report 'The Global Consumer Opportunity: Are Irish Organisations Ready?' was published by the Economist Intelligence Unit which emphasised that global consumer trends offer significant opportunities for Irish organisations.

The report specifically highlighted that by 2030, two-thirds of the world's consumer class will be in the emerging markets of Asia, but the report finds that traditionally Ireland is not well set-up to sell directly to consumers in Asia.

The second report was by Forfas on 'Key Skills for Enterprise to Trade Internationally' which highlighted that there is relatively few formal international sales courses available within the Irish education and training system.

The report also observed that for the economy to grow then international sales professionals with foreign language proficiency are critical to a company.

But recognising growing markets and developing relevant skillsets is not a sufficient basis for building export-orientated indigenous enterprises unless we can also offer a product or service that is providing some form of unique benefit.

We know that we cannot compete internationally on price because of significantly lower labour costs elsewhere (particularly in Asia).

Therefore we have to compete on differentiation and this can best be achieved through innovative entrepreneurship.

While we have been substantially increasing the number of entrepreneurship- related courses to undergraduate and postgraduate students across Ireland over the past decade, it is arguable that we are providing such courses to the wrong students.

The vast majority of entrepreneurship courses in Higher Education Institutions (HEIs) are being offered to business students, who can write wonderful business plans but who have great difficulty in identifying innovative products or services around which to build a business.

Meanwhile, our science, engineering and technology students are being incredibly creative and innovative in their studies through various coursework projects, yet very few have the opportunity to take a module on entrepreneurship.

It is time that all HEIs offered students from all faculties the opportunity to develop their entrepreneurial capabilities as the future of Ireland is dependent upon innovative entrepreneurship, not a plethora of 'me-too' products and services.

There are many things about Ireland which we cannot change. We are a peripherally located island, we are currently in financial crisis, and we are highly dependent upon multinational firms.

However, we can change the future, and significantly increasing our capacity in terms of innovative entrepreneurship and international selling would certainly put Ireland in a much stronger position to take advantage of growth opportunities in the emerging markets.

Thomas M Cooney is Professor of Entrepreneurship at the Dublin Institute of Technology and President of the International Council for Small Business

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