Checklist: How to identify your competitive advantage and get ready to export
This checklist helps you identify your potential threats, partners, collaborators, and investors, before you expose your business.
You wouldn’t get on an international flight without ensuring you had all the necessary documentation in place to be able to enter or exit the country. The same can be said for exporting.
When it comes to exporting, success or failure often comes down to two things. First, whether you can create an ‘unfair advantage’ or ‘competitive edge’ for your product or service that will transfer across markets; and secondly, how well you’ve done your due diligence (or pre-departure checks) on the markets you are moving into before you hit go on your strategy.
Ticket to success
When preparing to export, one of the best ways to tip the odds in your favour is to ensure you have developed an unfair advantage in the product or service you have created. This will be the unique feature (or group of features) that mean your product or service can’t be easily copied, and that leads customers to prefer your product over others. This advantage is in turn what helps you protect your market share and translates into increased sales and/or margin.
Typically, this advantage is not derived from physical business assets such as your real estate, equipment, or vehicles, but from the intangible assets such as your brand, product designs, trade secrets, innovative product functionality, unique software code, efficient systems and processes, patented technology or sometimes a combination of all these things.
Today, these intangible assets account for 90% of company value in the S&P500. These assets are the only ones that can scale exponentially and are what drives export success. Unfortunately, these assets tend to sit off balance sheet and are poorly understood, which can make companies vulnerable to a range of risks including asset theft, leakage of critical information, value erosion and ownership confusion — all of which are often amplified when a company starts exporting.
As Australia looks for ways to maintain and grow its exports, it is critical that companies give themselves the best chance of success by understanding not only how to scale and leverage their assets through export, but also how to mitigate the risk of these assets being stolen or copied.
Creating a pre-departure checklist
Just like a customs form and visa is essential to enter the United States, it is critical that you tick-off a “pre-departure checklist” to maximise your chances of success. Undertaking due diligence will give you the best chance of identifying the opportunities and risks you’ll face as you enter a new market.
Essentially, this checklist can be boiled down to the following questions, which should be answered on a market-by-market basis:
Are you ready to export?
What intangible assets (such as data, brands, content, code, trade secrets, patents, trade marks, design rights, and industrial know-how) do you own?
Which of these assets (or groups of assets) give you your competitive advantage?
Can you warrant you own all your assets?
What export strategy (deployment, licensing, or sale) will best help you maximise your return on investment?
How are your assets protected? (Patents, trademarks, trade secrets, etc).
Are you at risk of infringing anyone else’s intangible asset rights? (E.g. patents or trademarks).
What are the risks to these assets and how can these risks be mitigated?
Monitoring for clear weather and turbulence
By answering these questions, you will not only reveal potential threats, but also valuable international market intelligence: who is developing or using similar intangible assets; the state of development in the segment; and potential opportunities. This research can also then help you build a target list of future customers, development partners, collaborators, and further investors.
On the threat side, the checklist will help ensure that you aren’t infringing on anyone else’s rights, and that you have the right risk mitigation strategy in place because, unfortunately, people will not pay for what they can steal. In fact, one of the biggest mistakes businesses make when exporting overseas is thinking their product or service is more protected than it actually is — essentially giving competitors the chance to steal it before you’ve even begun exporting.
For example, a common misconception for many businesses is thinking that merely having a patent or trademark in one geographic location or for one aspect of the asset means the company’s product is untouchable. Unfortunately, this is incorrect. Depending on the scope of the patent or trademark, it may only provide protection around certain aspects of your product, or in certain geographies. A third party may still hold a patent or trademark covering part of your product, service or brand, preventing you from selling or using in that market. By taking the time to understand the validity and enforceability of your patents and trademarks in each geography, as well as those of competitors, you can make sure that you not only have the right protections in place but that you also aren’t infringing on someone else’s rights.
Finally, it is important to note that there isn’t a ‘one size fits all’ strategy when it comes to exporting. Ultimately, there are three ways (deployment, licensing or selling your assets) to export your product or service, and what works in one market, might be entirely wrong in another. Taking the time to do proper due diligence will help you to understand where the risks and opportunities lie, and which strategy — or combination of strategies — will provide you with the best return on investment and chance of being successful as you move forward.
