Entering a new market is not a routine activity, such as reaching a monthly turnover or gross margin. Entering a new market implies a change; it implies getting into an area of uncertainty (not only in geographical terms); it implies the possibility to fail; it implies the need to manage expectations.
Hence it is a project activity and should be approached with the mindset, with the method and with the tools of a project manager.
Why using a project manager approach?
- Because it allows to minimize and delay the risky investments, spending only as more certainty about the final outcome of the project is reached;
- Because it allows to explore in advance the unmapped territory;
- Because it allows to identify intermediate objectives and proceed only once these are achieved
- Because it forces us to take into account all the necessary aspects (success factors);
- Because it makes us always being ready to back down before incurring significant damage: an aircraft pilot always lands being ready to go-around, if necessary.
How does this methodology work?
Here are some principles that a good project manager always keeps in mind:
- The time “wasted” in the preliminary stages of study is time “earned” in the more costly implementation phase;
- The project is divided in subsequent analysis steps and does not move the next stage if the previous are not favorably completed (see below);
- All risks related to the project are managed as they emerge. I.e. action plans are ready to be activated in case things go wrong;
- The largest investment takes place only at the end, when positive results you are reasonably sure;
- Finally, the good project manager is going to use all those well-known methods, for the management of concurrent activities and resources (Gantt, Pert, etc.).
Example of a project split in four phases
(Unstructured) internal analysis phase leading to the decision to try to export to given market and to allocate an initial budget to carry out a feasibility study.
- Concept verification (feasibility study):
It is a thorough check of the assumptions also locally on the market, possibly relying on external resources and experts (consultants).
The result will be a budget and a project plan for the next stage of incubation or prototyping
- Incubation / prototyping:
Initial tryout in the new market aimed at finding useful responses to decide whether and how to address the next steps, while allowing to minimize investment and commitment.
Finally, we know exactly what to do, how to do it and what it costs. So we can now invest with minimized risks.
A structured approach to project management does not ensure that the strategic plan to enter into a new market will always be successful. It ensures instead that the disasters that could result from a bad implementation, or worse, by a belated recognition of the difficulties are avoided.
More details will follow with the next newsletters.