Monday, May 4, 2009

Advanced entrepreneurs must be global entrepreneurs

Most entrepreneurial businesses that are technology based must have a management team that is comfortable with doing business globally. The Orlando Sentinel newspaper reported today that a company located in Central Florida had raised $15 million in venture capital financing from foreign sources. This same company has its manufacturing operations in South Korea, its R&D operations in Finland and its headquarters in Central Florida. The largest market for its products will be in the United States.

This company is a great example of how advanced entrepreneurial companies will operate in the future:
- It is taking advantage of the critical mass of engineers in South Korea for its particular product in order to make the product in South Korea.
- Its product will be a component of cell phones. Where better to have R&D than in the country where Nokia is headquartered?
- Its largest market will be in the United States. So, locate the headquarters where your largest market is.
- It obtained its early stage funding from foreign investors. This company undoubtedly found that venture capital in the United States has shifted its focus to later stage deals to reduce risk, yet also reduce potential gains. On the other hand, non-U.S. institutional investors have a greater appetite for investment in earlier stage companies than U.S. institutional investors because they typically have a longer term view and believe in achieving investment gains based on the increased value of companies they invest in rather than on gains based on financial engineering (i.e derivatives or roll-up acquisitions).

In order to execute this kind of strategy, the entrepreneurial company must have a management team that is capable of operating in the global environment. A critical component of being able to operate in this environment is the ability to collaborate using the collaboration tools that are now available using the Internet. These tools will get better and become even more important to entrepreneurial companies in the future. Further, entrepreneurial companies will be able to implement these collaboration tools must faster and more effectively than large companies.

But, where and how will CEOs, CFOs, CMOs and CTOs learn how to operate in the global entrepreneurial environment? MBA programs will have to evolve to provide the critical thinking skills necessary for managers to understand the strategic advantages of starting and managing entrepreneurial companies that are global enterprises.