commentary Coming up with an innovative idea isn't enough, you also need the business head to match.
I was lucky enough to be one of the judges in the Australian Information Industry Association's (AIIA) iAwards last month.
Originally I baulked at the idea of being a judge when I was asked for my area of expertise -- being a typical journalist my knowledge extends to many areas but I wouldn't claim to being an expert in any of them. But I am grateful to the AIIA for having more faith in my expertise than I did because the experience of seeing what local innovators are coming up with was invaluable.
In terms of juding, we were given strict criteria from the AIIA which made the job easier, including innovation, marketing potential, value to the public, quality of the product, and more. As a judge it was our job to interview (maybe "grill" is a better word) each respective finalist and ascertain how well the product fit each of the criteria.
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However, one thing was made clear to me that day -- an innovative idea isn't good just on its own, to succeed you need to be able to back it up with a firm sales strategy and knowledge of your potential market. Some of the companies I saw had great ideas but unfortunately the sales and marketing plan was ill thought out. But by and large, the people that I interviewed had a good combination of the two and I hope to hear their success stories in the future.
However, winning an iAward isn't necessarily a prediction of success, as local startup Foursticks was unfortunate enough to find out. The Adelaide-based company was founded by David Bohn in 2000 and specialised in network performance management tools -- and it won an iAward in the telecommunications category in 2003.
Like some of the finalists in this year's iAwards, Foursticks is a local company that has its sights firmly planted on the US market. In the January 2004 issue of Technology & Business we ran a profile on Foursticks as part of a round up of local technology innovators. The following is a quote from the article:
"[Network performance] is a very busy market with lots of large overseas competitors, but Australia's expertise in telecommunications solutions has given Bohn confidence that Foursticks' strategy is going to pay off in the long run."
One year later and the company has gone into voluntary administration. So what went wrong? According to one of the administrators, Michael Basedow of MHM, sales were slower than expected and the company was running out of cash. Foursticks had government grants and private equity coming in but took too long to find its feet. Unfortunately for Bohn, Foursticks is currently owing about AU$1 million to various creditors.
"These sorts of technology businesses do take some time to commercialise their products and that is obviously one of the issues," said Basedow in an interview with Technology & Business. "Certainly the sales performance should be questioned and going forward a purchaser would certainly need to seriously assess its sales strategy," he added.
It sounds like a case of great idea, but a lack of the right business skills.
It was encouraging to see so many technology innovators as finalists in the AIIA awards but what can we be doing to ensure these companies don't end up in voluntary administration a few years down the track?
Natalie Hambly is editor of Technology & Business. Write to email@example.com. Penny Jones contributed to this report.
This article was first published in Technology & Business magazine.
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