GAO slams National Export Initiative Management - and so?

Ed Marsh | Aug 21, 2013

"Small business exporters need someone by their side."

David Ickert, Chairman of the National Small Business Association (@NSBAAdvocate) recently offered that perspective on an NSBA survey that found that only 3% of American SMBs said that the National Export Initiative had assisted them in growing globally.

That May survey provides a backdrop for last week's release of a GAO report on the management and effectiveness of the NEI.  In short the GAO was sharply critical.  Although the report might not include the dreaded "waste, fraud & abuse" findings, nevertheless it offered a disturbing overview of the coordination and effectiveness of government programs putatively designed to support SMB export growth.  Read more on both reports in a WSJ article by @sarahneedleman & @AdamJanofsky here1 and by Bloomberg's @pat_clark here2.

What 'can' & 'can't' the government do?

The premise for the government's interest in export growth is clear.  Strong mutual global trade enhances security and provides manufacturing job growth as products are made here and sold globally.

Security and economic growth are both laudable goals.

In support of those the government seeks to minimize hurdles (negotiate for reduced tariffs and equal conditions for American exporters); educate businesses on the opportunities and tactics; and provide programs to support where traditional business resources might have gaps (foreign market buyer introductions and financing for cross border transactions.)

There's plenty of room to argue about their success in each area.  Recent foreign trade agreements3 include Colombia & Korea, and negotiations are underway for a TAFTA or TTIP (EU agreement) and TPP (trans-Pacific agreement.)  And yet some of our protectionist duties (agriculture and others) result in similar restrictions on our exports.

Mindset is a real barrier for many companies, and the educational resources provided through the NEI try to overcome misperceptions.  But the fact remains that only a business leader can make the decision and commitment.

Some of the tools are wonderfully effective - but many are overlooked by even the companies which export.  Foreign buyer financing, foreign receivables credit insurance, introductions to vetted foreign buyers and representatives and trade show support (both US pavilions internationally, and foreign buyer delegations brought to US shows) are valuable and legitimate programs.

At the end of the day, it's still a bureaucracy

national export initiativeMaybe the NEI is overly ambitious.  Just look at this list of agencies that it anticipates will collaborate.

Sec. 2Export Promotion Cabinet. There is established an Export Promotion Cabinet to develop and coordinate the implementation of the NEI. The Export Promotion Cabinet shall consist of:

(a) the Secretary of State;
(b) the Secretary of the Treasury;
(c) the Secretary of Agriculture;
(d) the Secretary of Commerce;
(e) the Secretary of Labor;
(f) the Director of the Office of Management and Budget;
(g) the United States Trade Representative;
(h) the Assistant to the President for Economic Policy;
(i) the National Security Advisor;
(j) the Chair of the Council of Economic Advisers;
(k) the President of the Export-Import Bank of the United States;
(l) the Administrator of the Small Business Administration;
(m) the President of the Overseas Private Investment Corporation;
(n) the Director of the United States Trade and Development Agency; and
(o) the heads of other executive branch departments, agencies, and offices as the President may, from time to time, designate.

  from Executive Order 13534

And let's be honest.  People are people and range in ability from below to above average.  Some of the folks I've encountered who support the NEI fall on the former end of the continuum.  But honestly, as a whole, they are one of the few entrepreneurial groups that you will encounter in government.  There are some good folks.  (But when those good folks are not allowed to travel from their city offices to visit with potential exporters in the suburbs because mileage reimbursements are suspended, even the good ones can't make a difference.)

And in fact, even the best can only provide links, pamphlets, anecdotal encouragement and email introductions.  They are business enablers - they can't actually grow a companies business for them.

That "someone" by your side

That's the secret sauce.  Global business development is part science and part art.  David Ickert is right.  But how do companies find 'someone'?
  • First, the governemnt won't/can't provide it, just as they don't run your payroll for you, manage your sales force or count your inventory.
  • Second, it can be internal, contracted externally, or a hybrid.
  • Third, high school (or even university) Spanish classes, a passport or a couple trips don't fit the bill
  • If you skip this step you will probably fail, and at least squander the opportunity cost of lost sales during and extended ramp up and make costly, avoidable errors
You must have someone by your side who has done this before.  Who has made mistakes, leaened lessons and has broad executive and international perspective.  Strategic international sales growth requires an integrated execution across multiple disciplines.  Omitting one or two substantially compromises any effort.

So maybe the GAO is right.  Maybe the NEI is poorly executed.  Let others argue about that - you should concentrate on growing your business, realizing the manifold benefits of global diversification, and leverage the government programs that are worthwhile.

And maximize the effort by having the right "person by your side."

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