What Successful Businesses Do in Challenging TimesBy Jessica Davis | Posted 2009-04-06 Email Print
What do you do when the business environment feels like quicksand and all the tactics that used to be successful just don't work anymore? Take some advice from an executive who turned a losing proposition into a multibillion-dollar business.
What do successful companies do when they don’t feel so
successful anymore—when the business environment feels like quicksand? What do
they do when the tactics that used to be successful just don't work anymore?
That could be the question that any number of solution provider resellers find themselves facing today as we all are encountering the toughest economic recession in memory. Markets are maturing, industries have been transformed by the Internet, and vendors are selling software as a service. And that’s just some of it. The ground is shifting beneath us all.
Certainly these questions and worries were top-of-mind at Ingram Micro’s recent VTN conference, where the educational sessions focused heavily on sales—particularly on sales in tough times. Sales trainers at the conference advised VTN members to target CEOs and focus on the business benefits rather than the technology. We’ve all heard these messages before. But is there anything else we can do?
Managed services remain one of the bright spots even in this
difficult business environment, says Tiffani Bova, a vice president at Gartner.
Managed services offer high margins and continuing growth, and a sales meeting
about managed services can open up another line of conversation with clients
who have clamped down on spending.
But not all resellers are offering managed services to their customers, even if they’ve said they want to get into managed services
"People who haven’t had a services play have a harder time jumping into managed services," says Justin Crotty, the vice president at Ingram Micro who heads up the Seismic offering, Ingram Micro’s managed services play. "There are VARs who have said for a few years that they want to do it, but they can’t get their arms around the process."
But if box resellers wait much longer to make that first move into managed services, they may find that someone else has already eaten their lunch.
When they find themselves at an impasse, successful companies and successful executives—if they want to stay successful—ask themselves the hard questions and take the difficult action. The action may even be difficult just because of the attachment existing employees and executives have to the old way of doing things—the baggage.
About 25 years ago, Intel found itself in just such a situation. Back then Intel’s core business was manufacturing and selling memory chips. That was the company’s identity. But it was losing money on memory chips, and the onset of a recession began to make things worse.
One day during this crisis, Andy Grove, Intel’s No. 4 employee, asked co-founder and then-CEO Gordon Moore, "If we got kicked out and the board brought in a new CEO, what do you think he would do?" Grove recounts the encounter in his book "Only the Paranoid Survive."
Moore replied: "He would get us out of memories."
"Why shouldn’t you and I walk out of the door, come back and do it ourselves?" asked Grove. And that was the beginning of Intel’s strategic transformation to focus on processors instead of memories—a decision that ultimately turned Intel into a $1 billion plus company. Ask most people today, and chances are they won’t remember a time when Intel was in a different business.
What made this work for Intel was the company already had dipped its toes into the processor business, and middle managers at the company had been allocating more and more resources for processor production.
Maybe it’s time your company took that first step, if you haven’t already. If you aren’t doing managed services, why not test one managed service offering on one of your best and most forgiving customers? Just dip your toes in. This is may be the most important step. Because one day you may be asking yourself, "What would a new leader do to turn this company around?" The answer may be to go all in with managed services. But to be able to do that, you need to take that first step now.