I have had the good fortune of having met many executives who have made the leap across the divide from “Main Street” type of companies to “High Tech”. If you ask them, what’s different now, it’s usually the same kinds of things like:
Now, all of this is probably for the best, because there must be a reason why ALL tech companies have very similar priorities. I usually think of business acumen as a very sharp, fine-tuned regression equation, whose estimates have been honed over years of experience. So, tech executives are allocating their time and resources in the areas that will yield the highest return and are de-prioritizing items that are seen as peripheral and non-value adding. There is also another powerful motivator. The “geeks” that are in these companies absolutely love tinkering with their toys and hardly anything else. And of course, the best results come out of a labour of love!
However, consider these:
- Motorola, Nokia and Blackberry were Masters of the Universe before they were dealt a killer blow they did not see coming. When they were busy in the feeding frenzy, they never had time to look around, including at the rear view mirror.
- Nothing is more unpredictable than the shelf life of an insanely popular tech breakthrough. The latest most fashionable cliché in these companies is that their most fierce competitor is not even born yet! Unfortunately, like most clichés, it’s true.
The latest blockbuster creation from the competitor is like a tsunami that hits shore. Carefully honed business models and bulletproof strategies fall by the wayside and the strongest financial firewalls crumble.
Now, is there a catastrophic insurance policy against all this? Unfortunately, NO.
It’s a pity because all this passion, energy and effort in building great technology needs atleast an armor plating.
What can help?
Establish a measurement paradigm
I am absolutely convinced that a necessary ingredient in the cauldron of great technology companies is a few generous dollops of data, measurement and analysis. A clear-eyed analysis of historical boom and bust cycles will help establish realistic baselines for new products. Equally important is for a small group of people to play devil’s advocates and establish some upfront objectives and rigorously measure what is being achieved.
Inculcate an ROI mindset
Another good idea is to embrace the principles of zero based budgeting. Develop the habit of questioning every dollar that is deployed rather than have a “herd” mentality on investment decisions. Deciding on Marketing and R&D budgets based on what competitors are doing is not great strategy. Designing a ROI framework with tactical, intermediate and end ROI goals for all “soft” investments will go a long way in enabling an in depth understanding of what the money is bringing in. It also makes sure that budgets are decided based on merit and are not hostage to turf wars. At the very least, somebody must be able to say what business impact is expected out of flying in 50 cents for the yearly “flagship” event that has to be done.
Pricing can be a science
In a scenario where product adoption cycles can wither away in the blink of an eye, and me-too products can flood the market place within a timezone difference, it is essential to rigorously drive the right pricing strategy. I can’t think of any better place where the ability to make hay when the sun shines is most critical.
A series of pricing experiments accompanied by rigorous data collection can enable an in-depth understanding of elasticity curves that can then lead to smart, optimal pricing decisions.
Great Technology should be milked to the last drop!
Look for the odd man out OR better yet, BRING HIM IN
In a highly homogeneous work environment where the ability to be on the same wave length may be the greatest strength, change management can be a casualty. Bring in the data driven sceptics from the outside, let them germinate the seeds of constructive criticism within the organization. An unbiased evaluation and establishment of data driven decision-making by a disinterested third party at arms length from the pet obsessions of the tech executives could be just what the doctor ordered.
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This blog is authored by Karthikeyan Damodaran, Analytics Consulting Leader at BRIDGEi2i
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