On the marketing front, I have not lived through more fascinating times. Nor, as an adviser working with companies on technology, service and solution analysis, have I witnessed a more intriguing period. Both sellers and buyers have become increasingly complicated and bifurcated in their spending and buying habits. Many in the former camp are doubling (or tripling) down on their sales and marketing initiatives for 2009, attempting to reach companies in dire need of cutting costs. But others are delaying and/or cutting back on nearly all of their sales and marketing initiatives. The latter group are equally as polarized -- they're either aggressively pursuing spending initiatives to bring their cost structure down or have cut off spending entirely, especially on capital projects. Call it supply / spend management polarization if you will, but I'll tell you one thing. It's unprecedented.
Let's talk solution provider sales and marketing for a minute. In the past two months, I've spoken to more than a few providers who are aggressively -- and I mean aggressively -- ramping their efforts this year. They're hiring people, tossing more into branding, lead generation, channel development, etc. They view this time as a golden opportunity and are pursuing it accordingly. Even those divisions of larger technology companies with interests outside of procurement are ramping efforts in the spend and supply worlds while they're cutting back in others. In my ten years of watching vendor dollars flow from a sales and marketing perspective, I've not seen anything like this.
But others are taking the opposite approach. I received a note earlier this week from a friend who works for a solutions provider who told me their plan is to "freeze spending until the end of Q1" because their "investors are nervous about the economy and the impact to their portfolio." This is a provider that's doing great, by the way, generating significant interest, revenue and profitability growth in the market. But their backers are lumping them in with the rest of the portfolio at the very time that their competitors -- and mind-share competitors -- are doubling down. It's one thing to be nervous about the economy, but for investors, rather than management, to freeze spending is about as dysfunctional as it gets when management has proven competence. This reminds me of an overly hyper mom (or dad) who can't countenance their child's developmental risk taking. Note to investors: micro-manage your non-performers and BTW, the old adage is not "nothing ventured nothing lost". It is venture capital, after all.
What's interesting is that I'm seeing the exact same behavior on the practitioner side as well -- it's not just vendors and consultants who are rushing toward these two extremes. With practitioners, I've witnessed a leap in interest for programs and initiatives that deliver quick returns. The limit seems to be 12 months. This timeframe clearly benefits both consultants and SaaS providers who can deliver meaningful savings quickly. Many of these initiatives are getting fast-tracked. And it's not just procurement that is prioritizing them -- CEOs, CFOs and others are stepping in as well.
It's hard to save when you're not spending at all. Combating extremist organizational thinking is a challenge for some, particularly in manufacturing and especially those who appear to have gone into hibernation when it comes to both their overall spend and their unwillingness to invest a little to save a lot and possibly earn more. Granted, in many areas of manufacturing, the rapid declines in volume are disconcerting to say the least. But battening down the hatches will only lead to further decline.
Based on what I'm seeing from an anecdotal perspective, I would not be surprised to see an unprecedented number of bankruptcy filings in Q1 among SMB suppliers in both the US and Europe. This practitioner bifurcation of behavior -- just as it is on the provider side -- is (again) like nothing I've seen before. While it makes sense given how some businesses must rapidly come to grips with how grave their situation may be, freezing up -- spend and thinking -- is not the most promising tack to take.
So what's my advice for practitioners in this? If you fall into the camp that's spending, re-think and push through initiatives that have stalled in the past (including ones that require change management or other non-financial investments on behalf of your internal customers and constituents). Use this time to get the best possible deal from providers. And realize this is a golden opportunity for change and to get the type of investment dollars you need to make a difference -- if you can't get dollars now, you might have a harder time getting them later. Above all, don't fear blowing it -- corral all possible resources (thought and spend) and go forward. But if your company is in hibernation, take that as a sign and dust off your resume. You might be fine, but why take the chance, especially in a job market that takes far more time to navigate than it did 12 months ago?
Enough from me. What's your advice?
- Jason Busch