18 Oct Spend Money to Make Money and Dump Obsolete Tech Strategies
Layoffs in manufacturing are still going on in the Midwest at places like the Maytag plant in Galesburg, Ill., which was featured on an NBC news story on Monday. There are many experts giving opinions about why these jobs are disappearing.
The consensus is that many jobs are going overseas for cheaper wages and most stop there with their strategic analysis. That is usually a good place to stop because many companies are so focused on the bottom line. It’s a safe bet for the analysts to hang their assumptions and conclusions on the obvious. They use the same, simplistic executive conclusion: go for the cheapest cost.
If labor is one-tenth the cost, the decision is a simple one: ship the jobs overseas. Cheapest cost is not a guarantee for success, though. Many times, other cultural, quality and continuity issues are overlooked and the cheap solution actually becomes costly.
When it becomes costly, the guilty decision maker is usually long gone. This person is usually off to another “challenge” and someone else is left to clean up the mess. The failure is usually explained as a rare “fluke” or some “unusual external force” that affected the anticipated outcome. No one ever admits that the idea was a bad one in the first place and many times the failed strategy isn’t tagged to its originator.
There are some outcomes where the initial decisions cannot be overlooked. When Andersen was caught with integrity problems with Enron, some defended it as a one-time fluke or one individual’s poor judgment. The more it was looked at, though, the more “flukes” were uncovered. Andersen finally got washed away in a sea of poor judgments. It was the whole culture – not an individual.
Many of these poor strategies led to layoffs and force reductions at many companies in both the telecom and IT areas.
Spend Money to Make Money
Another key component in failed executive strategies was to cut marketing expenditures or, in other words, cut “spending money to make money”. Poor annual sales of products and services led to thousands of people that became “in transition”.
Making sales is a key to organizational stability. Decision makers sometimes don’t focus on increasing sales or expenditures to support making those sales. While several salespeople from different technology product and service companies still make the observation that “things are slow out there,” there seems to be positive movement seen by others.
IBM had a recent “resource action” that is a sanitized way of saying they performed an adjustment of “force reduction” to its staff. Even though IBM doesn’t seem to be doing as bad as some of its counterparts in the industry, they cut a lot of people. It is closing business and winning business from its competitors.
In comparison, Singapore Telecom, a network carrier that you may or may not be familiar with, has been letting some of its marketing and salespeople go as it fails to get close to its revenue objectives. They are less than 20 percent of their sales objective for the year perhaps because of the way they do business (not just because of a bad economy).
From a different perspective, the Chicago-based International Engineering Consortium (IEC) is looking at getting more business from conferences that they are holding overseas. They see more activity in their international conferences.
“We had to do something different and look to new markets,” said Mike Janowiak, the executive director of the IEC.
Maybe some of the “wait-and-see companies” should take a hint and do the same. A wait-and-see strategy is going to quickly become a “wait-and-die strategy” as companies that don’t do anything different will start to see themselves go under or be acquired by more agile firms.
Why Aren’t New Tools Being Used?
There are so many companies that have reached back into old strategies and tactics of the 1950s to try to increase sales. Giving people customer lists from 10 years ago and telling them to start cold calling to try to “get things going again” is a lame approach to drumming up business.
I know that some companies have resorted to cold calling and pulling out old customer lists as their primary sales and marketing strategy because I was recently called by a company that my firm did business with more than 10 years ago. Though the salesperson was eager, I told him we are no longer in that business because times have changed dramatically.
In talking with others who have experienced the same thing, the conclusion is that there are many firms chasing after dead accounts instead of targeting new prospects.
It is what I pointed out a couple of weeks ago: “Go where the business is today rather than where it was.” There are many sales executives who fail to grasp that concept. Many people cling to the idea that “you have to get back down to basics” or “you have to cold call to drum up business”. Though these strategies might be good to “look busy to the boss,” they are clearly ineffective and won’t result in closing business.
There were many automated tools that were developed in the heydays of e-commerce that haven’t been recognized (let alone utilized) by these companies that claim they are all over customer relationship management (CRM).
Salesforce.com is one of many tools that organizations can use to assess and manage the sales function. Still, few even recognize it. Many sales and marketing vice presidents are reaching back for their “trusty hammers of cold calling” when they should be reaching out for automated power tools to run the sales function.
This is a great time for investment into new tools that are proven and for setting new strategic directions. Instead, many people are just making minimal attempts at doing the same old things to “keep their jobs until this slump ends”.
Carlinism: Cost cutting is over. You have to spend money to make money.
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James Carlini is an adjunct professor at Northwestern University. He is also president of Carlini & Associates. This article has been syndicated on the Wisconsin Technology Network courtesy of ePrairie, a user-driven business and technology news community distributed via the Web, the wireless Web and free daily e-mail newsletters.
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