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Ebusiness Despatches: Don't put customers first
The Over capacity dilemma...

By René Carayol

Published: Wednesday 11 September 2002

Look at any industry you care to mention and it's suffering from a common symptom, over capacity. From aviation to automotive to high-tech demand is thin on the ground and supply is piling up in the corner. We're drowning in a glut of over production.

If the symptom is a common one, the way it's afflicting the IT industry is unique.

Why? Because few, if any, of today's technology leaders have been through so much as an economic downturn, to say nothing of the recessionary times we're now living through. IT's managers simply don't know what to do. They don't know how to react.

Or rather, they think they've got a strategy which is actually worse than no strategy at all. They think they can cut costs and carry on as before. Same strategy, different cost base. It's a recipe for disaster and here's why.

Technology vendors are used to turning up and asking the customer how many boxes he wants to buy. In short they've never had to master the consultative sell - the more complex and time-consuming relationship with a potential buyer. Maybe they tried a little harder for the 'big ticket' uber-CIOs but for the rest of us they were mere box shifters.

Today they still think like box shifters even if they accept they're unlikely to shift as many as they did in the 1990s. The sooner they realise that the days of Y2K when you turned up and the door and just unloaded kit are over the better.

Axing staff and asking those that remain to carry on as before only working to a bigger client list is short termism at its worst. It's not sustainable because you can only do it once or twice. And after that you're left with a small, rudderless team and ultimately an industry swimming with ex-employees who can't wait to bad-mouth you.

Of course it's not just the vendors who are victims of this kind of thinking - the customers are suffering too. In any organisation, when times are tough three board level executives are first to feel the pressure - the marketing director, the HR director, and (you've guessed it) the IT director. While the revenue generating departments cling on to their corporates halos, the so-called service providers to the business feel the heat.

In both instances you should be investing in human capital not taking an axe to it. You should arm your people with the skill set they need to manage and prosper in a recession. That means understanding the consultative sell, understanding how to manage relationships and understanding how to sustain those relationships.

I know it sounds a strange thing to say but companies are mistakenly focusing on customers first. They should be focusing on employees first. Do that right and the customer relationships will take care of themselves. In short, invest in your people - and put away the axe.