Five great things about being CEO in a tech recession
It would be easy to come up with a list of why the current downturn sucks. In fact, who needs a list? You can feel it in your bones. But a lull in any battle, or economy, can be an opportunity for those with the foresight and resources to press it. And we're not talking about lame cracks like the traffic getting better. Here are five genuinely good things about the current tech economy. Which ones will you be able to take advantage of?
1. The downturn will kill off your most annoying competitors
You may be in a crowded market now, but you won't be for long. Companies are going to fold in this downturn. Less competition from silly companies that aren't playing by the rules of good business means you can focus more on your product and on getting your message straight compared to the remaining competitors that really do matter.
2. You can hire cheap
See No. 1. There will be unemployment. The job market will change from a seller's market to a buyer's, which means you'll be able to hire better people cheaper. Maybe not so good for them (be sure to salary up when things improve). But good for you.
3. You can lay off at will
Unhappy with your organization as it is? Worried about the effects on morale of shutting down that experimental project you keep in a corner? Worry no more! While a year ago layoffs might have been seen as desperation play and thus acted as a staff morale killer, if you do judicious layoffs today the remaining staffers will be glad to see you trimming the fat so they get to keep their jobs. Plus, it will get your investors and board members off your back.
4. Your customers will cut you some breaks
Users and customers who like your product are far less likely to give you hard time about minor flaws in your service. If they like you and want you to stay in business, they'll understand that you have to focus on the core of your operation, and on generating revenue, to stay afloat.
5. Whatever doesn't kill you...
Yes, it's true. Tough times focus you on what really matters. You will have to spend the majority if your time on revenues, customers, and product, and far less time on offshoot projects and handholding nonproductive employees. On the other side of this economic phase--if you make it there--you will have a better company.
Related: "CEOs get paid for vision and holding to a budget."
Rafe Needleman writes about start-ups, new technologies, and Web 2.0 products, as editor of CNET's Webware. E-mail Rafe. 
2) Yep - you can hire cheap, but you'll end up with cheap. The top talent will already still have jobs (they're usually the last ones to go if/when things get that bad off), and thus far demand for folks who actually know what they're doing is still very high. If you find someone who is genuinely worth the paycheck, you'd best go out of your way to keep him or her, or else you'll have that employee's resume still sitting on Monster, and will lose that person the very nanosecond that he or she gets a better offer. The middle of a vital project is the worst time to have to lose a crucial player just because you were too cheap to make it worth the employee's while - even in the best of times. Now picture losing one in the midst of a crap economy...
3) you're still stuck with showing some intelligence when laying off. I do agree that it's the best time to ditch the deadwood, but simply slashing for slashing's sake will end up killing your company faster than anything else.
4) you forgot the flip side: customer will actively start looking for lesser-priced alternatives, which means there's pricing pressure to contend with (unless you're in an absolute niche market and basically have a monopoly in it). See also Microsoft and their current customers becoming far more interested in adding Linux, instead of merely buying more CALs and keys without blinking. In good times, an IT Director will sign P.O. requests with about enough of a glance to find the signature line. During bad times, getting so much as a replacement mouse out of him will require something akin to the Spanish Inquisition. That in turn translates into a far easier time of convincing the powers that be that maybe they should give Linux a look - after all, at $0.00 in purchase and licensing fees, it makes a far more compelling argument when budgets are tight than it does during times when budgets are fat.
With the huge abundance of open-source projects (and due to layoffs and etc. more work being done on them, or more projects being born - by un-/semi-employed programmers, or by programmers needing to buff up their resume with work product examples)? Suddenly a proprietary solutions provider will find it way harder to make sales, than in times when customers had plenty of cash to spare.
Recall that Linux (among many open-source projects) actually bloomed during the dot-bust, big-time. IBM threw $1bn at it during the heat of the bust (2000-2001), yet they made that money back many-fold... including a huge chunk of that during the dot-bust.
5) if you did #3 right, you won't have to worry about non-productive employees and dead-end projects. :)
/P
- by Tim_Berry October 22, 2008 8:21 AM PDT
- Nice post, thanks.
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(3 Comments)Careful with the layoffs, though, because you can go too far with that. Don't panic and cut people if you're going to need them back. People who know their jobs can be very hard to replace.
Tim