II. The Context of Asymmetric Marketing:
The New Uncertainty of the ‘Sandstorm Economy’™:
Just as culture defines the inner attitude of a tech companies toward their day-to-day challenges, so too economic context tends to define how marketers approach strategy. When the context of the tech industry was an artificial ‘new economy’ boom with ‘new rules’, there was easy money for ideas scribbled on the back of Palo Alto bar napkins. But those days are gone, hopefully forever. For me, the new context of recurring cycles of uncertainty is more like a sandstorm.
Sandstorms are regularly occurring events and the people that live in the areas affected by them plan for their occurrence. And while sandstorms are widely seen as ‘natural’ phenomena, there is a ‘human element’ in their creation. The human element is the over-cultivation or over-population of naturally arid (low rainfall) geographies.
This is a good metaphor for what happened in the technology and internet bubble. An ‘over-farming’ in the form of ‘the planting and harvesting’ of thousands of companies that were not sustainable, never should have been funded, let alone taken public. It left a dry, less friendly, less hospitable high technology and IT landscape in its place. Scientists call the process of over-farming and over-cultivation desertification. For a lot of tech companies, the IT spending trends of the post-bubble, post 9.11 period has been like a desert---hard to grow a business.
We’ve all probably seen news footage of the American Army confronting the sandstorms of Iraq, but just for the record, let’s review the impact of your basic, cyclically occurring sandstorm.
Machinery. In a sandstorm, it just breaks down a lot. Helicopters, tank engines, even the motors that control Tomahawk missiles. This is what has happened in a lot of marketing organizations that were not built to fight in the new uncertainty of the sandstorm economy. They didn’t have the ‘filter’ (the culture, the strategy, the operational principles) to succeed. So they slowly (or quckly) break down.
Intense Heat. It’s a fact of life in a sandstorm. 100 degree plus temperatures. Fast forward to the heat placed on tech management teams to produce some growth, any growth, and of course to cut costs by downsizing key people, the very boots on the ground they will need to win. Over 500,000 engineers and business professionals are looking for work in the Silicon Valley.3 That puts more pressure on those that remain. The heat makes it hard for even the best ‘soldiers’ to fight without getting burned out.
Visibility. Now we get to the heart of the issue…the inability to see very far in front of your own face….or the inability of companies to provide much more ‘revenue guidance’ beyond the contractual dollars they have from customers they ‘locked in’. The ability to see new business---to quote Mickey Blue Eyes, ‘Forget About It’!. When you can’t see, it’s easy to get lost and you need special tools to allow you to navigate. American soldiers in Iraq actually used GPS not just to guide ‘smart weapons’, but to actually walk around inside their own camps. That’s the downside of a sandstorm.
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The high technology industry context, the sandstorm economy, is much the same. According to VAR Business4 only 1 in 4 IT executives in companies with more than 1000 employees expect spending to be greater in 2003 vs. 2002, and that ‘recovery’ from a tech ‘recession’ will not come until 2004. But the real details of the heat, visibility and machinery break-down is in these numbers:
- 70% of companies surveyed have placed one or more IT projects on hold;
- 62% have deferred short term projects;
- 55% have deferred long term projects;
- 45% have actually cancelled previously planned projects;
- 20% have even lengthened upgrade cycles for PCs. Ouch. Even Moore’s Law functions differently in a sandstorm.
Limited revenue visibility. War. Budget tightening. Terrorist threats. Weapons of mass destruction. Modern trade wars and changes in historic partner relationships……..the ‘old Europe’ thing. This is the context of what I call the sandstorm economy, the naturally occurring but people-exacerbated environment of economic uncertainty challenging technology marketers. And since the sandstorm is a ‘naturally occurring’ phenomena, you can expect it to show up in an unexpected manner at the least opportune moment, e.g. the end of your quarter.
The upside of a sandstorm? The good news is that the sandstorm is having the same effect on your opponents, your competitors, breaking down their machinery, burning out their troops, and making it equally hard for them to see. But there’s even more upside. Since sandstorms do have a people-created component, people can act to lessen their impact.
There are three major positive trends in the Sandstorm Economy. They are what I call the ‘g-transformation’, the 3 new ‘c-imperatives’ of large and medium corporations, and what I call ‘2nd inning’ internet effects. Understanding and leveraging these positives will enable a-marketers to practice their ‘market-craft’ at a higher level, and to leverage the sandstorm.
The Revolution in eGovernment and eWar: the G-transformation
The g-transformation is the application of technology to the challenge of G2C (government to citizen), G2B (government to business) and G2G (government to government) programs. The G-transformation is a long-term trend, not a new ‘digital pork barrel’ or an excuse for a ‘dot gov bubble’. It is not just confined to initiatives of the Bush administration, although the Bush administration is aggressively pushing it forward. In the final analysis it hopefully should and will be a bipartisan victory. Every smart political leader wants to take credit for g-transformation. So a-marketers get ready because it’s here to stay.
The g-transformation will co-mingle technology, government and the private sector in new ways, evolving America more and more into an Israeli high tech industry model, i.e. an eFront in the war for national survival. And while shooting wars may not be a constant for the eFront companies, pre-emptive digital war will be a constant. For the US to survive it must maintain the dominance of it’s leading technology companies, even in a sandstorm.
The 3 C-imperatives of Corporate IT Organizations
While corporate IT executives are squeezing every penny, American corporations operating in the sandstorm economy remain ‘soft targets’ for terrorism and terror-driven uncertainty. In this uncertainty, the 3 imperatives that are front and center in IT organizations from coast to coast are the cost imperative, the continuity imperative and the customer imperative. Drive down costs, guarantee business continuity in a disaster, and use technology to own and manage customers, thus providing more visibility in the sandstorm.
And there is more good news for a-marketers is in these corporate IT imperatives.
- 46% of companies surveyed by industry publication VAR Business actually accelerated projects with clearly documented ROI, with 29% accelerating short term projects and 18% accelerating long term projects. Look for more of this in future essays, because projects with clearly documented ROI usually are connected to asymmetric product and distribution strategies, and asymmetric business models practiced by the technology provider winning those projects.
2nd Inning Internet Effects
I’m taking creative license with a phrase originally attributed to Amazon.com CEO Jeff Bezos, i.e. ‘we are in the first inning of the internet’. Well we’re now out of the first inning. In the first inning, we saw the rise of the portal model (Yahoo), the e-tailer model (Amazon.com), and the self organizing trading community model (eBay). The internet itself is an environment that is fundamentally asymmetry in action. Here’s a few examples from Neilsen Net Ratings.
- Broadband users are about one half of dial up users but broadband users as a whole spend the most time on line. The asymmetry of bandwidth experience.
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Websites: While portals, communities and search engines are still the most widely visited, financial sites are the stickiest. The asymmetry of economic need.
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Human Bandwidth: As people’s time at the office increases, more people shop online from the office than at home. They are stealing back their human bandwidth. Corporations activate URL blockers like WebSense to keep them working. The asymmetry of the digital workstyle/lifestyle.
In the 2nd inning of the internet, the ‘effects’ are what Jack Welch, retired GE CEO talks about in his book ‘Jack: Straight From the Gut”. Welch describes the adoption of the internet by traditional business leaders in ways that re-inforce their asymmetric advantage over their new economy opponents. Welch talks about how GE leveraged these 2nd inning effects in the ‘buy, the sell and the make’, i.e. procurement, outbound customer management, and collaborative product lifecycle management aspects of the GE business. I call these 2nd inning effects asymmetric business or a-business, and/or asymmetric commerce or a-commerce. The a-business trend will accelerate with pure internet businesses becoming ‘bricks and clicks’ businesses (eTrade opening physical locations, for example). A-business is touchpoint-agnostic business. Web commerce, mobile phone commerce, voice or v-commerce, embedded commerce…….bricks, clicks, technology tricks all fused, all part of an integrated approach to gain an asymmetric advantage relative to the customer, partners, suppliers, etc.
A number of high tech marketers are instinctively returning to principles of asymmetric marketing in the sandstorm economy. Startups, for example, are turning to asymmetric marketing approaches in order to launch new innovation at a time when venture investors are extremely cautious, capital is hard to raise, at a any price, at any valuation.
In coming essays, I will go further into the g-transformation, the new C-imperatives, and the 2nd inning internet effects that are the positive side of the sandstorm economy, that provide asymmetric marketers with new opportunities.
Copyright 2001-2003, Joseph E. Bentzel. All Rights Reserved.
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