Friday, February 12, 2010

Facing Crisis

One of the most popular subjects in the Web is still the world financial crisis. Quite understandable why: directly or indirectly it affects lives of billions of people. And, no doubt, we are among those billions. Saying “we” I now mean those involved in business, more precisely – into software development business and software development outsourcing.

We observe that the world around us really changes, and the question is, what is the real impact of these massive shifts onto software business?

According to Wikipedia, Seeger, Sellnow and Ulmer give four defining characteristics of crisis. Such an event:

  1. Is unexpected,
  2. Creates uncertainty,
  3. Is seen as a threat to important goals,
  4. Causes need for changes.

Okay, in our everyday life we meet quite a lot of unexpected difficulties that create uncertainty rather often, and we do not call such situations crises, just issues or problems. So, it seems to me that discussing crisis we should focus only on the items #3 and #4: threat to important goals and need for changes.

As for important goals that are threatened, the software business as any other business has the same goal – sustainability, and crisis jeopardizes continuous attainment of this goal. Threat to this goal motivates us to struggle, and here we approach to #4: need for changes.

So, what can we change and how should we do it to fit new reality? Is there anything specific for our business?

Basically, in this context I do not see any dramatic difference between software business and any other business of the – say – rear echelon, not affected by the crisis directly like mortgage companies. All of us suffer because our clients forget about us: they now have a lot of more valuable things to think about, and thus all the additional non first-aid services or products are not asked for.

It looks like clients just vanish. Our services are still of good quality, they are even cheaper than they were yesterday, but nobody shows a bit of desire to buy them. When McDonald’s found itself unable to sell beef-based Big Mac in India, they were in better situation, since Hindu people worshipping cow and thus hating Big Mac, still had money and were eager to buy something from the world-known brand. So, McDonald’s just changed beef for lamb (or for chicken), “Big Mac” for “Maharaja Mac, and – that’s it: clients purchase these new Macs and pay money for them. Somewhat different is now with our clients: they just do not take any notice of us.

What is regular market at non-crisis times? Crowd of clients and crowd of vendors. Clients are interested in being aware of the services and products they might get from the vendors, and in general, clients are ready to purchase some services and products. Vendors also behave in their usual manner jumping up and down on the spot, pushing competitors apart, raising their hands and screaming “Choose me, I obtain perfect skills and expertise!”, or “Choose me, I will do it cheaper!”, or “Choose me, I am guru in PM!”, or “Choose me, I am better educated!”, or whatever else. Now it’s all the same except that almost all clients are absorbed in their own thoughts and do not look at the crowd of vendors at all.

It turns out that habitual jumping, screaming and handing competitors off is not a good idea now. It does not work for this new crisis-affected market. Time to rethink models of behavior? My suggestions for it to follow later, in the next post.