Facing Crisis 2. Rules of Promotion

In the context of this narrative it makes sense to divide lifecycle of any company into two types: normal periods of time and crisis time periods, these time spaces changing one another more and more frequently during recent decades.

Promoting its business within normal time periods, a company behaves as usual, and “as usual” means – according to some standard rules. From the very start let us disregard deviations (liars, cheaters, charlatans, etc.) and speak only about companies practicing conscientious approach to business. Thus, I am not discussing business ethics, let’s take it for granted.

We are so accustomed to the rules of promotion in regular business, that strangeness of these rules is not noticed. For instance, the rules make me saying here and there (the more frequent the better) that my company is the best one, that it beats all the competitors in all the main items, that we provide customers with unique services using our unique experience and expertise best available at the market. Quite recognizable, isn’t it? I bet it is. Do I tell the truth? No, certainly not. So, am I lying? I would answer equivocally: all the businesses do so, and I play according to the rules. We all have got accustomed to those rules, though a great number of them are really ridiculous. It is well known, for instance, that different companies while promoting competing products of the same niche use almost the same advertising texts. Moreover, these similar texts are rather stupid very often. The heroes of commercials urge us to speak, for example, to our hair or to dirt on a carpet (“Say NO to dandruff!”, “Say NO to stains!”), and nobody seems to be surprised. Why? – Because nobody really cares: such are the rules, and you are welcome to say any rubbish since nobody really listens to you, and texts in your commercials are just signs that your company exists and is ready to serve its clients.

Thus, a client automatically translates heaps of exaggerations and oddities of your promotional stuff into just a few simple and clear signs, and nothing is lost in this translation. In fact, the resulting signs just define the layer you belong to as a vendor. Every kind of business is naturally subdivided into a few layers each of them containing companies of almost equal qualities and capabilities. Layers differ from each other in “scale”: volume and level of provided services, popularity of brand, annual turnover, etc. So, signs coded in your promos show which layer you belong to. Client reads this information and then decides whether you seem a perfect representative of the layer or not. If yes – good for you, you are chosen! If no – you hardly has a chance to change the client’s mind.

Very simple. Then why do we use so much efforts and money to code our clear signs into bizarre commercials? Such are the rules, the rules for normal periods of time in business lifecycle. What about crisis time periods, should we comply to the same rules? I doubt we really have to. For more details see my next post.

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.