Observations

Learning from Tech Companies that Grew in Q4 2008

By Bill Freedman

Despite all the gloomy economic news, there are a handful of companies that grew revenue in Q4 2008. Consumers and businesses are spending money, albeit a little more selectively. Below are a few notable tech companies that got more of their fair share of revenue in Q4 2008 (the third quarter in our ongoing worldwide economic recession):

Company
Q4 2008 Growth
Chart
Sybase
3%
SY
9%
Callidus Software
10%
Shoretel
16%
25%

First off, I want to congratulate these companies for their strategies, operating plans and teamwork that resulted in positive outcomes despite uncertain conditions. In addition to revenue growth, many of these companies created new products and avoided mass layoffs in the past period.

Here are a few statements from the corporate executives (emphasis is mine):

Sybase chairman, CEO, and president John Chen: Sybase’s success “…is the result of judiciously investing in our Unwired Enterprise strategy, together with our ongoing efforts to streamline operations and prudently manage company assets. …I am optimistic in our continued ability to execute well.”

Informatica chairman and CEO Sohaib Abbasi: “Our results…demonstrate the operational discipline of the Informatica team to navigate the economic turmoil. We are well prepared to pursue our strategy and continue to focus on operating income in the quarters to come.”

Callidus Software president and CEO Leslie Stretch: “We entered 2008 with just over 20% of total revenues being of a recurring nature, and we exited the year with almost 40% of total revenues coming from the recurring category. I am also proud of the effort we made to streamline the business and bring operating expenses in line with our profitability goals.”

ShoreTel chief executive officer John W. Combs: “ShoreTel continues to build momentum with strong sequential international revenue growth and continued focus on developing innovative solutions that help our customers cut costs without compromising performance.”

VMWare president and chief executive officer Paul Maritz: “We are making solid progress on our three key initiatives to build on our virtualization leadership in the datacenter, the cloud and on the desktop. We are executing on our product roadmap, strengthening our ecosystem of partners, and bolstering our management team – both globally and operationally. VMware is well-prepared for the opportunities and challenges ahead.”

What can we learn from these businesses? A lot. No, I don’t expect these companies to disclose details of any draconian tactics they employed to hit their numbers. But all of the executives are signaling the sources of future success. Some of those signals include my favorite themes: strategic focus, execution excellence and optimism.

The Imperfect Practice of Influence

By Bill Freedman

The inner workings of our minds is fun to think about but difficult to understand.

I have deep interest in neurology, neuropsychology and behavioral science research. Many interesting studies are in current circulation…my personal favorite at the moment is The Behavioralist Meets the Market: Measuring Social Preferences and Reputation Effects in Actual Transactions–more on that at a different time.

In the absence of compelling and all-encompassing theories of the mind, the imperfect practice of influence is delegated to artists, politicians, salesmen and li’l ole me. Here are a few things I’ve learned from my own research:

  1. Facts matter. Unless you are a philosophy undergraduate pondering the meaning of life, facts are extremely persuasive. The sun rises in the east. A one way bus ride costs $1.50. No argument.
  2. Know your audience. Different people in different circumstances respond to different stimuli. No single technique works in all cases. For an audience of one, aim squarely at the individual’s core need. For an audience of many, plan on using multiple strategies to connect with a variety of segments.
  3. Be realistic about outcomes. Influencing perceptions and behavior is hard…just ask the quirky wannabes trying out for “American Idol.”  But successfully changing perceptions through influence is achievable…just ask Barak Obama.
  4. Practice humility. Factual arguments don’t persuade 100% of the time. Baseball batters are heroes if they can hit a ball three out of ten times. Influencing others is even more elusive than hitting a baseball.

I maintain my sanity by celebrating every interaction and cherishing each win. Today is another good day!

What New York Taught Me About Experience

By Bill Freedman

The recent “Miracle on the Hudson” reminds me that in many situations, there is no substitute for experience.

All of the individuals involved in saving lives on Thursday were skilled and experienced professionals. Captain Chesley B. Sullenberger is reported to be a 40 year veteran of the air. While I suspect most of the dispatchers, police, fire, port workers, ferry operators, and health providers, can’t match the Captain for years on the job, their training, experience and retraining resulted in a prompt and coordinated response to the accident. Kudos to all of the first responders for a job well done!

So much that I’ve heard about the accident to date focuses on the decision-making and heroism of Captain Sullenberger. For example, he made multiple split-second calculations and decisions about where and how to land the plane. His agile mind knew that that the chances for survival in a water landing were improved if the landing gear were closed and the wings remained attached to the fuselage after water impact. His commitment to passenger safety included taking proactive steps to ensure that everyone got out before he exited the plane.

Could a rookie pilot have gotten all this right? I don’t know. It is, however, refreshing to see a veteran perform as expected–and get the appropriate credit for his experience.

While I’m not tasked with public safety or life and death decisions, Captain Sullenberger made me reflect on some of my own decisions, especially those where experience was weighed against other criteria such as desire for something new, youthful charm or perceived cost savings from selecting a junior contributor.

All I can say is experience is on a strong uptick…

What Optimists Do in 2009

By Bill Freedman

As an enterprise software entrepreneur, American, father, husband and optimist, here is where I’m directing my personal energies in 2009:

Innovate. There is no recession on innovation. Things like economic uncertainty, instability in our financial markets and the housing crisis are widely reported. These developments are clearly depressing but not under our immediate control. That is why I’m continuing to process the depressing information, but focusing my personal creativity, enthusiasm and industry on producing innovative products, services and solutions.

Participate in global and local communities. Web 2.0 has made the world smaller, which is great. Technology has made it easier to communicate, collaborate and transact business around the globe. We are all richer for these new connections. One of the unfortunate by-products of globalization is a “crowding out” of local activities, institutions and businesses. Global is good, but so is local. I’m participating in both spheres.

Contribute your abundance generously. The lessons of early economists remain true today. Specialize. Create value within your specialization. Trade your created value with others for personal and communal enrichment. What do you have in abundance today: time, skill, finances, ideas or something else. Figure out how to get your abundance into circulation.

Manage scarce resources carefully. Optimism isn’t blind. It’s pragmatic. In a recent San Francisco Chronicle interview Benchmark Capital partner Bill Gurley wisely stated, “in market downturns, frugality is not only a virtue, but also it could be the difference between survival and failure.” Understand what’s scarce. Cash savings, fossil fuels and the environment are under scrutiny in our household.

Improve education. Education is America’s greatest industry. Our universities are coveted around the world and our commitment to providing K-12 education to all residents is one of the greatest public policy practices in human history. Sadly, public education is in need of a strategic overhaul, increased funding, better public relations and increased participation from parents and communities. Every investment I’ve made in education has provided a spectacular economic return and has made me happy. I want the same for my children and everyone’s children.

Comments and contributions to this discussion on optimism are encouraged!

Resistance to Change

By Bill Freedman

Sales and marketing professionals at technology companies often complain that IT customers are resistant to change. The evidence supporting this assertion ranges from customers turning down meeting requests to older products continuing in use despite the availability of newer versions.

The shocking truth is that, collectively, these stick-in-the-mud IT organizations are making many important changes. They are embracing Service Oriented Architecture, 64-bit computing, open source technology, outsourcing and mobile computing. They are exceeding demanding service levels for back office application availability and improving end user productivity. They are holding the line on costs, while helping their organizations achieve top-line and bottom-line growth.

Labeling customers as “resistant to change” is convenient, but the facts tell a different and more complex story. Many changes are taking place in these organizations every day. Many ideas and distractions arise to compete with the plan of record, but only a precious few earn much attention. Is the problem resistance to change or are vendor claims not inspiring decision-makers to change their plans?

Overcoming Resistance to Change: Look Inward

Human attitudes towards change result from a complex interplay of emotions and cognitive processes. We all make choices in our lives that result in changes to the status quo. We all cope and adapt to changes that happen in our environment and that impel a reaction.

Former University of California Chancellor Clark Kerr wisely stated “the status quo is the only solution that cannot be vetoed.” I believe that the status quo is what the disgruntled technology vendors are bemoaning. And, broadly speaking, the status quo plan of record appears to serve IT decision-makers quite well.

There is hope for disgruntled vendors, but it won’t come easy. While IT decision-makers are heavily dependent on IT vendors, they are also pragmatic and skeptical. They will resist products which are not aligned with their priorities. Time and time again, compelling, urgent and value-creating products are purchased, deployed, used and upgraded.

Look at your product portfolio. Resistance to change?

Security Hassles, Travel and the Internet Substitute

By Bill Freedman

I’ve spent a lot of time on the Internet this week. My bounty is a lot of new information on web marketing, managerial effectiveness and salesmanship. All I can say is the research was enriching.

On Saturday I will travel by air to Los Angeles. I’m going to experience first-hand the differences between Air security and Internet security. Clearly there is more energy and more friction involved in air security.

As much as I enjoy the Internet, it is not a good replacement for face-to-face interactions. Yes, I predict that I’ll be grumpy about the wasted time in intolerable security lines. But it is a small price to pay to experience my LA friends and colleagues.

So the security angle is interesting. In a sense security raises the transaction price for transactions that are separated by geography. Perhaps the cost is one hour for each departure.

Economists will tell you that the higher security costs will drive the marginal traveler to seek substitutes such as the Internet. I assert there is a more important dynamic. If the number of trips (and the number of face-to-face interactions) declines, the value of each interaction increases.

I can write a lot of emails and do a lot of online research in an hour. But the expense to value ratio for the human interaction, in this case, skews toward travel. I’d be less productive without the Internet. I’d be less happy without travel.