Take me to your new leader

Technological developments, economic downturns, fundamental shifts in demand patterns and intense competitive pressures are all combining to create greater uncertainty in the IT industry. They are also quickly changing the nature of competition.

The IT industry has been tried, tested, torn apart, slaughtered and hung over the past 12 months yet there are still many dangerous paths ahead. To keep on track we will need leadership of a much higher quality than the industry has seen over the past few years. Above all, it will require the ability to admit mistakes, to learn from them and then to move forward quickly.

It will need the military skills of a Montgomery, the analytical expertise of a Kissinger, and the dogged endurance of a Churchill. And if all three are available, it is still going to be extremely difficult.

The Australian IT marketplace will always be a battlefield. And like most modern wars, a large number of combatants, splinter groups and factions will always be involved so that it will at times be difficult to decide who is fighting whom and for what.

As one vendor retires bruised, battered and bloodied, another two or three will shoulder each other aside in an attempt to take part in the fray. An array of splinter groups will rise because in many instances the same or similar products will be sold by many different companies.

The Australian marketplace remains one of the toughest in the world. There is fierce competition, rampant price-cutting, and aggressive marketing characterised by many claims and counter-claims. And it is expected to get worse.

Strange times

These are funny times: the stock market correction has sparked a great deal of introspection for some vendors, but it has knocked a lot of conviction out of people who were, not so long ago, brimming with confidence, enthusiasm and innovation.

Why, exactly, is this happening? Why have some bold and breakthrough types of thinking suddenly become the targets of the set-em-up-then-knock-em-down brigade?

Is it because new business models didn't turn profits in six months? Is it because stock options have tumbled? Or is it because a number of start-ups have crashed and burned?

We keep hearing predictions of the demise of just about every marketplace. Forecasts from the analysts come stuffed with the usual buzzwords: shakeouts, overcrowded, me-too, premature, undercapitalised, untested, unproven, uncertain and unnecessary.

And then we have the all-too-famous death spirals -- savage, swift, relentless, bloody, messy and inevitable.

These words are repeated so often that they're generally taken as fact. Anyone who spends time watching the IT industry knows how the mill works. The loose community of executives, marketeers, analysts, reporters, and pundits of various shapes and sizes snatch up an idea and then kick it around until it gains a momentum of its own, regardless of what the marketplace may think.

Cutting loose

There is nowhere to hide. Even companies that beat the quarterly earnings expectations of various analysts have also been punished. Some days this market faces nothing short of wholesale abandonment. The end always seems so frighteningly near.

What do the barrages of forecasts and numbers mean? Not much, unless you know exactly what segments they include and what assumptions went into the calculations. Everybody defines things differently, so all parties come up with different numbers and growth rates. Many have been seduced by technological wonders and have mostly taken their inputs from vested interests, like inventors and vendors.

In several cases new technologies have not succeeded because there was still plenty of life left in old technologies. Customers were loathe to abandon what they knew for something that offered only marginal improvement on the old.

And sometimes corporate executives just see a new development as being too risky. But then Bill Gates himself is reputed to have said that the difference between old and new technology is that the old technology works when required.

Crummy ideas and poorly executed business plans will always crash and burn. There will be many more market corrections and the weak and inadequate will continue to get munched.

Casualties

There is no question that these are unsettling and risky times and no matter how rosy a future the so-called experts paint, there are always going to be many bumps on the road to prosperity. Vendors increasingly will need to employ new business models that push the boundaries of traditional controls. Relationships, knowledge, people, brands, systems and services will continue to take centre stage.

The human price may be even more costly. While individuals are sure to gain from the anticipated technological changes, new pressures are certain to be added by the need to adjust to new realities. As consumers become more demanding and reduced barriers of entry create fiercer new competition, companies will also feel more pressure to stay afloat. Mergers and acquisitions are likely to result across a wide range of industries as innovation and economies of scale become important catalysts for success.

With our world slowly starting to look like Marshal McLuhan's Global Village, I think it is high time we realised we are in business first, technology second.

All in all, 2001 is shaping up to be one busy year! It will be the year of the shakedown, when only the strong survive.

Risks to the fore

During this period of disruptive change in which different qualities are needed to manage a business, vendors will need senior managers with a sound understanding of the market their companies trade in; an ability to pick good staff; an eye for detail; plus a moderate willingness to take risks.

Managers who can absorb and master changes are often not the same as those who can run a tight ship and turn a profit year after year. What is required is a combination of foresight, inductive reasoning, brilliant strategy, sound planning and an ability to be prepared for the inevitable. In the IT world, being prepared means having a good sense of what's going on -- both with the technology and business worlds.

Lets hope for a soft landing, but also lets hope that we relocate some values we've mislaid along the way -- such as common sense.

Here's to a profitable future based on better

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