Laying in a Load - Preparing for the Upturn

The secret to preparing for coming out of a downturn is embedded in the concept of positioning. Most often companies streamline their operations during a downturn. They get rid of skunk works and concentrate their R&D on bonafide new product areas. Therefore, you must match your products to your customer's advancing technology. The usual and natural way to do this is in new product introductions.

Positioning

New products are the de facto result of a company's positioning strategy. It should be targeted at those needs and desires that represent the position that the company wishes to occupy. The backdrop of the customer's desires and needs shifts rapidly in high-tech markets. In other words, market position is a moving target. Suppliers must continually evolve their technology in order to hold or improve their position in the market. That is why R&D spending as a percent of revenue is usually 10% to 15% for high-tech companies. The chart is compiled from 13 high tech, US companies for the last five or six years. I tried to look at a broad cross section of software, internet equipment, semiconductor, and semiconductor capital equipment companies. We can see that R&D spending has averaged between 10% and 17%. This same range has persisted for the 20 years that I have followed the industry.

The problem with positioning is that it is usually done in a "field of dreams" fashion. Product development is done without addressing any segment or niche. Market research must be done in order to understand what the segments are and how they are evolving. Here is how to position your company for the upturn.

• Do market research
• Get your sales force to categorize and segment their accounts.
• Do an in-depth assessment of advancing technology and how your company matches.
• Prioritize your customer base with respect to your segmentation strategy and their importance within it.
• Create a marketing specification for your products with the features and benefits to target those segments.
• Streamline your R&D
• Eliminate all skunk works.
• Focus engineering on your marketing specification.
• Communicate your positioning strategy to your employees
• Train sales persons, field engineers, and Customer Service.
• Network your scientists and engineers with their counterparts working in your customers, your suppliers, and your competitors.
• Audit and recreate your Marketing Plan!

Nothing is done in a vacuum. Today's high-tech managers must continually update their skills and knowledge base, both in the industry in which you compete and in the management science which you bring to your position. Take advantage of industry trade organizations, mangement associations, local colleges and universities.......oh yes, and consultants.

Do you have time for all of this? Make time. You can't afford not to.

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