Friday, February 25, 2011

Surfing, Silicon Valley-Style: What is the Lifespan of Your Business?

When you travel and people hear that you're from California, they usually imagine Baywatch -- oceans, beach, and surfing. Here in Northern California, the ocean is cold and the surf is 30 minutes away or more, depending on traffic. Instead, most of us here ride waves of business driven by cycles of technology and the economy. From semiconductors in the 80s to the Internet era in the 90s and on to today's social, streaming, web 2.0 wave, you can see the rising forms grow, carry us, and finally break over time.

Once and a while I'm called on to help an MBA student work through some project assignment. Typically, the assigned case study projects require some historical analysis of a business decision at a select moment in time. The funny thing about history is that your knowledge of the broader story means that your decision can't really be unbiased. Imagine an example of a case study for a pen computing platform set back in the 1990s. Regardless of the actual issues presented, knowing that pen computing will fail, doesn't the smart decision include a common denominator of "take the money and run"?

Most companies have a lifespan. Often in calculating business strategy or imaging a business in theory, people tend to imagine the company as going on forever or at least having a lifespan similar to IBM. Here in Silicon Valley, it's easy to look across the landscape and see the empty skeletons of former titans, market leaders that were not immune to time and the evolution of technology. Whether it's the old Boreland campus in Scotts Valley, Sun Microsystems various campuses, or the once great empire of SGI that's now inhabited by Google, time has claimed all of these former corporate stars.

While it's easy to see exit strategy as an important factor in start-up strategy, what about more established companies? We keep seeing parts flying off of the Yahoo motor, yet it's still trying to race down the road. Remember when they were one of the blue chip Internet stocks? Think about all of that money that they've spent over the past ten years in failed acquisitions and technology development -- would they have done better pocketing the cash?

Companies that start to run amok tend to give off a dying vibe. You start to hear stories -- problems with the work environment, layoffs, crazy control systems and cost cutting measures. If the work and stress of building a start-up brings the excitement of growth, riding the wave of a company in decline is all about the stress of waiting for the wave to collapse on you. 

Having a sense of history about the lifespan of a business also bakes in a certain amount of cynicism. When you find yourself in an interview, you're always looking around trying to get a sense of where the company is in it's cycle of life. Are the people excited? Too busy to spend much time talking? Do they look they are having fun?

Just because a company seems like it's in decline doesn't mean that it's not potentially a worthwhile opportunity. In the same way that there are people who thrive in the chaos and excitement of growth in a startup, there are some people who are well suited to managing a company's end-of-life -- it's just that marketing pros are not usually in that group. Growth and marketing kind of go hand in hand. Typically, companies that in decline are looking for replacement followers of their existing strategies, not pivots. Of course, if you're brought in chartered with bringing transformation, then you may be able to turn that wave into an interesting ride.

While I'd like to wrap this up with some sort of exciting take-away thought, I think that the best way to leave this is with the same kind of feeling you might get at the beach, watching the waves form, move through space and time, then break. Big ones. Small ones. Waves of different shapes and different heights. Maybe the waves aren't as big as you expected. You should have been here yesterday.

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