A couple of months ago (mid-March) we published a lightweight forecast in executive summary style about how we saw the potential next steps of software development companies - startups and ISVs, that is. We believe the impact segmentation of industries and direction covered quite well what actually happened, became “bleeding obvious” hindsight, as someone commented.
Now, after 3 months in CoVid, the very first waves of behavioral changes are mostly gone - time to prepare for the next (and in our view, not last) shift in decision making. Again, we are thinking about your clients. And sometimes, your clients’ clients. Your success is driven by a business Matryoshka doll, eh?
We survived, and most of us have NOT even experienced directly the health impact of CoVid. This argument is not to downplay what happened, and especially not what could have happened without acting. But still important to keep in mind when pondering about how people think, behave, and decide NOW either on a personal or a professional level.
The ongoing economic crisis is primarily NOT (lack of) liquidity-driven. This is something new compared to previous major collapses. The supply chains are basically there (even if slowed), governments and central banks were quick to pump liquidity into sectors either directly, through banks, and/or allowing tax reliefs. Not a typical economic textbook economic disaster. (Whether that is a good way to handle the situation or not, another debate.)
Also, forced digitalization helped our daily life executed in a matter of weeks (or days). Compromised, designed by MacGyver possibly, yet for most businesses at least governance, administration and some sort of basic internal communication remained working or just possible at all. That’s an incredible value if you think about it. In luckier industries, either no or decreased impact on the revenue side. The luckiest also benefited from - mostly temporary - windows of extraordinary opportunities.
And here let me share a story with you. How I did not buy a Porsche a couple of years ago.
In the midst of the previous financial crisis (2008-2009) I moved to Athens to work for a startup - just a few months ahead of the Greek debt pile problems surfacing and hitting the country. IMF, ECB, Troika, you know the history already.
Both for the startup and myself, that was a sort of golden cage situation: the company made revenues on the global market and growing heavily, myself personally also in a rather healthy financial situation - yet the surrounding climate conditioned (with good reason) for uncertainty and instability. You just could not really know what will happen, how bad it can be, and when things are turning around and start to get better. Well, I am a careful risk-taker in life anyway, but the perception of the general uncertainty around pushed me further into staying on the safe side. Similarly to many other people, I also reduced budget to mostly cover only the real pain points, appreciating any reserves - well, of course, it was mostly family who could still squeeze me out from my rather reluctant stance :)
A few weeks into the crises a quite common liquidity phenomenon emerged: luxury items appeared on the second-hand market at extremely low prices. Cars, for example. It was not uncommon to see Aston Martins, premium germans - or actually quite new Porsches on heavy discounts. I still remember the 3-4-year-old Porsche Caymans in the range of 20-25k eur. An absolute bargain.
Oh, man. I could afford that, no question. I did also know that the long term rational decision is to BUY the car, because there is no way that all countries go bust and remain there, not allowing me to sell the car for even more at some point. And even if I can not sell or all of us go into recession - is it that bad to stay in a Porsche for a few years which you got for peanuts?
For quite a few days (weeks) I was thinking and thinking, stopping at the car dealership every now and then - but decided against the purchase. I was influenced by a couple of things we now call in our method the irrational mindset. First, in such an uncertain period I valued security higher than usual. Second, I just thought it would not be right to buy a luxury car in such an environment - I admire its excellence and uniqueness, but rather for my own pleasure than for showing off. So irrationalities overwrote the otherwise rational option.
Okay, so what is the take-away from the story? How is that relevant to this late-pandemic period?
1. The decision-maker mindset.
However wishful we want to be about fast recovery, despite the financial security of most (large) companies, decision-makers are influenced by the uncertainty of the economy and environment. Yes, they have the cash in the bag. Yes, they know that current problems will go away in the mid or longer-term and things will turn around. Yes, they also know that investment in innovation would make sense to gain a competitive advantage.
Still, there is that little irrational bug whispering to avoid risks, stay on a much safer side, and play a defensive game - like most of the companies around you. Also, wondering about how clients or their clients may think right now, where they are with their decisions. Strong pressure to just avoid any risks - with a rather low barrier.
This aversion is purely based on expectations and short term experiences. A couple of signs proving that point:
2. The irrationality crack.
But. (There is always a but.) With the right relevant offer, you can still get your message through the risk-aversion attitude. There is often a chance to hit the right spots. If your targeted decision maker did not give up on life and is not overwhelmed with pure fire extinguishing, some of the extraordinary propositions may gain attention. Even though I did not buy the Porsche at the end, it was in my head and considered for weeks. A better sales approach would have pushed me through, to be honest :) The million dollar question is the WHY and HOW.
As we discussed in the previous summary, there is no one size fits all solution. Every company, every product, and organization is a different kingdom, requiring their own viable solutions.
Yet, please find a couple of common tactics for inspiration in such a reluctant period.
Hope the above provides you some new perspective and inspiration about how to think about the market now. Age of reluctance is natural - as well as your chance to actively shape some of the niches. Good luck to sell your Porsche!
As you may guess, AbilityMatrix is exactly focusing on some of these areas: we have gained several years of experience in international go-to-market strategies and execution, starting from finding product-market-fit to generating international leads in a highly agile and often remote-only environment. Click here for more information about our approach!
