Take it from Lou: The marketplace is the driving force

by Sam Lightstone

in Business Development, Careers, Project Management

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Sam Lightstone

Sam Lightstone

Distinguished Engineer at IBM
BIO: Sam Lightstone is Distinguished Engineer for relational Cloud Data repositories as well as co-founder of IBM's technology incubation initiative.He is author or several books, papers, and patents on computer science, careers, and data engineering.
Sam Lightstone

Wanna be a lean mean hightech machine? Listen to Lou. 1990 was IBM’s most profitable year ever, with corporate revenues of $69 billion. Only three years later, in 1993, things had changed dramatically and IBM was tragically staggering under its own weight on a path to lose $16 billion. The end was near, and IBM was on its way to suffer the same fate as Steller’s Sea Cow, the Irish Deer, and the Caspian Tiger when John Akers was removed as CEO and Lou Gerstner was brought in, as part of a clear salvage attempt. Gerstner left his position as CEO of RJR Nabisco, with the grand challenge to resuscitate one of the world’s greatest technology companies, a company that, despite serious financial difficulties, was still pulling in about $60 billion. The first thing Gerstner did was assess the root causes of IBM’s fall from grace— and there were several. Among his chief observations: IBM had become an insular corporation accustomed to telling other companies what they should buy and investing heavily in advanced technology without clear market goals. To shake things up at IBM Gerstner instituted a set of mantras, guiding principles for everyone in the company to follow. Gerstner’s #1 principle was perhaps the most poignant:

The marketplace is the driving force
behind everything we do.

Gerstner didn’t mean that IBM would no longer invest in speculative technology unless existing customers were demanding it. He meant that, from hardware to software to services, everything that IBM was to do from that point onward needed to be grounded in their best understanding of the market direction and requirements. The market would drive IBM, not the other way around.

Great innovations, brilliant new technology, and breakthrough ideas are truly great only if people use them and find them valuable. Marketing and hype help to spin that perception, but they provide only a bias in the process, not the substance. Ultimately, consumers are the real decision makers on whether products have merit. It’s a profound and subtle point: A great idea ahead of its time is not a great idea—it’s a useless one. A profoundly innovative engineering advance with only microscopic benefit? Who cares. Similarly, a great idea without great execution, usability, and reliability will flop. Everyone who works in software, from the product strategy planners to the function testers, needs to understand this. Understanding that good ideas alone aren’t enough is the single greatest epiphany an organization can have toward collectively channeling energies into a deliberate successful software R&D development cycle.

As a leader, your job is both to operate with that knowledge and help others internalize it. If you find yourself in an organization that “just doesn’t get it,” continuing time and again to invest in bad ideas that are out of synch with market needs, you can help establish your leadership by explaining how the right course corrections can act as a catalyst for product success. Failing that, you might be in a losing organization, and your career would be better served somewhere else. No organization makes the right decisions all the time, and a few missteps are healthy. But constantly being out of touch with both where the market is and where it’s heading are hallmarks of an organization sailing off the end of a precipice to its peril.

If you look at any large-scale software development effort you’ll inevitably find people working hard on features that have tiny and almost insignificant benefit to the end user while deferring other features of far greater urgency and consequence. This happens because engineering teams get hyped to work on exciting (to them!) features but not necessarily those that are most important to the market (what really matters). Cool engineering projects don’t make good business based on the cool factor alone. As software developers we are not our own customers. To help your own career, avoid working on projects or features with microscopic benefit no matter how interesting they may be in terms of scientific computing or cutting-edge technology, and help others around you get like minded.

Lou was CEO of IBM from 1993-2002 and set a tone of transformation that steeled one of the world’s largest technology companies, empowering it for a decade of growth. In 1990 IBM revenued USD 69 Billion.  By 2001, Lou’s last full year as CEO it had grown to USD 83 Billion, and by 2012 it had USD 104.5 Billion. Mr Gerstner, not too shabby.



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