Category Archives: Market Intelligence

The New Market Dilemma II: Vendors Need to Provide Vision — NOT HYPE!

The AI Crash is coming. The only thing we don’t know is how bad it’s going to be. Regardless, this time will be no different from Black Monday, the Dot Com Bust, or the 2008 Financial Crisis in that regardless of how bad it is, business must go on (or modern society won’t). That means we will need organizations to lead, and for that to happen, they need to start taking the lead now.

The solution today is essentially no different than the solution we we gave vendors for getting out of the 2008 Financial crisis:

  • continued new product development
  • continued spending on marketing and thought leadership (NOT AI HYPE)
  • continued workforce development
  • continued process improvement

Except the key now is to focus on real value and real capability, not BS AI just to cash in on the hype before the crash (and definitely not hallucinatory LLMs where they should never, ever, ever be used).

New Product Development

New product development that focusses on providing customers a better solution to their problems or a better fit for their desires at a great price point demonstrates:

  • you’re a well-run company and a little market hiccup (even if it is a deafening belch) is not going to hold you back
  • you realize new competitors are still entering the market every day with innovations of their own and the only way to provide lasting value is to continue to improve your solutions
  • you know the only way to make things better is to keep going, and
  • you take a level-headed approach to business with a plan to be around for the long haul

Marketing & Thought Leadership

Having the best product in the world is a moot point if no one knows it exists! This doesn’t mean you go crazy and overspend like you tend to do in a peak business year, just that you take the percentage of your budget you’d normally spend and spend it … wisely. Focussing on channels most likely to hit your target market still able, or willing, to spend, and you focus on core value and when you want to differentiate your offering, especially in high-tech or services, you focus on thought-leadership, not hype!

Marketing lets your potential customers know that you’re here for the long haul and still developing solutions that will help them lower costs, increase productivity, and maybe get out of this mess quicker. It’s also the only way to establish you as a market leader, which is key to not only being remembered when a customer has the budget, but getting the visit, request, and/or sale.

The reality is that, if you don’t market, you’re out of sight. If you’re out of sight, you’re out of mind. If you’re out of mind, you’re NOT being sought out when the customer has money.

Workforce Development

Your success all comes down to your people. Companies don’t build products … people build products. Companies don’t design winning marketing campaigns … people design winning marketing campaigns. Companies don’t think … people are the thought leaders. And if your budget is tight, you shouldn’t be adding too many bodies … when you need to add effective brainpower. And you do that by developing the staff you already have. (Which does NOT include giving them hallucinatory LLM access.)

If we’re truly moving in a knowledge and innovation economy, then you’re going to get a lot more out of educated, experienced, well-trained staff than just a body in a chair or cognitive atrophied idiots prompting hallucinatory Gen-AI LLMs that tell them to add rocks and strawberries-with-two-r’s to the mix.

The best developers can be 20 times as productive as an average developer (and can now produce a high quality, highly secure, new app at a lower cost than AI with current computing costs). The best inventors can produce 10 times as many inventions. The best thought leaders can produce market-changing ideas where an average person just produces refinements that might not even get noticed at all. Relatively speaking, if you’ve paid just a bit more to hire top talent, a few dollars on training can lead to a few thousand in productivity gains.

Process Improvement

Bring in an expert to do a complete review of your development, delivery, and operational processes to find opportunities for improvement that you won’t notice when buried in day-to-day operations.

This lowers your costs, which allows you to lower your prices, which allows you to grab more market share. You don’t necessarily have to hire a McKinsey Partner at 15K a day either … there are plenty of niche consultants who can jump in, do a focussed assessment, and net you great results for 5K a day in a couple of weeks … paying for themselves almost immediately.

The New Market Dilemma I: The Key to Avoiding the Worst of the Coming AI Induced Recession

I’d hoped I wouldn’t have to state the obvious, but every day we’re getting closer to doom and gloom as a result of continued over-valuation of AI companies that are losing billions of dollars a year with no plan for profitability by the end of the decade. Once they go public, a stock market crash is inevitable, and the only question is how bad will the AI crash be?. (If the trend line across the last 3 — Black Monday, Dot Com Bust, 2008 Financial Crisis — continues, the crash will be catastrophic and might trigger a simultaneous global default that ends modern civilization; but if we managed to learn anything from the past, it will just be Black Monday 2.0, which we’ll recover from in a couple of years.)

However, for the time being, the AI hype-induced economic inflation as a result of ridiculous explanations pulled out of a depth so dark that even a proctologist with a flashlight would have trouble finding the source, is getting worse by the day. It’s to the point where the only way that the current reality can be summed up is that we are living in a world of hallucinations (which is, of course, what Gen-AI is famous for).

So, when the crash happens and the fallout brings the next recession, depression, or global catastrophe, how are you going to get through it? And, more importantly, how can you prepare for it in a manner that will allow you to get through it? The answer now is almost the same as it was 20 years ago when we first discussed The Market Dilemma.

FAITH

But not faith in God, a God, Gods, what you perceive thy God or Gods to be, deities, supernatural beings, faith healers, shamans, or any other religious entity you might care to believe in. And definitely not faith in AI. (Although many of the tech bros are treating it like a God and, in the case of Christian religions, actively violating the second commandment.)

Faith in Humanity.

Twenty years ago, the answer was faith in human created systems designed to prevent, deal with, and correct problems that only work (and catch on) if people believe in them and have faith that things will get better with time. However, now that most systems are being redesigned to put AI at the core (where reliability is coin-flip), systems are not the answer — people are. People who employ good, old fashioned, Human Intelligence (HI!) while it still exists. (After all, if the majority of people in developed economies become dependent on Gen-AI, the cognitive atrophy will degrade our ability to the point that solving even simple problems will be nigh impossible.)

Systems, religion, and societies as a whole all fall apart when people lose faith. Just like the influence of a religion will decline until it eventually disappears if people stop believing in it and cease to make it part of their daily life, the strength of the system will degrade when people stop buying, selling, and participating in the system on a daily basis, and the strength of society as a whole will degrade when people stop believing in each other. Since we know a market crash is coming as a result of too much faith in the AI Hype which has led to overzealous buying, selling, evaluations, and run-ups that are unsustainable and can only lead to a crash, we need to return to our societal roots if we want to get through what is coming.

Not only do we need to return to business-as-usual pre-AI Mania, but we need to double down on Human Intelligence, Human Ingenuity, and Human Empathy. We have built, and rebuilt, societies from before recorded history without advanced tech (and definitely without BS AI — which is the Fastest Freeway to Financial Failure), and if this society is to continue, we must continue to build the foundations without unreliable probabilistic AI that has done more harm than good and use our intelligence to design the right systems and tech to allow for continued progress.

Progress that, as LEO XIV wrote in his Magnifica Humanitas, will require an updated human-centric social doctrine that safeguards humanity that focuses on truth, work, freedom, dignity, and shared responsibility. Respect for, and faith in, each other as we strive for peaceful progress and real justice. (Even though it was written by the Pope, it’s not a religious doctrine. It’s a human doctrine. The first real, significant, human doctrine since Pope Leo XIII published his Encyclical Rerum Novarum in 1891.)

This progress will come from those who don’t have, or promote, unrealistic expectations in what they can deliver, in the capability or value of the products and services their organizations offer, or their ability to deliver faster than is reasonable. Slow and steady still wins the race, and those who forget the mistakes of the past are doomed to repeat them (and run in circles). So take it day-by-day, make the best, human-led, decisions you can based on all the information available, and progress in a steadily forward fashion.

Another Reason You Can’t Wait Too Long for the CPO!

In our last post, we reviewed a post by the Great Garry Mansell on the rule of two where he outlined when an organization needs to hire a COO in order to continue to grow. We noted that you can use the same same logic to determine when you should hire the CPO, which should happen earlier than most organizations believe.

In a follow up post on the hidden tax, Garry gave us another great reason to hire a CPO early.

Basically, as organizations grow, they spend money to feel professional. It’s a hidden tax that grows over time that not only (greatly) reduces their EBITDA and profit, but also decreases their resiliency.

As Garry points out, as companies grow, they spend money to feel professional. They add tools because someone recommended them. They add layers because it feels grown-up. They add process because it looks like control. They add roles because it feels safer than making a hard choice about what to stop. And then they end up with three to ten times as many tools as they should (just look at the average number of SaaS tools in an organization), and spend two to three times as much as they should be. And the processes they add are not the right processes because they don’t have the expertise to define best-in-class sales, marketing, procurement, etc. processes because they don’t have a seasoned CRO, CMO, or CPO to define them. They hire people they don’t need to get stuff done that should be automated or simplified by better processes (that could only be defined by the right senior people who should be hired at the right time, and funds saved until they can be).

This is another reason why you need a CPO early. A CPO will vet not only the reason, but the ROI, of every proposed product/platform and prevent unnecessary purchases and, if something is required, find the best product/platform. They will prevent processes that don’t add value. And they can even help determine when hires are really needed or when better platforms and processes can delay the need.

Procurement will focus their spend on the things that improve outcomes. And they will happily cut the things that improve optics because optics don’t carry you through volatility. Cash and speed do. And Procurement will help you conserve cash and act as fast as it is prudent to.

As Garry states A “good company” that has protected margin and kept agility will outlast a “professional company” that has simply become expensive. And a good company is one that puts Procurement front and center. After all, as Coase clarified, Procurement is the reason a company exists!

Don’t Wait too Long for a True #2: The CPO

Garry Mansell recently wrote a great post on the a rule of two that dictates when the founder of a growing start-up needs to hire a COO to help manage the day-to-day to keep the start-up on the growth track. Garry labels the position the second-in-command — a true strong number two! But he should call it number one, because the role of this CEO’s right hand is to create pace without drama … absorb ambiguity and turn it into clarity … make the founder less central … and allow the organization to scale without burnout.

As Garry points out, when it hits the wall where the company struggles to scale, the company is in a state where it looks like the founder being busy, but not effective. It looks like things moving, but not compounding. It looks like decisions being made, but not sticking. It looks like the organization waiting for the founder to be present to progress. As a result founders often try to solve this with many more heads. Another manager. Another lead. Another layer. It can help in the short term … until the founder becomes the bottleneck for alignment across those layers. They don’t admit that the hardest part is not finding talent. It’s letting go of the belief that ‘only I can do it properly’. They don’t realize it becomes the thing that limits growth.

But when the organization has a good COO, she doesn’t just take tasks. She takes load. She takes ownership of outcomes … and they make the founder better by refusing to let everything sit in the founder’s head. And Garry’s right on all accounts.

The same logic more-or-less dictates when the organization needs to hire a CPO. Even if the CPO is the entire team. Once an organization is big enough for the founder to hire a COO, a true #1, one of the hats the COO inherits is the CPO hat — and takes over the Plague of Purchasing. But as the organization continues to grow, more and more divisions/teams need to buy more and more products and services of all shapes and sizes, which requires more and more decisions and analysis, more policy, and more decisions … which get made, not properly codified, forgotten in the heat of the moment, and made again. Just like when the organization reached the point it needed a CEO, we again have the situation where it looks like the COO being busy getting Procurement done, but not effective. It looks like things moving, but not compounding. It looks like decisions being made, but not sticking. It looks like the organization waiting for the COO to be present for Procurement to progress.

Even though the organization might only be spending a few million, and the savings might only be a few hundred K, which would barely cover the cost of a CPO, making it look like it’s too early to hire the CPO, but it’s the right time. Hiring early allows the CPO to define proper processes and procedures, define platform and automation needs, determine the right time to pull the trigger on platforms and applications, identify when category managers / senior buyers are needed and the team needs to expand, and because processes and platforms were built into the organization as it grew, the CPO will be able to delay hires longer than peers because Procurement will be efficient from the get-go.

All Good Plans Have This in Common!

There’s a number of things all good plans have in common, but one often overlooked aspect is one emphasized by Garry Mansell in his scaling plan is real post.

According to Garry, he can always tell within ten (10) minutes whether or not a scaling plan is real. Not because he’s clever, but because real plans have a particular smell to them … they acknowledge constraints. They name trade-offs. They make it obvious what will be sacrificed, and when.

And he’s right — because if a plan is frictionless, it’s not a plan. It’s a fantasy (and likely even worse than your RFP Fantasy). And many of these fantasies, as Garry points out, are immediately identifiable from their assumptions that everything is possible, nothing has a cost, everything is assumed to be easy, integration is assumed to be smooth, customers are expected to behave, and cash is assumed to cooperate. Anyone who’s been though a real startup knows that NONE of this is the case!

A real plan not only acknowledges constraints, but contains sentences about the harsh reality that are uncomfortable, sometimes very uncomfortable, to say out loud — especially for executives who believe that “leadership” is always maintaining positivity and exuberance. But the reality is that there are always risks, and if you’re trying to start something new, or grow considerably, there will be lots of big risks. And if you don’t acknowledge them, do what you can to mitigate them, and be prepared to work through, or at least around them, you won’t succeed.

This should not be a surprise, because, as Paul Martyn will be quick to point out, and I will be quick to echo, if you don’t acknowledge, and capture, your real constraints in your scenario analysis, you will not succeed. And if the most import constraint is left unspoken, other unspoken constraints will be implicitly captured in the constraints and costs that do get modelled, and the outcome will be determined before the first scenario is run. That’s not success, that’s doing everything possible to protect the status quo.

And you won’t scale anything that way!