In early March, we attended the annual Global Electronics forum and came away with a number of great insights into how top-tier high tech and electronics (HTE) companies are looking to survive this recession and then thrive in the next upturn, when it comes.
Just to give you a sampling of who was there and what they talked about, Dell’s Paul Prince, the CTO for enterprise systems, led a presentation on “Coupling Hardware and Silicone Design for More Powerful software Enablement,” and Johan Van de Ven, a senior vice president for Philips Consumer Lifestyle, led a panel on the “Thoughts on Next Steps in the Ongoing Digital Revolution of Consumer Electronics” There are too many other great presentations to cover here – just know they were all excellent.
As we heard these presentations as well as feedback from the panel discussion about the Global Electronics Industry – with executives from austriamicrosystems, Celestica, Dell, Fairchild, IBM, Philips and McLaren Electronic Systems – some clear themes about our current worldwide economic environment came to the fore.
First, worldwide high tech and electronics companies are viewing today’s markets as uncertain and unpredictable and this is causing tremendous difficulties for all organizations to plan and forecast. In this environment, companies are placing a premium on gaining the ability to have greater visibility of what is going on, whether that’s with their customers, suppliers or worldwide operations. They want to reduce the dysfunction that’s produced by silos within their operations and in interactions with outsiders. Anything that can reduce the latency of decisions is of high value to the organization grappling with the rapid fire pace of change now occurring.
Secondly, reducing costs across the operational value chain is a high priority activity at all HTE companies. Consumer demand for the entire range of digital/electronic products continues to be softening or declining at a rapid pace, leading to price erosions and thinner margins. Any operational improvements that reduce costs help counter these trends.
Thirdly, the time to work toward gaining market share with new or improved products is now. Most of the companies continue to maintain their investments on Innovation, as well as drive increased levels of customer intimacy, especially in these tough times. Companies that can take market share through well placed product offerings, and differentiated customer service, stand to gain the most when the upturn occurs.
A recently released McKinsey research confirms that insight: “About half of the companies that entered these downturns as leaders—the top 20 percent—ended up as laggards when the economy regained momentum.” Interestingly, the laggards were companies that cut employees and other SG&A expenses. And leaders in the upturn tended to be those that engaged in high levels of acquisition, according to McKinsey.
Clearly, McKinsey’s findings offer real imperatives to do what it takes to make continued investments in the growth of your HTE company and work to identify future trends. Whether that’s improved management or new technology adaptations, there’s room for improvements and investments for the next up cycle.
We are going to focus future blog entries on our views of how companies can make implement recession-beating practices and work toward emerging as a leader once the downturn recedes.