A former colleague has a favorite story he likes to tell from his IBM days. I think most people have heard of the phrase ‘nobody ever got fired for buying IBM’, even though today you might more likely substitute Microsoft or Google. In fact, people did get fired for buying IBM and it’s instructive to understand why. The particular example the ex-IBMer relates to happened in early 90’s and involved a large enterprise company that decided to pilot what was then a new product for IBM called Office/2. Running on the equally ill-fated OS/2, Office/2 was a groupware product broadly comparable to Lotus Notes or MS Exchange today.
With some considerable confidence, the customer decided that to trial its first ever use of client server groupware, they would choose the executive management team. The trial did not go well and to add insult to injury, IBM Office/2 was ‘withdrawn from marketing’ – a delightful phrase synonymous with ‘canned’. Removed of any possible way to fix the problems or move forward now, the hapless customer project manager in fact found himself ‘withdrawn from employment’, and in frustration even physically assaulted the IBM Systems Engineer.
All companies have their ‘Edsel’ moments. Successful companies are the ones that recognize their mistakes quickly and move on. Typically this means rationalizing product lines. Getting out of markets can be as important as getting into markets. In fact, product lines do not even have to be unsuccessful in the market’s eyes. They can be very successful, but if they fail to make a profitable contribution, or are otherwise deemed non-strategic, they can be axed at the drop of a press release.
In these circumstances, customers have little, if any leverage. It’s unrealistic to think you can change the course of industry titans like Microsoft, Oracle, SAP, IBM, HP or Google. The chances of any of these companies going belly up, is of course, rather slim (but still finite), but if they axe a product line upon which you depend for some reason, then the impact is the same.
Conversely, smaller companies are typically focused around a single product. The risk of company failure is clearly higher, but equally clearly in my mind is the additional security a customer enjoys by virtue of the fact that the vendor is 100% focused on their market, and are of a size that the customer really does have leverage over them.
I’m not saying don’t buy IBM or any other industry giant, but I am saying that many of the oft-quoted concerns about smaller vendors are overblown. Having worked for both large companies and small companies, I just don’t see small companies as being inherently riskier for customers. Size really doesn’t matter.
UPDATE September 30th, 2010
Interesting article that covers Microsoft’s exit from the blogging software space and advising customers they have just six months to migrate off, and notes a number of other cancelled projects. Even buying from Microsoft is no guarantee of longevity.
I agree and here is my inference “Small => 100% Focus on the area of business => Quality service to customers with great innovative ideas => Happy customers => Success.” And in small company the strategy is always to scale and grow as trusted organization in the focused market and hence “Getting out of markets can be as important as getting into markets” is not there or very rare
But I think being successful is important to be able to get that motivation to be more successful