Strengthen the Strong

An article in the Feb. 2, 2009, issue of Newsweek puts forth a very difficult-to-imagine supposition—perhaps you may have read it. The article, “Silicon Valley's Fork in the Road,” starts out by asking the question, “Could Silicon Valley become another Detroit?” Now some of you who've been in the technology industry for several years might think this is a totally ridiculous analogy. How could Silicon Valley be compared to the auto industry? After all, the U.S. automakers are in tight financial straits primarily because they designed and produced vehicles that did not address the wants and needs of the driving public. How could this scenario possibly be likened to the technology-driven companies in Silicon Valley that are the world leaders, for example, in the design and development of 45-nm and smaller ultracomplex chips?

Even so, some in Silicon Valley are deeply concerned “that unless we boost government spending on science, technology, engineering, and math—STEM in industry jargon—we will be unable to keep up with countries like China and India. At some point, companies such as Apple, Cisco, HP, IBM, Microsoft, and Oracle could be eclipsed by foreign rivals, just as Ford, General Motors, and Chrysler have been,” as stated in the article.

A top executive at HP Labs was quoted in the article as saying, “the rest of the world has been rapidly boosting spending on science and technology while the United States has been, in effect, scaling back.” Reducing spending on technology, while initially impacting the high-technology sector, will ripple down quickly to other companies that support or depend on this industry for their livelihood. In the near term, these companies must look inward to make sure everything is being done to optimize their operations to not only remain profitable, but also to keep the doors open.

No matter what industry you're in, there most likely are one or two winners or about-to-be winners that make up the bulk of your sales and profits. If these business units address the needs of today's markets and appear to be poised to do so into the near future, then they are worthy of your utmost attention. You need to provide them with the proper tools to compete successfully in this ever-changing world: resources and money. With the right team in place, enough financial backing, and a forward-looking plan, your business has a good chance to prosper even in these most difficult times.

The decision to cut non- or low-revenue generating business units is not an easy one to make, especially if you have been the primary driving force behind them for quite some time. As once quoted by a singing cowboy in a long-forgotten movie, “You got to know when to hold 'em, know when to fold 'em.” This adage applies to any business.

If a business unit is not successful, management must bite the bullet and pull the plug, freeing up much needed capital and resources to grow and improve the remaining profitable ones. Continually throwing money and people after losers just doesn't make sense.

As stated in the title, management must concentrate on strengthening the strong. A profitable business unit can be made more successful if the proper investments are made in it. You just have to make that really tough, gut-wrenching decision to cut back on the losers and concentrate on the strong.

Paul Milo
Editorial Director
[email protected]