Part II: Cash, Pain & 20%
"Twenty percent" seems to be a figure that comes up a lot. When I talk to companies, VCs, and other folks out in the tech/wireless space, it seems 20 percent is the "default" staff and/or expense reduction. On an individual standpoint, the pain is obvious, as I’ve had friends and relatives lose their jobs as part of this 20 percent realignment. However, on an organizational realignment basis, the comments that I’ve gotten back have been somewhat surprising.
In a bunch of cases, in companies, especially fast-growth companies, which have had to execute the "20 percent whack," people have commented that the changes did not have the organizational effects that they expected. Either folks say their company continues to function well, or, in more than one circumstance, execs have told me that their companies are operating better after their reduction.
There are a couple of reasons for this. One, if companies ramp quickly, spending lots of cash, they invariably have some hiring mismatches. Maybe there are hires that are great performers, and somehow end up in the wrong company culture or job function. Or they are hires who have told a great story (all the great stuff they’ve done in their six companies and eight job roles they’ve done in four years), who also don’t pan out. A lot of times, the political jockeying in high-growth companies causes a situation where internally focused process and activities drown out "getting stuff done." Similar behaviors happen on the expense side of the equation, from which R&D projects are funded, to business development efforts, to facilities, to marketing spend, etc. Nothing like a crisis to realign this focus and get people back on track, both for their individual efforts and the cash they spend on behalf of a company.
For folks I know who have now ended up in the job market, there is still opportunity in the tech/wireless world, although everyone is forced to do their own personal 20 percent, an individual personal retrenchment and focus. One friend is now on his own, but already has several clients in the media space. A relative of mine voluntarily left the hardware component company where he had been for several years, taking a lateral job at a defense contractor with more stable prospects. Everyone I speak with, whether remaining in their role, or looking for something new, is doing their own evaluation, their own personal 20 percent, evaluating their own expenses, cashflow, and plans, as they are all the “CEOs of themselves.”
Assuming there is not a further meltdown, which unfortunately is not an assumption any of us are able to make today, this process, albeit painful from an organizational and personal level, seems to be recognized at a visceral and emotional level as necessary and appropriate, as the system and individuals self correct. And as much as many of us may wish to bemoan our situation, we are in an industry that is continuing to innovate, continuing to generate excitement and future growth opportunities: wireless, communications, computing, and convergence. As much pain as we are all going through now, it’s still a much better place to be than dozens of other industries out there.
— Jeff Belk is a principal at ICT168 Capital LLC, focused on developing and guiding global growth opportunities in the Information and Communication Technology space. He can be reached at [email protected]. Special to Unstrung