We became too expectant of high margins. Not to mention becoming obsessed with entrepreneurial behavior; easy funding, market-capitalization envy, and the ”drive-by IPO” culture. With returning stability, we can see the errors of the worst excesses, and must reform our view of the future. Most markets will deliver medium margins at best, and significantly slower – although steadier and more controllable – growth. We can no longer expect the extremely cyclical market behavior that allowed us to rely on fat boom-time profits to underwrite the leaner periods. Instead, we must now adjust our businesses in real time to meet prevailing market conditions.
As an organization, we have confronted the changes in the business climate. This includes those changes that have taken many by surprise, especially the rapid shift of business to Asia and China in particular. And we have safeguarded the profitability of our company by doing so. I believe all companies have the ability to tackle these issues, and there are indeed further signs of companies getting to grips with reality’s arrival in our high-tech back yard. But inevitably some will not, and the consequences of such failure will be disastrous. The nettle must be grasped, and the sooner the better for all of us. Ultimately, it is this drive to regain profitability that will end the recession in our industry.
I guess, as technology pioneers, our faith in innovation may have compromised our dedication to implementing sound business practices. However, the „silver bullet“ philosophy is less valid today than at any time in history, and we now have to face business realities. The easy funding era created high-tech moguls as easily as lottery millionaires – with just as much long-term credibility. Real business is not like this – ask any of the formerly derided ”old stocks”. They have been there for generations, managing growth, confronting fads and transients, delivering steady shareholder returns. At the height of the high-tech boom, young technological upstarts, as darlings of the markets and investment houses, bumped many of these companies out of the top rankings of stock exchanges around the world. But now it seems that the old timers are returning to favor. They would have been foolish to have failed to react to the events on world stock markets, but experience and sound practices may have helped them maintain greater loyalty to their customers than to the markets and their vociferous analysts.
I would call this real customer relationship management. The best thing we can do for our customers is to be here for them in the long term. And to achieve that, we must recognize the basic business practices that focus our attention on tangible returns.
Ian McEvoy
President of Universal Instruments
