The Paradigm Shift Lurking Behind the Recession - AvNetwork.com

The Paradigm Shift Lurking Behind the Recession

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OK, we’re still here. Now what?

It’s been a tough year for a lot of folks in our industry. The great shakeout is still ongoing, but we are getting a short breather. Three months of relative stability in the stock market has reduced the panic and knee-jerk reactions of our big business customers, but unemployment is at a 26-year high. Business travel and meeting excesses are not currently big news topics, but there is still no sign of the return of the big show. So you may ask, when will everything be back to normal? Never. Sorry. The recovery and whatever it will bring has been tentatively scheduled for next year. In the meantime, the changes are afoot in how customers will expect us to do business — if we can prove that our product is not a commodity.

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Evolution or Revolution?
As an industry, live events staging (along with the entire AV industry and its complementary technology and creative partners) is poised for a paradigm shift in how we do business. And while it has its roots in the simplification of technology, the fuse for big changes has been lit by the current recession. A paradigm shift is a transformation from one way of thinking to another. It is revolutionary change, and we are long overdue for one. Most of us will initially miss this shift just like the companies that didn’t see the demise of film slides 20 years ago. This oncoming revolution is all about the customer taking control of the business relationship. The new expectation is that technology should respond to the buyer’s needs instead of forcing the customer to adapt to the limitations of technology. This shift will manifest itself in three distinct areas:

How we sell. The future of integrated technology is collaborative selling. We have to sell outcomes, meet expectations instead of specifications, and adopt value-based pricing strategies. We have traditionally sold equipment (or rented, for the perpetually literal) and added intellectual contributions (labor) on a time and materials basis. It was simple and made it easy for the customer to compare pricing. In essence, we commoditized everything we do. The fundamental question that marketing must address is: “How does my product improve the customer’s condition?” We also need to convey, “What can we do for the customer that no one else can do?” followed by “What is that worth?”

Who we sell to. In AV staging, we treat our market channels as sacred. That’s why we get so upset when a company we perceive as our wholesaler sells to someone we consider our customer. It’s also why we are afraid to sell to a customer that might possibly be our customer’s customer. What we need to recognize is that some of our middleman customers (i.e., production companies) are not penetrating to the current decision makers of the corporations that need our services. We have customers that are not very good at reselling our services or, worse, they devalue them. We need buyers that can approve or anoint a long-term relationship with a strategic partner. If you hired a salesman that is no longer producing, wouldn’t you replace them? Isn’t it time we gave some of our customers the boot?

What business we are in. Intellectual capital is what is inside your head. Intellectual property is what comes out of it. When you hire an employee, you engage the opportunity to use his or her intellectual capital. When someone hires your company, they are paying for access to your intellectual property. It does not take a lot of intellect to sell or rent hardware. To use equipment correctly takes some smarts. To use it creatively is worth more than the cost of capital. And to truly innovate is priceless.

Not every customer needs true innovation all the time. Sometimes a projector rental is just a projector rental. Companies that are setup to innovate will lose money on every rental. Rental companies will fail when they try to innovate. Sometimes the real value is in reusing an old idea, but even that can be a more profitable sale than we have been settling for lately. In the new economy, you will need to decide which business you are in: hardware or brainware. In either case you still need to convince clients of your value.

Summer of 2009 is the eye of the hurricane. It is the relative calm before we pass through the rest of the storm. We won’t really know that the recession is over until it is long gone. That is why we have to prepare now for the postrecession economy — whatever it will be. Whether you believe in this paradigm shift or not, you can hardly ignore the need to hit the restart button on your business. The one thing I think we can all be sure of is that things will never be the same.

Tom (T.R.) Stimson, MBA, CTS, is president of The Stimson Group, a Dallasbased management consulting firm providing strategic planning, market research, and process management services to the AV industry. Stimson is the 2009 President-Elect of InfoComm International, a member of the ETCP Certification Council, and keynote speaker for the Rental & Staging Roadshow. Contact him at tom@trstimson.com

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