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hitz

Lessons from the Last Crash

Posted by hitz in Dave's Blog on Oct 4, 2008 11:03:34 AM

In the past two weeks, I've had lots of people ask me how I think the financial meltdown will affect things. I don't have a crystal ball, but I thought it might be interesting to look back to the tech crash in 2000/2001.

 

I remember one of our executive staff meetings in particular, where it became clear how bad things were getting. One of the topics of the meeting was how sales were going, and Rob Salmon, who ran world-wide sales at the time, described an ugly picture. We were still winning deals, at least according to the lower level decision makers, but when it came time to collect the purchase order, we would find out that the CFO, or even the CEO, had frozen the funds at the last minute. It wasn't that anyone else was taking the business: the business was simply disappearing, or at least being delayed.

 

The executive staff meeting continued, and an hour or so later we had a status update on a big business software project that we were working on. I can't remember exactly what it was—ERP or CRM or something like that. Anyway, about twenty minutes into the conversation, Dan, our CEO, interrupted and said, "I don't think it makes sense to do this right now. It's just too expensive, and given the economic situation, too risky." The IT people giving the presentation said, "But it’s been approved. We already committed to our vendor!" Dan's response was, "It's not too late to cancel." That was that.

 

From the other side of the room, Rob Salmon groaned. He said, "I bet this is exactly the same conversation that is going on at our customers, right before they tell us that the deal we thought we had won just disappeared.

 

That was in 2001, but I have a hunch that the same conversation is going on in boardrooms all around the country. All around the world, for that matter. Remember, it's only two weeks ago Monday that Lehman collapsed. It seems pretty likely that CEOs and CFOs will reconsider, or at least delay, any big decisions that they can, even if they haven’t told their staff yet.

 

I’m curious about peoples’ experiences at different companies. What has the boss said so far?

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