Executive Summary

The tech industry is undergoing a fundamental and cyclical transition. While individually painful, it’s systemically healthy to clear away rot and make room for new and better opportunities for startups, investors and ultimately, customers. But it requires a back-to-basics mindset, with fundamentally different skills and perspectives than “move fast and break things” and “growth at all costs.”

While the cycle isn’t new (to many of us), there are a few significant differences this time around:

1.      Money beyond scale inflated all kinds of operational costs from talent to services to marketing channels and more; blunted execution skills; muted performance measures and distorted priorities. Most importantly, it distracted teams from market focus. People and companies must pivot when runways are longer, funding scarcer, customers more risk averse and hype less acceptable. Money, resources and attention must be on sustainable fundamentals.

2.      A generational run of success for investors, founders and leadership teams made the downshift even more shocking and navigation more complex. Today’s founders – especially those coming from the Big Tech, Big Vision environment – must adapt to a pioneer, hands-on culture with all the changes (and detail) that entails.

3.      AI is hitting everything, everywhere, all at once. Previous eras of innovation were triggered by foundational developments (client/server computing , mobile devices, cloud platforms, in-memory processing, no-code, etc.) that delivered orders of magnitude improvement in performance and created entirely new applications, categories and markets. Now, AI will not only enable simultaneous development but also deployment up and down the “layers” of technology. This has the potential to unleash unprecedented opportunity – and unfathomable chaos.

This is a unique moment for companies to recalibrate their market readiness, strategies, priorities and skill with a renewed focus on value, relationships and orchestration. Here’s how you as company leaders can take advantage of the “in-between” to strengthen, repair, reposition, refund, and prepare for the coming tech renaissance. I’ll keep the focus on enterprise tech because that’s where this applies most. However, much of this applies across B2B tech categories.  

A quick look back on how we got here: The age of recklessness

Money beyond scale accelerated access to talent and markets and built instant visibility. It also inflated all kinds of operational costs from talent to services to marketing channels and more; blunted execution skills; muted performance measures and distorted priorities.

The red flag was clear when companies promoted funds raised over revenues. This is a problem for customer focus and delivering value - potential vs. actual.

The impact on individual teams and companies:

Because companies scaled so fast, there was little need for inside, ”builder” experience, particularly at the senior levels. Hiring was almost unlimited, with plenty of money to bring on specialized inside positions and engage external resources.

This not only inflated the market, it also nipped the reach of scrappier, more conservatively funded and bootstrapped companies. This is especially true for European startups who had little concept of the money required to break into the US -- how much to spend, how much to pay and how to incentivize teams.

The (inevitable) reckoning: The end of the runway  

While painful, tech downturns are a necessary and cyclical occurrence (87, 99, 08). But with the industry growing exponentially for so long, an entire generation of founders and investors only knew the good-and-getting-better times. They simply never experienced a downturn. Covid was a long-term lesson in resilience, but financial and resource belt-tightening was short lived.

As recession loomed (and then inflation ballooned), buyers became more cautious about tech spend, valuations changed, and funding dried up. Executives and managers were distracted by their own personal financial impact, losing the business priorities and customer focus in the process.

Layoffs were virtually unknown among “successful” companies, demoralizing those who lost jobs and stressing survivors who were only just recovering from pandemic pressure. And since the shock of the first wave of layoffs, management is now quick to shed positions. Many teams learned that they were bloated.

With funding at a standstill and IPO markets essentially frozen, companies have been treading water. Forward thinking, outward thinking, best thinking is nearly impossible when fortunes and expectations change so drastically.

Recalibrate now: The unique moment to “build back better”

Ah, but this is the moment for winners. The reckoning clears the way for a stronger foundation.

Many of today’s biggest successes emerged from the Great Recession (Dropbox, Asana, Salesforce, Slack among them). The next generation of leaders coming from Big Tech certainly bring the best in big vision and execution at scale. But not all know how to navigate the business model of the first fifty (or even first 500) pioneers effectively.

Recalibration requires different priorities, programs, processes and skills. This era is all about the small stuff, demanding hands-on execution and close-up detail. It prioritizes getting things done. It forces creativity when you can’t simply buy access. It involves humble listening to customers, partners, and other influencers. (But don’t get distracted here by the shiny - know what your unique value is.)

This is an especially good moment for earlier stage (or more conservatively funded) startups who know how to be agile and frugal. The pioneer mentality can mesh with the sophistication of the moneyed visionaries to make something far richer, more valuable, and more sustainable.

Here are six areas to recalibrate in this “in-between” moment:

1.      Efficient spending. The priorities are durable foundation and runway preservation. Demanded by current investors and required for future funding, it’s just good business sense.

2.      Intensive engagement. This is the window to revisit customer and partner requirements and identify market gaps (and your own shortcomings).  You’ll build the formula for innovation, co-creation and proof of value, strengthening relationships with customers and partners that allow you to upsell and expand your footprint (and their commitment).

3.      Clear and compelling value prop. No one needs frivolity now. Address the need, define the problem you solve, explain what you deliver and why you’re best qualified to do it. Most importantly, create a sense of urgency in the negative consequences and risks of status quo.

4.      Simplified, self-service selling. Arm sellers with smart tools and customers with clear acquisition processes. With point three above as your business case, map out how easy it is (and what’s needed) to evaluate, buy and use your solution. Revisit the journey from discovery to demo to onboard and beyond.

5.      Ecosystem reach. It’s more effective to build communities and sell through and with partners. The adage that applies: “If you want to go fast, go alone. If you want to go far, go together.” As a leader, invest in efforts to recruit and enable your satellite partners. As a partner, push in to stand out. You need to hook the platform reps and the customers. Invest in activities that model what you need. Show how you drive sales and brand for the “whole.”

6.      Expectation management. Surprises hurt; opaqueness kills (morale, relationships, credibility and more). You need relentless clarity on the why of strategies, justification and outcomes of initiatives and assessment of (all kinds of) performance. It requires continuous communication to and with all stakeholders from the board to the front-line, to customers and partners and with analyst/influencers.

Rebirth: Ready to catch and surf the next waves

The result of this stage is a successful and stronger rebirth. The cleanup and clarity of messaging, skills, processes, operations and ecosystem provides the foundation for exponential opportunity and growth.

That’s what investors want to see for next-round funding and raises valuations; what customers benefit from in stickier solutions and demonstrable ROI and what your people feel good about in joining, building and staying in your company.

One key make-or-break factor is effective orchestration - making sure that teams are in sync with each other; journeys are well-defined from buyers to customers to partners; actions are coordinated, measured and adapted; insights captured; and communication continues all around.

This is the immediate goal for 2024 into 2025.

The rebirth will be fueled by omnipresent AI as an enabling capability inside platforms, networks, apps, processes and operations. It’s disrupting today’s solutions, models and markets, much like mainframes to client/server and enterprise tech, like the internet and mobile devices to ecommerce, how in-memory processing begat large-scale analytics. Think of AI’s fuel as the movie “Everything, Everywhere, All at Once” and you can see the scale, speed and dimension of innovation.

This back-to-basics commitment is what every company needs to do now, whether the high-flyer, established gorilla or next-stage startup. Everyone must prepare for the coming renaissance, which will be faster, less predictable and more dynamic than anything we’ve seen before.

Today’s recalibration is the bridging moment. What’s the roadmap? Stay tuned.

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About the author:

Bonnie Ravina is a 30-year veteran of business technology and founder of Full Circle: 360 Marketing, which specializes in go-to-market strategy, sales enablement, thought leadership and customer programs for enterprise tech startups and scaleups. She has worked with more than three dozen software and service companies around the world. Bonnie also served as an operating partner for Paris-based Ring Capital, where she developed its portfolio programming and support and advised on US market entry. With a current focus on startup advisory, Bonnie consults with exec teams and delivers workshops and speed coaching through accelerators and other communities. She began her career as a founding member of SAP America’s management team, where she ran marketing and served on the global launch team. She lives in suburban Philadelphia.