Industry Snapshot – Reacting to Economic Downturn

A great example of reacting to economic changes that we use in our Strategic Thinking course is Joe Tucci’s reaction to a sales dip at EMC. Up until 2000, EMC dominated the market for failure-proof storage of huge amounts of data. It had the best technology and 75% of the high-end storage market with its product, Symmetrix which cost $3MM. It had great operations, organizational processes, and people—including skilled and aggressive salespeople.

In the first quarter of 2001, sales collapsed. Tucci, who had seen the collapse at Wang, did not believe his managers who said it was a one-quarter event—that purchases were just being postponed. Tucci felt it was more than that and wanted to get to the heart of the matter. He started having strategic conversations with his C-level peers, as well as the CEOs and CFOs at his clients. The cumulative answer was that the economic slowdown and excess capacity in telecom were forcing changes at his customers’ businesses.

Tucci used these conversations to get quick market feedback and make significant changes throughout his organization.

You can read about this story in significant detail in Confronting Reality by Larry Bossidy and Ram Charan.