It was the last quarter of calendar year 2008 and the signs of a business slowdown and the impending recession were in the air. While other companies did the usual - cutting costs, including marketing and sales expenses, mentally preparing for flattening revenues and beginning to explore new markets and services - Dr. Anand Deshpande, Founder and Managing Director, Persistent Systems, adopted a different approach.
He figured that this was the best time to meet customers, though not his usual contacts at the VP-Engineering level. He also decided against the standard technical and project related discussions. Instead he met up with CEOs and tried to understand how they viewed their businesses and what their current priorities were. This process resulted in around 150 CEO meetings and gave him invaluable insights, as summarized below:
- CEOs focus on a few important business priorities directly and completely delegate other issues. Further, conserving senior management bandwidth is important for a CEO.
- CEOs are more focused on growth initiatives than mere cost control.
- CEOs are interesting in solving their customer’s problems fully, not piecemeal. The CEO looks towards customer relationships from a long term perspective.
"We reasoned that if we had to get the CEO’s attention we had to solve problems that are directly relevant to him/
her. That means to focus on the growth side of the business."
- Dr. Anand Deshpande
Founder, Persistent Systems |
|||
Next, Deshpande and his management team sat back and thought about what this meant for their business. In his words, "We reasoned that if we had to get the CEO’s attention we had to solve problems that are directly relevant to him/her. That meant a focus on the growth side of the business. Second, it meant that in projects where we were engaged at a level below, we must take complete ownership for the engagement so as to free up bandwidth for the customer."
As the management at Persistent mulled over these implications, they came up with the following ways to serve customers better-
- Offer total solutions by not only augmenting Persistent’s own capabilities but also by partnering with other players in the ecosystem to acquire the full range of competencies that would help offer a complete solution.
- Demonstrate ownership, and interest in long term relationships, by offering a risk/reward proposition to customers.
The rationale was simple – at a time when customers
were hurting, what better way to reiterate your
commitment to them. But that was not all; as a
business proposition it made a lot of sense to
Persistent. If they could pull this off, then they could
build non-linearity into their business model and, more
importantly, Persistent could associate with customers
in transformational initiatives.This year, the company has proactively worked with its customer base and has seen an increasing interest for projects that are governed by risk/reward contracts.
|
|||
Therefore Persistent mooted this idea to its many existing customers and found, unsurprisingly, that it appealed to them. This year, the company has proactively worked with its customer base and has seen an increasing interest for projects that are governed by risk/reward contracts. Deshpande is the first to admit that it is too early to predict the impact of this move on his company, as they do not have sufficient data points to validate how the market will accept it.
Persistent has prepared itself by understanding the contours of such a model, and mitigating possible risks. He agrees that legal frameworks need to be more robust, and that is something the company has focused on.
|
|||
However, the initial results are highly encouraging and Persistent System’s preparedness for working with such models is increasing. According to Deshpande, the general perception that such models entail assuming a lot of risk is not necessarily true. Persistent has prepared itself by understanding the contours of such a model, and mitigating possible risks. He agrees that legal frameworks need to be more robust, and that is something the company has focused on. Persistent has also consulted with companies in other industries that work on such outcome-based models.
In conclusion, Persistent has differentiated itself not only through its offerings and capabilities, but by ferreting out game-changing opportunities during adverse times that could possibly redefine its future.