On Growth

A Year for Leadership

The executives who succeed in 2010 will be the ones who make the tough choices that position their companies wisely.

Welcome to my inaugural column, the topic of which I know is top-of-mind for all IT services executives coming out of what has been an especially trying year: How to drive growth in the ferociously competitive and mind-numbingly-fast changing IT services market.

For those unfamiliar with Revenue Rocket Consulting Group, we specialize in working with small-to-midsize IT services firms, helping them develop both organic and acquisitive growth strategies. Of the almost 200 companies with whom we've worked, the vast majority have been Microsoft partners throughout the United States and Canada. So it's fair to say we have a pretty good handle on the Microsoft ecosystem and what it takes to prosper in the market. And from what the prognosticators are telling us, it looks like in 2010 and beyond we'll see the IT services market rebound as corporate America loosens up its purse strings to buy the services they'll need to win their own wars. So what is it that IT services executives need to do to get in the game for 2010?

It's time for true leadership. I recently came across this oft-quoted pearl of wisdom from Peter F. Ducker, arguably this country's most influential management guru, to explain the difference between management and leadership: "Management is doing things right; leadership is doing the right things." For the last quarter of 2008 and all of 2009 most IT services executives took a hunkering-down approach to their business -- that is, doing right the things one does in a down market, such as focusing on existing customers, reining in costs and so on. Our advice for 2010 is to manage wisely, but to start thinking more aggressively about the right things to do.

Focus your firm. In a word, the most fundamentally right thing to do is specialize. What this means is to own a segment of the market positioned at the intersection of a technical and vertical market and drive your company to be the No. 1 or No. 2 player in that segment. It takes disciplined and far-sighted leadership to avoid the temptation to extend beyond your company's intellectual domain and to resist the lure of easy dollars outside this domain. It's the one thing we continue to proselytize to our clients, and the reason is simple: Just because corporate coffers are opening up doesn't mean that customers will abandon their cautious, tight-fisted ways. The IT services companies to whom they award their business will be those that can speak from a position of authority, with unqualified expertise and demonstrable proof of performance.

Build out a business model to fill this focused market. This means sell into this market with a full set of services offerings. One of the benefits of specialization is that it allows you to embrace a full lifecycle-services model for your clients. You can think of this as a three-legged stool, consisting of an advisory service for big-picture strategy work; technology services, providing the nuts and bolts of application development and implementation; and maintenance and support of both infrastructure and applications. It's the model that allows you to get deeper into your clients' businesses with a broader range of services that ingratiates you to the point that you generate more recurring revenue and make it tougher for a competitor to get any traction.

Differentiate, differentiate and differentiate. The simple truth of marketing is that the broader you define your offering, the less distinctive you'll be in the market. The less distinctive you are, the longer, harder and more expensive it'll be to win business. The more defined you are to a specific segment of the market, the more you can distinguish yourself from the crowd and win them over with your expertise, insights and experience.

It's really that fundamental.

Whereas 2009 was challenging because companies cut back on spending, 2010 will be equally -- or even more -- challenging because the competition for these newly minted corporate budgets will be fierce. This year's winners will be those executives who lead their companies in doing the right things to make the tough choices that position their companies wisely.

Next Time: A New Managed-Services Opportunity

About the Author

Mike Harvath has spent his entire 30-year career advising partner companies on implementing winning growth strategies and facilitating mergers and acquisitions. As president and CEO of Revenue Rocket, he and his team have advised over 500 partner companies on reaching their growth goals.