Look for new opportunities
When NetApp hit the tech crash, obviously people freaked out across the industry and went into safe mode.
“A lot of people look at a downturn and they say, ‘That’s the time to dig in. Whatever you’re doing, hunker down, and do it a little more efficiently,’” Hitz says. “I think that can be a big mistake. A downturn of the magnitude that we’re seeing now and certainly for tech companies, the dot-com crash, it’s almost certainly a new era. Whatever the key strategic stuff you were doing before, that has to be different.”
NetApp’s vice chairman, Tom Mendoza, always told Hitz that customers only open their wallets when they’re in pain, so while you may look out at the market and say people aren’t going to spend money right now, also remember that they’re in pain, so you have to find their pain and then show them how you can ease it.
“Downturns create a lot of new pain,” Hitz says. “A whole bunch of customers who whatever they were doing before, it’s not working anymore, and all of that pain they have is now opportunity.”
You need to talk to both your current customers and people you’d like to see as customers in the future.
“Hang out with them,” he says. “They’ll tell you. The interesting thing about customers is customers often will tell you what they wish you would do, and when they do that, I think they’re often wrong.”
He acknowledges that you’re supposed to say that the customer is never wrong, but sometimes customers aren’t quite sure what they need.
“They’re not necessarily the expert on how your product works or how your service should work, but dig behind the thing they tell you to do, and say, ‘I’d like to understand more. What’s the problem you’re trying to solve when you ask me to do X, Y, Z?’”
For example, when meeting with one customer who wanted NetApp to create a new feature for them, Hitz’s team dug deeper and discovered that the solution to the customer’s problem could be found in another product they already made. Had they not pushed, they would have wasted time and development efforts creating a whole new product.
On top of actively listening and probing deeper, you also have to learn to be persistent.
During the dot-com boom, about 70 percent of NetApp’s customers were Internet and technology companies, which made NetApp’s senior leadership very nervous. They wanted to find customers in other industries, so they kept calling up companies on Wall Street and explaining the cool features they offered and how they could do things less expensively than their current providers. They got laughed at. Things were good, and they had money, so they didn’t care about cool features or cheap costs. Enter the tech crash, and then things changed.
“After the crash, everybody we talked to said, ‘Oh my God! You can solve the problem for cheaper? Oh my God! You have features that let me do it a different way!’” Hitz says. “Suddenly a zone of customers that we had locked out of ended up being our key target.”
Now clients may not be willing to spend as much money as they were before, but they still have to run their businesses, so look for ways you can help them do that more efficiently and cost effectively.
“If you can help them do that in a different way, that can be a great opportunity,” he says.
As NetApp started to grow by capitalizing on new industries, the face of the company changed. When it reached the $1 billion mark the second time, only 30 percent of its business was in the technology and Internet fields, and it had expanded into all of those areas it previously wanted to be in. Instead of being a tech-heavy company, now it sells primarily to Fortune 1,000 companies.
“It’s tough in the downturn, because you don’t necessarily have the opportunity to do as much new investment as you want,” Hitz says. “You’re probably cutting it back, but what do you have in your portfolio of business that allows you to solve all the new problems that have just emerged out there?”
He says to spend time brainstorming and focusing efforts around that question in order to move forward during this hard time.
“It doesn’t feel like that’s the right thing to be doing, but at least spend some time saying, ‘Is there a group of people that suddenly have some pain that’s just what we know how to solve that never would have considered us before?’” he says. “It could be an opportunity for transformation.”
