The current state of the economy is on a lot of peoples’ minds. I personally spend quite a bit of time attempting to identify and understand macroeconomic trends. I do this despite the overwhelming good cases made against doing so for the average person. See A Random Walk Down Wall Street as a prime example. I’ll likely continue to do so as long as I enjoy it and as long as, well, my ideas have a successful track record.
One trend of particular interest to me, especially because I make a living from technology, is the velocity of change in economic cycles caused by the increased volume and timeliness of economic data. My theory is that we’ll be experiencing increasingly exaggerated and compacted cycles from 2005 forward. In geek speak a higher frequency and amplitude.
I’m not going to cover what that means to your portfolio, even though it’s a great conversation over a beer. But, what does this mean to Sales Engineers and the companies we work for and sell to?
A good starting point comes from a very applicable book titled The Well-Timed Strategy by Peter Navarro. To paraphrase a great deal, you need to monitor business cycles because, as a professional, you should be changing jobs close to the top in order to progress faster in your career. If you think about it, talented people are most in demand during an economic boom when business investment (read: expansion) is at its height and unemployment is at its lowest. When the economy has been expanding rapidly is precisely the right time to move on if you were already planning on doing so (I’m definitely not advocating moving on just because of this fact). You’re likely to have the most negotiating power and be able to secure a higher salary and perks than you otherwise would. Keep that in mind next time you’re thinking about changing companies.
What about the companies you sell to? Depending on the size of company you work for, you may have a wide variety in the types of opportunities you pursue. Extremely mature companies have more refined territories which make it more difficult. During recessions or stagnant economies, the companies hit hardest are those reliant on growth to survive. Technology companies, many small to medium businesses, retail, etc. all qualify. Companies in these areas will be far more reticent to make investment if they are in a position of having to plow all profits into growth. Large companies and those in mature industries (and government), can be impacted quite differently. The smartest strategy for a company in a downed economy is actually to expand, assuming resources have been allocated that way. Labor and raw materials are cheaper. The competition is in retreat and less likely to exploit new markets. Companies adept at managing the business cycle will be more likely to buy from you during this time as they may count on being able to get better discounts from vendors. Knowing this in sales can help you understand these buying patterns and may even allow you to score some points with your customers’ executives if you can illustrate how this knowledge may be able to help them make the best use of budget dollars.
Inside your own company this knowledge can be immensely helpful as well. If you’re in a senior management position in the sales organization, the absolute best time to look at expanding your sales force or retooling is now when other companies are looking to pause or cut back. Not only will you be able to expand more quickly but the quality of talent you can acquire will go up as the economy goes down. Other capital investments like lab resources, educational material, laptops, etc. may be easier to come by as demand goes down across the board and vendors still have quotas to meet—not to mention the deals to be had because of business selloffs. If you can use this situation to your advantage, just think about how prepared you will be when business does pick up again. You’ll be in a clear leadership position compared to that of your competition.
It’s not just a cute catch phrase. Those that can avoid the pack and invest in contrarian fashion will outperform the rest. The biggest gains are always to be had at inflection points, and this one will be no different.
What does this mean if the business cycle becomes permanently more prone to boom and bust and moves from one to the other more quickly? Aside from it being a little scarier, it means that knowledge of this process will become even more important as more opportunities to get out in front will present themselves. As an SE or SE manager/executive, you can use this understanding to better your (and your company’s) situation. I definitely recommend you do what you can to start researching the signals of these inflection points to get a leg up on the competition. I’m sure I’ll get around to sharing what I use soon enough too 
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