Witnessing a Correction in the Physical Security Industry
Many economists say the stalled housing market is the sign of a “correction,” when the market, meaning buyers and sellers, reconsider the value of a particular item. I think we are witnessing a kind of correction in the security market, too.
Why have companies like Tyco, GE, UTC and IBM virtually ceased innovation related to security? It’s a type of correction, but not strictly economic in nature. You see, security is recession proof. When folks have a lot of money, they spend money on security to keep what they have. And when money is tight, they spend money to protect what they have. It has been that way for centuries – through lean times and plenty. The key to enjoying the benefits of buying and selling security is value. If you buy or sell value, you’ll always be welcome at the table.
So what does it mean when Tyco, UTC and these other big companies stop innovating and blame the economy for struggling sales numbers or cut heads in order to hit goals? It may mean they’ve been selling fluff, and not real security value. Remember, the real value of security is always in demand. That’s the correction. We are simply witnessing the big companies’ attempts to find where value truly lay.
Does this principle of correction apply to small companies as well? Yes, but less precisely. If a startup is suffering due to poor sales, it may be the result of several factors such as incomplete sales channel, poor go-to-market strategy, or simply crappy products. Maybe it’s simply bad timing for the technology. My point is that product quality (or crappiness) is not the chief variable. In most cases, for large and small vendors, the correction can itself be corrected by more closely aligning product capabilities with the current needs of the end user.
Here is where the sales systems built by UTC, GE, Tyco and others break down. The executives running those companies don’t have deep relationships with end users, generally speaking. They rely on the sales channels – dealers and integrators – to touch the end user. The subtle but important changes in the preferences and priorities of end users can manifest themselves as mysterious downturns in revenue by the time manufacturers way up the supply chain feel them.
That’s why it is important for manufacturers to maintain a closer relationship with the end users of their products. Big companies got big because they successfully built a sales channel to move their products, crappy or not. Therefore, if sales are slumping, it means somewhere along the line, value – and an understanding of the ultimate customer – got lost.
My end user clients – mostly in the Global 3000 – complain to me about this disconnect all the time. They are baffled by the paltry attempts by manufacturers to understand the real challenges facing the enterprise. Schmoozing by overly-friendly “strategic account reps” doesn’t cut it. Fancy lunches and tickets to ball games are fun, and certainly lubricate relationships, but in the end do not address the pressing needs of the customer. If you ask me – (and most of those big manufacturers don’t) – I’d say it’s time to focus on the end user. It’s time to correct the correction.