Many Technology Businesses Struggle Unnecessarily While Mega-Corporate Neighbors Boom.

ANN ARBOR, Mich., May 22, 2012 /PRNewswire-USNewswire/ -- In the wake of an amazing recovery by large corporations, with US output of goods now surpassing pre-2008 levels, it's no secret that many Michigan technology companies are still struggling to survive in the current Great Recession.

Reason #1: Government spending has been slashed and large corporations are hording cash and deferring capital spending while smaller tech companies have risked capital on new products they can't get their traditional customers to order.

Reason #2: Too many small and medium-sized businesses, the backbone of Michigan and the surrounding Great Lake States, are depending on traditional customers and ignoring the new and extraordinarily inexpensive marketing outreach that search engines, smart phones and tablets have created.

No one talks about Reason #3, the elephant in the room.

These are the findings of RFD Insight, a research and business-consulting firm with offices in Ann Arbor and Bloomfield Hills, Michigan. Visit www.RFDInsight.com. "There is a new surge of opportunity staring business leaders in the face," explains Wes Arrington, President of the eight-year-old consulting firm. "In their anguish, many companies become too insular. They need to get out more and see what's happening."

Michigan was once one of the wealthiest states in the union. But during the past eight years, RFD Insight has found that small and midsize companies, the backbone of Michigan business, have been chiefly hampered by a well-meant but disastrous Teflon shield that surrounds senior tier managers while the rank-and-file workforce is often on a continuous shrink-expand-shrink cycle, Arrington explains.  

"In the intimate executive rows of smaller companies, key executives become political friends and cover for each other, while leaders confuse personality with performance and give managers a pass on unrealized goals. Executives may get along with one another, but the margins erode as inventory piles up, and this cash drain often causes delays in equipment maintenance and replacement," Arrington continues. "They may have the best of intentions but the net results are lowered productivity, shipping delays, quality decline and poor customer satisfaction.

"IT management could help if they were not at the mercy of comptrollers who find IT an easily delayed infrastructure cost in an era when every company is an Internet company, whether they know it or not," says Arrington.

"The plea that 'we just can't compete with off-shore manufacturers' is just an excuse for not trying to compete," Arrington says. "We see what can be done by an aggressive organization when we understand that Michigan-headquartered Ford Motor Company has an investment-grade financial rating, achieved primarily by lowering its break-even point, reducing its outstanding pension liability and significantly improving its product portfolio. That takes leadership that inspires an organization to produce products with great design and solid engineering."

Founded in 2004, RFD Insight has worked with two-dozen established firms. Typical performances with technology firms have produced a controlled 20 percent increase in annual revenue to preserve manufacturing quality with dramatic increases in gross profit and valuation to preserve business quality and attract investment opportunities.

A major contribution by RFD Insight has been penetrate new customer firewalls that have made new sales much more difficult to attain. "Customers have forted up. There's now a moat around the customer, a dragon in the moat, high stone walls and boiling oil poured on anyone who makes it past the dragon," notes Lawrence Dolph, who leads the marketing practice of the Michigan consulting firm.

"In reality, the business culture has shifted," Dolph observes. "It's no secret that the new etiquette is to email customers for permission to call. But then no one publishes his or her direct email. The choice is to get customers to call you, or for you to become Sam Spade and stalk prospects on the Internet for their direct contact nodes. Almost no one does this effectively without help.

"Once the sales force of a company understands that in this sales environment they are dependent on people calling them, what are they supposed to do?" Dolph asks. "There is a powerful case that traditional advertising now fails to perform, so companies have shifted resources into social media and search engine optimization.

"Despite the buzz around these new media strategies, it doesn't mean much for smaller technology companies. The effort required exceeds their resources. General Motors was spending $40 million on its Facebook page, and $30 million of that was for page maintenance. Smaller tech firms may find that website visit rates increase only modestly, if at all, and incoming prospect calls remain too low to offset a company's downward business spiral. When there is a prospect on the phone, the salesperson may act out anxiety and offer a price with an even slimmer margin—often not understanding the factors that are driving up costs on the production floor," Dolph says.

"The carpeted row may offer a warm and clubby atmosphere, but the net result is a glide path to nowhere.  The situation is modeled in all of the business schools and addressed by at least some of the two million business books offered on Amazon," Arrington adds.

"And still Michigan businesses, like many smaller businesses in other Great Lakes States, remain on the ropes. You want proof, drive around any industrial park in Michigan, Ohio, Indiana and Illinois and count the For Rent and For Sale signs on the buildings," Arrington says.

FOR MORE INFORMATION, contact Lawrence Dolph at (734) 516-5841 or email [email protected] or visit www.RFDInsight.com

SOURCE RFD Insight