At our Quarterly all-hands meeting last week, CEO Joe Tucci said something that really stuck with me.
"What you do in a downturn predicts how you do in the upturn."
The last downturn, I recall Joe reinforcing his determination to invest in new innovation and technology. We told Wall Street that over the next 18 months EMC would have its most prolific product roll out schedule in the history of the company. To deliver on this, we had to continue investing about $1 billion a year on R&D. When your revenue run rate is $10 billion, that bet is a solid one to make. But what happens when your run rate craters to $5+ billion in a matter of months? That is what happened to EMC. What did Joe do? He continued to invest heavily where it mattered like R&D, and cut with precision elsewhere. I remember him saying back then, "We are a leading technology innovation company. We need to remain one. Our customers expect this and they're looking for help. We're going to lower our costs and enhance the value our technology brings. Coming out of this economic turmoil, we are going to be in a much stronger competitive position."
This was just one move. In fact, he laid out a 12-point plan that the company followed in the months and quarters of the early- to mid-2000's. It was laid out in 3 phases "1. Stabilize, 2. Renew, 3. Grow." It included diversifying our product portfolio; improving our product cost and quality; embracing the channel; realigning talent to the new strategy, and more. Within 5 years, EMC's revenue was up over 100% from the 2002 valley and we were hitting record results for revenue, net income, market share, customer satisfaction and employee satisfaction.
I was in NYC on October 6th, 2008, a day some are pointing to as the day this current state of the economy hit the fan. I was with money managers, journalists and cab drivers that day. You could feel something very, very big in the air. The next day, October 7th, still in NYC, I looked at the news publications sitting next to me as I watched CNBC and snapped this photo.
I remember thinking that morning how pleased I was that Joe Tucci was running EMC right now.
While reading my email today, I saw that his moves during the last downturn continue to pay dividends to EMC's current market success. Within my email box was news that
- EMC was a "2008 VAR Business Annual Report Card" Winner in both hardware and software categories, as determined by sales channel -- kicking the behinds of competitors such as HP, IBM, CA,and NetApp. They rated us on "product quality and reliability;" "richness of product features/functions;" "technology innovation," "compatibility & ease of integration;" "marketability" and "services opportunities," among other categories.
- EMC is about to get another Six Sigma Quality award -- interestingly, this one as a "best place to work." I guess that means that if you care about quality, you'll love it here.
As I've mentioned before, Joe has remarkable courage and wisdom -- especially in times like this. He's built a strong and engaged team; an amazing strategy; record levels of customer trust and relevance; an A+ distribution ecosystem, winning technology and service; and a war chest of cash over the past few years. If these are the cards we're playing with in the downturn, I believe EMC will again stand strong coming out of it.
-------------------- Talk Back ------------------
What's been on your mind lately in light of the economic turmoil? Are you doing anything differently ... just in case?