There is a tendency for us all to forget that the single unifying factor that underpins all of our organizations–whether commercial or otherwise–is that they are founded upon people. In my work as an industry analyst, it is far too easy to think about the companies that we write about on a daily basis as amorphous blobs, as "its" not as "them." We write about them in terms of success and failure and profit or loss, but without always remembering all the moving pieces–or people–that engineer their relative performance.
Waiting for a plane this week, I was reading an article in The Wall Street Journal that brought to my attention the relative amount of risk in contemporary tech funding, compared to the first dot-com boom. In it, Bill Gurley–a partner at Benchmark (a venture capital investment firm)–points out that more humans are working in loss-making, Silicon Valley businesses than during the previous boom 15 years ago; that there has been a normalization in accepting jobs at companies that are loss-making. That employees–whether stock holders or not–are partners in a game of calculated risk and reward.
60% of businesses simply do not, nor have any plans, to invest in [digital marketing] within the next six months.
It is a public statement of what many of us have been talking about in private: The chances are we are overdue for a high-profile business failure from one of the high-risk tech ventures. The knock-on effect that such an event will have on the greater tech industry will be something that should keep all of us awake at night, especially those like me that worked in the industry through the dot-com bust.
Why, though, should you be interested in this potential bust, or "market correction" as we euphemistically like to call it? Well in our survey data at 451 Research, we’ve noted repeatedly that in digital marketing there is an increasingly wide disconnect between the availability of new fangled technology and actual real-world adoption. In short, for all the money that is being invested in building technology in this marketplace, buyers are stubbornly refusing to stump up the cash. This is not for a lack of understanding of the potential of the technology–that it could have a positive, transformative effect on organizations is broadly accepted–yet around 60% of businesses simply do not, nor have any plans, to invest in it within the next six months. Most likely, this is due to the fact that people and their requisite skills underpin any organization. In a reverent nod to the Beastie Boys, we can ask the question, "Do you have the skills to pay the bills?" For in our analysis, and maybe just a reflection of common sense, we can say that it is perfectly possible for an organization to have mature, intelligent processes but still lack the human skill within those processes to operate them efficiently. Nevermore so is this the case than when complex technology is involved in the equation.
This is one of the reasons that we often talk of "capability-based buying" in our research, a process that suggests balancing the desire to implement technology to support a process against the ability of the humans to operate it in an optimal manner. It is that mixture of maturity and capability which is currently putting the brakes upon the mass adoption of digital marketing technology and heavily impacting vendors that are currently well-funded that have been bet upon; it’s our belief that adding human capability to organizational maturity is the key to enabling adoption.
In the analysis of the dot-com bust, one of the primary contributory causes within those consumer-facing businesses was the paucity of customers enabled to contribute to a bottom line in a pre-broadband, pre-mobile world. It wasn’t that people wouldn’t buy their groceries or clothes online; it was that those methods of selection weren’t easily achievable (the 3D, rotating Miss Boo-curated mannequin was a poor salesperson on a 56k modem line). That technology runs in advance of adoption is normal and natural; that it is apparently running so far in advance at the current time, when so many of jobs in the tech industry depend upon that adoption continuing apace for loss-making vendors, should be a concern for all, as failures to translate into successful businesses will create an ill-wind that will–as ever–blow none of us any good.
Matt Mullen is a senior analyst of social business for 451 Research, where some of his primary areas of focus are digital marketing and social media technology. Follow him on Twitter @MattMullenUK.