Published in April 2009

Thoughtful Metamorphosis
The good side of bad news.
By David McNutt

As you know, few believe that we will come out of this economic slide this year. In fact, many of the anticipated cutbacks in corporate spending that were hinted at last Fall are just now being felt in our industry because of lag effects in execution.

In economics, as in nature, all things tend toward equilibrium. So, when some sectors of the economy are tanking, others will thrive. Retail sales are taking a hit, yet pawn shops are booming. New England ski resorts had a great season because people were not taking long vacations or getting on an airplane. So load factors on flights from New York to the Rockies are way down. Why should skiers fly out West when New Hampshire just got 17 inches of snow?

People and companies alike are adjusting their spending, and the effects are showing up in unusual places. For example, consider local television news budgets, often the most expensive line item of programming expense. Of the 10 ABC-owned and -operated local stations, eight have slashed their news budget spending that, unfortunately, also includes staff.

In a departure from their more journalistic past, now the first question news directors ask when considering remote coverage of a story is the cost. KABC for the first time did not send teams to cover the presidential inauguration in January. This was probably a decision to cut travel in order to help save jobs, because it is rumored that the O&O station managers have an edict to trim 20% from their operating budgets. I would think that this may also affect capital technology spending in professional audio and video products.

Other bad news, although not as bad as expected, has given us some glimmer of hope that at least the downward spiral may be slowing. Some economic data recently suggests that we are adjusting to the rollercoaster drop that has taken our breath away, and we can at least inhale again—although hopefully not just to let out another scream.

We have been hearing bad news for so long that we have become skittish and doubtful about the future. Until we stop hearing about Ponzi schemes, corporate jets and bank bonuses (or until we stop giving so much negative credence to them), our confidence level will continue to drive our cautious consumption and we will remain in the spiral we are in. I hope that it is time we purposely look for the more positive signs.

For example, I spoke recently with an integrator, Audio Video Systems, Chantilly VA, which confirmed that government spending is, indeed, rising, and directly into their firm. A 17-year-old company that has focused primarily on government clients since its inception, AVS reported more than 20% growth last year, and is expecting the same this year. AVS has 100 employees, 40 of whom are CTS certified, and the company is investing and providing for even more CTS training. Granted, the company obviously offers a skill set that understands its customer base, but those projects do appear to be increasing and AVS is preparing for more.

But this is no isolated success. There are many firms like this one that subsist on work from the government sector, both federal and state, K-12 and higher education. One such firm decided to focus not on expanding customers to serve, but on service to customers. This new focus on developing customer relationships has been so successful with its major clients that the company has simply developed a time and materials agreement for work and, if asked, will even put doors back on hinges for the customer, just to serve the client’s needs. It is this kind of thinking that transforms companies from periodic project seekers into continuous service providers.

It is not hard to imagine in these transitional economic times that

• companies will transform, and that the net result will be firms that are stronger and more resilient

• our customers will have a similar metamorphosis in their expectations

• we will recognize and fill new needs with new service.

Hang in there everybody. Our best times are ahead of us.



A member of Sound & Communicationsí Technical Council, David McNutt has more than 35 years of experience, covering live sound engineering, marketing for well-known manufacturers, audio system design and consultation, and fixed installation contracting. McNutt holds a Masters in Telecommunications and an MBA in Marketing and Strategy. He can be reached at dmcnutt@testa.com.
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