Carlos Leyva

Silicon Stories

Chapter 2: Competitive Advantage

A Moral Dilemma

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I spent 3 years running the local professional services organization of Northwest Computer Company. I learned more about business (as opposed to technology), during this time, than in all of my previous years combined, or since. I have wonderful memories and enduring friendships from this period in my life. However, life at Northwest Computer Company caused me unmitigated stress and took a serious toll on my health. There were several reasons for this, many, but not all, were of my own making. I will share a particular dilemma that troubled me beyond belief, and which is relevant to this discussion of competitive advantage and its sustainability.

In the early 1990’s, Northwest Computer Company was the shit. They had managed to string Intel processors together (using their flavor of Unix) in a scalable architecture that was more compelling than anything else on the market. By the time I arrived on the scene in 1995, Sun, IBM and HP were whacking them upside the head. They responded with a number of clever, but ultimately unsustainable, strategies.

The first strategy was the result of a brilliant insight. The client-server revolution had left a gaping hole, with respect to the dearth of knowledge available in the marketplace regarding the new architectural paradigm. While their competitors were busy pushing iron, Northwest Computer Company radically revised their sales model to lead with architecture. The fact that some of their sales teams, and their nascent professional services organization, could speak to these issues was a significant differentiator that led to big wins. When this strategy hit the wall (i.e. the competition caught on) they discovered Data Warehousing.

Data Warehousing and Big Unix Iron

Data Warehousing was a client-server technology that required big Unix iron. The idea was to lead with professional services (data warehousing design and implementation) and bundle the iron as part of the deal (i.e. change the rules of engagement). The implementation of this strategy required more depth in their Professional Services (PS) organization. I was hired as a project manager in the local Houston office, and I was subsequently promoted to professional services manager. The position was responsible for working with account teams as pre-sales support (i.e. providing domain expertise) and managing resulting PS engagements once a sale was concluded. The strategy was far more successful on the west coast and in the U.K., where the sales teams and the PS organizations got it and had the depth of talent to implement it.

Frankly, the strategy was broken for many reasons. However, the problem was primarily that it required a level of sophistication that was not universally available. Instead of selling a product, the sales teams were mandated to begin selling solutions. Never mind that this required a completely distinct mindset, one that the majority of account teams were totally ill prepared to market.

Many prospects, at least in the conservative oil patch, were suspicious. They quickly surmised that we were leading with PS in order to sell iron. By 1995, the Unix market had already begun a quasi-de-facto standardization process (to the degree that this was possible in the Unix space). Prospects were extremely reluctant to commit to a niche Unix vendor whose market share was decreasing visibly.

This dichotomy in marketing strategy resulted in a moral dilemma for me personally. I believed wholeheartedly in solutions. I believed that well executed solutions were in the best interest of our potential customers. However, our solutions, provided by our capable PS organization, could readily be implemented on our competitors’ iron (often for less cost and reduced risk). In other words, I only partly believed in our value proposition, and from the point of view of Northwest Computer Company, not the most important part.

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