Can You Solve a Real Management Dilemma?

A few weeks ago, I asked you to try to solve three real-life management dilemmas that plagued me during my career. What I didn't tell you is that two of the three scenarios, one involving Intel and the other involving Microsoft, are relatively well known among those who followed the PC industry at the time.

Today, they still stand out as classic dilemmas. In one case it certainly appears, in retrospect, that we made the wrong decision. What I find fascinating is that many of you didn't fall into the trap the company's management team fell prey to. How about that?

In any case, the response was great, and now it's time to give you the answers and see which of you came closest to figuring them out. Even if you didn't try your hand then, you can do it now:

CLICK for Dilemma #1 >
Dilemma #1: Your product is a dog; now what?
You're the VP of marketing. Six months ago, your much-larger competitor preannounced a product under development and you did likewise to keep pace. Only now, the development folks are telling you that your version, which you'll be launching in three months, is a dog that won't come close to meeting its performance targets. Your competitor has no such problem and will leave you in the dust. The product takes more than a year to develop so it's too late to start over. Remember, you've already publicly preannounced.

What do you do?

Dilemma #1: What really went down
The company was Cyrix, the product was a PC microprocessor, and the competitor was Intel, c. 1996. Realizing that the performance gap between our products and Intel's was only going to get worse of time, we completely repositioned the product, indeed the entire company, to focus on low-cost PCs. In early 1997, Compaq launched the first sub-$1000 multimedia PC (a Presario model), that used an old design we rearchitected to drive down PC price-points (MediaGX processor). Lo and behold, a new era of low-cost computing began. It never ended.

I guess you'd call that making lemon-aid out of lemons, but at the time we called it dressing up the pig.

Dilemma #1: Responses from BNET readers
steveo@... came closest to nailing it with this comment:

All might not be lost. Your product needs to find a niche that can be defended.

Is there a sub-segment of the market for which your product is best suited? (Or can be made to be best suited?)

Can you create differentiation through pricing strategy? Even if your performance is worse in ALL relevant categories, you can still offer a superior value proposition to a segment of the market through pricing.

In an email, daweaver@... Suggested: "Introduce your product as the low-cost alternative to the gee-whiz bells & whistles version that the competitor has announced. Not everyone needs a smartphone, for example. Many just want a basic, inexpensive phone. The same goes for most products."

Mschneidy: At this time we may not be able to beat the competitor to the market, but we can still beat them in the market by focusing our strategy on differentiation and positioning.

dennis@...: Reposition is the cheapest dog around (no specs = no frills)

Tanksteels: if one knows about the performance gap, focus on building myth around whatever performance the under-development dog can deliver. After all each dog has his day and people have different performance expectations - some want what can bite and some do not and so many different expectations from a dog. Know it and position in that fashion.

In an email, costas.papas@... suggested to position the product as "average no frills."

You're seven years into a promising career as a manager with a big company. Your company has singled you out as an up-and-comer with executive potential, but you're also being courted by a few startups. Do you play it safe with the big company or roll the dice with a startup? Your company pays better, and although you're a low-level manager today, you can climb the corporate ladder, albeit at a "big company" pace. The startup, on the other hand, offers mega-stock options with windfall profit potential and a big job title with big responsibility, but if it doesn't survive, you'll end up with no title and worthless stock options.

It's your career, what do you do?

Dilemma #2: What really went down
This is autobiographical, c. 1980s. As most of you suggested, I rolled the dice and left the warm and cozy womb of a big company (Texas Instruments) for chaotic startup hell. But I did it for very specific reasons. I wish I could say it was all about climbing the corporate ladder and making gobs of money, but frankly, I wasn't as savvy back then as most of you seem to be now.

What I was really looking for was the chance to put my butt on the line in a high-stakes, make or break position. I was just wondering if I really was as good as the TI execs seemed to think I was, but I couldn't prove it in the middle of a highly tiered organization.

And while I did score with a startup or two over the years, my most memorable achievements and happiest times (for me, they're always the same) turned out to be with a mid-sized public company. Sometimes I wonder what might have been if I'd stuck around at Texas Instruments. Who knows?

Dilemma #2: Responses from BNET readers
There was no "right answer" to this one, but I wanted to highlight the reader comments that were most insightful and/or like-minded as my thought process at the time. There were three:

From Lmck, whose answer came very close to my own way of thinking at the time:

Personally, jump to the startup. The options, big title, and potential are all nice perks but you should never count on them. Ask veterans of the dot-com era.

If you were risk averse I would have said stay with the big company. However, in today's climate neither company is truly stable. Just because you have been tagged with a promising future there are no guarantees that a reorg won't happen.

The startup allows you to have more exposure to a variety of positions since you'll be required to wear many hats. If you were worth your salt at the big company now is the time to show it. You'll directly reap the rewards of your efforts in terms of experience and skills. If you manage to grab one of the lucky lottery tickets (e.g. IPO, buyout) so much the better. Nobody can take the experience away from you.

Use the start-up to accelerate your career. At a big company the likelihood is that even being groomed for upper levels still means going one small manager-position step at a time.

At a start-up, you can jump to a position of more responsibility. You really learn how to be successful in a limited resources, live-by-your-wits, make-it-up-as-you-go environment.

It's high stakes, sure, but if you personally do well, even if the company doesn't, what you've learned makes you more attractive back at that big company.

Start-ups/early stage companies are fantastic work opportunities to grow your career, get things done at a pace unheard of in large process driven businesses as well as possibly create enormous personal equity. While very risky compared to large corporate environments (especially for senior execs), not all start-ups are the same and come in many "flavors" that affect the risk profile.

Do your homework to minimize the risk and uncertainty; analyze the product, market, the founders (especially if it is a very technical product and much of the documentation is still in their head), the investors, board, capitalization structures, competition, etc. The goal is to mitigate risk and there is no such thing as perfection. Also, the analysis will help jump start your work at the start-up.

Dilemma #3: An offer you can't refuse

You're the CEO. What do you do?

Dilemma #3: What really went down
The company was Stac Electronics, c. 1991, and the software utility was Stacker, a patented, revolutionary data compression technology that doubled PC hard disk capacity. And this at time when Windows 3.1 was giving PC users heartburn because it occupied so much disk space. Stacker was the top selling software utility and, to complicate matters, we were preparing for our IPO at the time of Microsoft's "offer."

Needless to say, it was quite a conundrum. I still remember our CEO, Gary Clow, going around the room, asking each of his top execs for our opinions on what we should do. In the end, it was unanimous. Screw Microsoft; we fight!

Following our rejection, Microsoft came up with "its own" version of data compression that "just happened" to violate our patents. Years later we won a patent infringement suit that what was, at the time, the largest judgment against Microsoft, $120 million.

As is so often the case with this sort of thing, Stac won the battle but lost the war. With its core software business decimated by Microsoft's action and unable to restart, even with all that money, the company eventually went under.

Dilemma #3: Responses from BNET readers
One reader who knows his PC history pretty much nailed this one by saying we should have made the opposite choice. In hindsight, I'm inclined to agree:

GeorgeCopeland:

In 1980, IBM asked Bill Gates to advise them on an operating system for their new PC. Gates recommended CP/M, then the most successful PC operating system on the market, written by Gary Kindall at Digital Research. IBM tried to talk to Kindall about a partnership, but Kindall refused to sign the non-disclosure agreement. IBM went back to Gates, gave him the contract, and the rest is history.

The moral: Never turn down the opportunity to do business in the bigs. Things might not work out, but at least you will never be reading comments on business websites about what a colossal idiot you are.

Kudos to all the readers who took the time and invested brain energy to comment, and special props for the folks named in this post. Nice work, everyone. It's impressive, really.