In the ever changing world of the IT industry, many businesses still rely on outdated strategies that no longer deliver results. This article explores three common business strategies that we constantly see failing within our sector.
Short-term opportunity strategy
Unfortunately, this is one of the most common approaches in the IT sector. Mostly found in companies started by former coders or managers who “left with a client”.While this strategy can provide an initial boost, it is fundamentally flawed.
Enterprises that operate this way tend to adopt a “with us or against us” mindset, which hinders collaboration and innovation. They are failing because the company becomes overly centralised in their decision-making process. As a result, you get a fear-based culture, in a permanent crisis mode and, with time, an ever-growing reputation challenge.
Personal charm strategy
This strategy remains prevalent in the IT sector but is dangerously fragile. It relies on the founder’s charisma. Over-reliance on personal charm creates bottlenecks like dependency on few main clients (1-2) that leads to unexpected loss of talent.
If customer retention depends solely on the individual’s charm rather than on business/technical added value, the company’s growth is not sustainable. This is where this strategy is failing.
Lock-in strategy
It is self-explanatory. Lock-in strategies are designed to make clients dependent on a specific IT provider. It may initially secure business, but it ultimately creates significant vulnerabilities.
You can recognise this strategy through lack of documentation and push for niche technology. The biggest fear of lock-in strategies is change. This lack of flexibility is holding back innovation and competitiveness.
An IT company relying mainly on lock-in tactics will quickly develop a complacent culture. Comfort within the status-quo grows to the extent that competitiveness fades out: “You have nothing to lose, right?” But without external challenges or an incentive to innovate, your company reaches a dead end. So this strategy is also failing.
Conclusion
It has become evident that strategies based on conjuncture, opportunity, or locking in the client, are no longer viable. A resilient path forward proves to be value-based strategies for building solutions instead of services or products. Prioritising the understanding of the client’s business model and drivers then sharing this knowledge with the entire team will support agility and foster innovation. At Base7, this is a successful approach validated by our business partners.
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