The good news about the "new economy" downturn is that savvy industry leaders have gained 25 years of business-cycle experience in three, EMC Executive Chairman Michael Ruettgers told a Wong Auditorium audience on May 2.
Turning that experience into success was his Industry Leaders in Technology and Management Lecture topic, "Managing for the Next Big Thing in an Information-Intensive Economy." The event was co-sponsored by the Office of Corporate Relations and the Center for Technology, Policy and Industrial Development.
"As you look for the next big thing, you need to prepare for it, shape it and make it happen sooner," Mr. Ruettgers said.
Examining the recent business cycle is the starting point. Exuberance, the first wave, appeared as IPO feeding frenzies, companies trying to get big fast and a long boom era. Gloom, the next era, meant equity selloffs, myopic risk aversion and MBAs flocking back to conservative businesses.
Reality, as Mr. Ruettgers sees the next era, acknowledges that technology moves forward relentlessly, the Internet is globalizing everything, leaders use downturns to their advantage, and -- most important for EMC, a provider of intelligent enterprise storage systems, software and services -- that information is indispensable and inexhaustible.
While only 5 percent of information was created digitally in 1990, today more that 93 percent is, and "if it's created digitally, it should be stored digitally," Mr. Ruettgers said.
Mainframe systems' life cycle peaked in the 1980s, generating about $80 billion in wealth, followed by PC systems' peak in the mid-1990s, producing $800 billion. The network/Internet systems era isn't likely to peak before 2005, but Mr. Ruettgers believes this market will top $8 trillion. He predicted 22 percent annual growth in the need for content storage.
His advice on change comes from experience. As CEO and president, he led EMC from a $400 million company in 1992 to a $4 billion, Fortune 500 global enterprise in 1998. During the 1990s, EMC refocused its product line every 30 months, swiftly moving from memory boards to mainframe storage to open systems to enterprise storage to network storage. The initial focus on hardware shifted to software and services.
One EMC innovation, Mr. Ruettgers said, was abandoning an annual strategic plan for a rolling six-quarter planning process. Each month, performance and strategy are measured against the plan, and each quarter, the cycle is extended. Another tool is a concurrent development process that means as one product is distributed, its successors are in development or testing. In 1998, for instance, 80 percent of EMC income resulted from products launched that year. Shorter product life cycles push innovation, he said.
Finally, he said, preparing for the next big thing means getting the best people on board. Beyond predictable characteristics such as leadership and orientation toward results, successful EMC managers are driven by a sense of urgency, he said.
A version of this article appeared in MIT Tech Talk on May 16, 2001.