5 MSP Business Lessons Learned from the Auto Industry

The status quo can kill a business. One only has to look at the recent developments at General Motors and Chrysler to illustrate my point. Both companies were rescued from the brink of bankruptcy by a controversial government bailout, after years of reactive and apathetic management. Rather than push the limits of innovation to build a better offering or streamline the organization’s operations, some entrepreneurs are focused too closely on day-to-day tasks to look ahead. Failure to look for the signs of imminent danger or listen to the changing needs of your customers can be fatal. Remember, few MSPs are too big to fail…

GM and Chrysler were too busy maintaining the status quo to notice their competitors realigning their product lines and cutting costs as a hedge against potential business downturns. As we all know, oil prices and a souring worldwide economy hit the automotive industry hard a couple years ago and neither company was prepared to survive an extended sales slump. It didn’t take long for their cash reserves to disappear and, with tremendous infrastructure costs, neither organization could continue operating without a major bailout.

The final member of the former “Big Three” followed a different path and avoided the same fate. Ford not only leveraged the company assets to obtain several lines of credit before the credit crunch, but it began to right-size the organization a few years before the market collapse. While GM and Chrysler were closing plants and cutting costs in response to dwindling sales (standard operating procedure), they did not make the fundamental changes to their business and financial strategies that Ford did. When the market went from bad to worse, they had no alternative; declare bankruptcy or ask for government support. For most companies following the typical rules of economics, insolvency would be the only option.

Lessons Learned

Every business can benefit from studying the implosion of the domestic automotive industry. Ford and the foreign manufacturers that looked ahead and made proactive adjustments to their business model did better than those who didn’t. While executives can’t be expected to anticipate every potential crisis their organization could face, the successful leaders study the trends and prepare for the most common predicaments.

The process is quite simple, but requires dedication and organizational skills. It starts with spending some time each week (or at least every month) to take a deep dive assessment of your current business. A big part of that review should focus on how well you’ve executed on your business plan (however loosely put together it might be), measuring your performance compared to the expectations you set at an earlier point in time. Whether the results exceeded objectives or fell significantly short, once that appraisal of your current business situation is completed, it’s time to look ahead.  Just like half-time in a football game, adjustments made here can be crucial to your success.

Chances are that no two MSP businesses share the exact same model, which means the assessment process could follow a number of different paths as well. However, there are several steps every service provider should implement in order to address current deficiencies in their organizations and to pursue future opportunities:

1. Engage clients in discussions around their current and future needs
2. Schedule regular meetings with outsource parts to discuss customer needs and new options
3. Watch for trends and potentially disruptive forces that could affect your business
4. Research new services, solutions, or processes that could enhance your business
5. Update your business plan at least once each quarter, incorporating steps to address # 1-4

Look Far Ahead to Solve Tomorrow’s Problems

Four of the five points mentioned above involve an MSP keeping abreast of the needs of their clients, investing the time required to gain the information that will allow them to meet their long-term business goals. Communication with customers, employees and business partners is central to the plan.

With the rapid changes in technology and regulations, it’s more important than ever to listen closely to clients and other industry professionals. That information is invaluable, especially if you can identify common themes and trends that you can take advantage of. For example, if a number of your clients are concerned with new data retention rules, it may present an opportunity for your company to provide consultation services and solutions that can alleviate their anxiety.

If you utilize the services of an outsourced helpdesk partner, their reports and feedback can also be invaluable to your planning. Review the information and look for trends in the support calls, and discuss ways you can reduce the headaches of both your clients and the helpdesk staff. Sometime customer satisfaction can be improved with just a few simple changes or by replacing a system with a high failure rate. That can reduce the support costs for the MSP and improve their clients’ productivity.

These proactive moves can help you streamline operations and keep the focus on long-term success. You’ll still be able to respond to the emergencies that creep up from time-to-time, but looking ahead often helps an MSP to strengthen their support and minimize those issues. Remember, you’ll be better prepared to respond to evil (or prevent it) if you’re listening for evil.