What follows are a couple of paragraphs from a much longer and more informative post: Gartner Innovation During Its Formative Years.
Gartner Group’s Business Model: Innovation During its Formative Years
During the 1960′s at IBM and 1970′s on Wall Street, I was a subscriber or reader of research from several firms which were predecessors to the current Advisory Industry. The firms included IDC, Computer Intelligence, Dataquest, Yankee and Input. While on Wall Street, I joined the IBM user groups “Share” and “Guide”, The CCIA (Computer and Communications Industry Association), and SIM (Society for Information Management), presumably in order to be exposed to IT users perspectives.
After I was recruited to Wall Street’s Oppenheimer&Co. I knew of no other Wall St. technology analysts who belonged to any of these groups, to those analysts’ likely disadvantage as they missed out on the users experiences with the vendor’s hardware, software, and services. Since the user-group exposures had brought me much closer to users requirements and mentality, I managed to convince Oppenheimer to allow me to start a small internal business under its auspices, to help fund my research team’s expansion. Within a year or so, with two co-workers, we signed up fifteen major-league CIOs who met periodically with our small staff to absorb our views and G2 pertaining to the IT vendors. This activity was the catalyst which eventually evolved into Gartner Group.
During its first year or so, beginning March 1979, Gartner was a hodgepodge of ideas which I had brainstormed onto paper and presented to the first VC’s I had ever met and who were among the best: Bessemer and Warburg Pincus, both of which jumped at the structure which presumably would create visible and meaningful differentiation compared with the existing players. A secondary motivation was that they knew the research I had been producing, and bargained for lifetime rights to Gartner’s research! I’ll briefly outline ten of our innovations, most of which were implemented within a brief period:
- Clients: I proposed that our new firm would benefit from selling our services to three quite different constituencies simultaneously! Not only to “vendors” of computer products and services who were then the primary buyers of IT information services, but also to “users” of such products and services, as well as to “investors” (my post, Gartner’s Stock Brokerage Arm, Soundview describes how our investor service fared). All three client categories would receive similar written research, our service being differentiated when clients would call in to our analysts for personal guidance (we called out as well), or when they attended our conferences where clients would select their sessions and/or also speak privately with our analysts. At first, our VCs complained that we could not start three businesses at once! After I explained how our understanding of each constituency and its issues would be significantly enhanced by also dealing with two other points of view, the VCs capitulated. This was a gamble for them and the company, but the differentiation potential seemed significant, and so it turned out!
- Hiring: Unlike our competition we would hire senior rather than junior professionals, who were peers of our clients who could demonstrate deep knowledge and articulateness in specific areas of IT, and who would have to survive a rather lengthy and difficult group interview! The VCs understood and again accepted the additional expense resulting from such an approach. As we grew, the cost and the quality of our analysts were generally more than our competitors’, again with a very positive net result.
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