Zoom is one of the leading videoconferencing platforms in the market — and one of the most successful. But it recently made a decision that could significantly damage sales going forward.

Zoom publicly indicated that work-from-home is not working for the company (hat tip to Business Insider for the initial report), which is pretty much like a car company telling its employees to take public transportation. It is a clear indicator that the company’s software not only doesn’t make work-from-home viable, it never will. That’s likely to reduce the total available market (TAM) significantly, given that work-from-home-policies have been fueling videoconferencing sales in recent years.

It seems as if videoconferencing systems are faltering again, and Zoom’s decision to force employees back to the office might well doom the company in the long term.

I have seen this happen before. I was at IBM working in its then-telecom division (ROLM) on pricing and discovered that IBM divisions were not buying our own product — it was too expensive. If you can’t justify the price of your own product at cost, you certainly can’t justify it at retail. Every time an IBM division deployed a non-IBM solution, IT noticed — and the decision to save a few bucks did tremendous damage to sales once customers found out IBM didn’t even buy its own products. 

Another example involved GM, where the then-CEO looked out into the parking lot and discovered that most employees bought Toyotas. Rather than finding out why, he indicated that employees who continued to do so would be fired. (Steve Ballmer did something similar during the Microsoft Zune/Apple iPod rivalry.)

What both CEOs should have done is understand why these decisions were made (even though employees could buy at discounted prices) rather than ignoring the problem or, as the GM and Microsoft CEOs did, cover it up internally. GM had a massive quality problem that needed addressing Microsoft had under-executed on its stated strategy. In both cases, the decisions got out, and those who heard about them avoided both product lines.

Why would you buy something at retail that a company or its employees won’t use themselves at a cheaper price?

The same is true with Zoom. If you run a company and you want employees to be able to work remotely, why would you buy a work-from-home tool from a company that does not believe the same thing?

Having employees come back into offices might fix the tactical management problem of motivating and managing people remotely. But it creates a strategic problem: it makes what the company sells look inadequate to the work-from-home task (especially if competitors continue to support remote work). Were I still a marketing director and working for one of Zoom’s competitors, I’d build a displacement campaign around Zoom’s decision and point out that my product is better because my work-from-home policies remain in place, and I’m not  experiencing the command-and-control problems Zoom is apparently experiencing. 

Now, to be clear, none of the videoconferencing options in market are great at overcoming the remote management problem, but they are being gradually enhanced to do so. Companies retaining aggressive work-from-home policies understand that the priority is to ensure these products work adequately, because — regardless of whether they sell any of them — their own productivity and effectiveness is at stake. They’re motivated to improve their offerings to address remote management issues, meaning they should advance more rapidly than Zoom, which has decided to fix the problem by forcing employees back to the office.

(Even worse, the decision comes as many companies are beginning to mandate a return to the office; even the US government wants workers back.)

As far as foolish decisions go, this is on the short list to be one of the worst.

Zoom should continue to highlight that work-from-home is viable. Otherwise, its installed base, which was bult on work-from-home, will collapse as other companies follow Zoom’s lead. And why wouldn’t they? If one of the leading work-from-home vendors no longer believes this works, why should they? Working in the office is the old status quo, so it would not take much to pivot the market back to where it was pre-pandemic when the videoconferencing market was anemic, at best.

Zoom should be a showcase for work-from-home, not one of its most visible detractors. It's like an automaker telling employees to take public transportation so it can sell off its parking lots. Any money saved would be a fraction of what the company would lose in sales if others followed their example. In the end, Zoom may have created more downside risk for this entire segment than any other company in or out of this space.

I’d suggest avoiding Zoom as a work-from-home answer going forward. You do not want to rely on a company that does not believe it can be successful using its own product.