Transforming From a Service Company to a Product Company

Transcription

1 Transforming From a Service Company to a Product Company STEVE S BACKGROUND Managed operations for LSPs Started up Tokyo office Started China office Oversaw entire Asia business Oversaw supplier management Oversaw technology Managed sales and marketing STEVE CHU PHOTO ABOUT US Mission: Help companies grow There is tremendous demand for strategic planning, management consulting, and technology advisory services in the translation and localization industry. Treehouse Strategy is a management consulting company that helps translation and language companies around the world grow and get to the next level. We devise strategies to penetrate more customer accounts, broaden the spectrum of solutions and service offerings, and bring them to market. 1

2 Agenda Characteristics of service companies vs. product companies Case study How to transition from a service company to a product company Characteristics of a service company Labor intensive Difficult to scale Differentiation is difficult (especially in language industry), unless service is extremely unique Margin is proportional to the cost of labor Characteristics of a product company Capital intensive especially in the initial product development phase Taking the product to market can be an expensive and lengthy process Differentiation concrete product you can describe Customers expect new versions, feature updates, product support, and professional service Pricing can be based on perceived value 2

3 Case study 1: 37Signals A web design Company founded in the late 1990s Developed a product for internal use to manage projects Used an established, successful blog to market this new product This product is now known as Basecamp The lesson learned: Developed a product for internal use but saw a greater opportunity An established marketing outlet Case study 2: Andersen Consulting Tried to create products Weren t good at writing business requirements Over spec ed Products satisfied their over-intellectual selves Lesson learned: Failed to adopt a product company mentality; service behemoth that was not agile enough for market s needs Case study 3: Language company Language service company with many healthcare clients Translated training materials for medical devices Productized an e-learning platform where users can populate and edit their own content Created a separate team for the product Went to market on a subscription model Lesson learned: Capitalized on a known market opportunity with a captive audience 3

4 Case study 4: Interpretation company Interpretation company in a very unique niche Built a one-of-a-kind product around this niche Other prominent examples 3M began as a mining company Microsoft began by providing programming language services Amazon went from an online book seller to a legitimate product company It could be that the purpose of your life is only to serve as a warning to others 4

5 5/1/18 Failed products, missed opportunities The demise of AOL The world s first social media One of the largest sources of content Instant messaging 5

6 From a service company to a product company Business model is fundamentally different Mentality of running a service company is different from running a product company Service company: What problem are you trying to solve? Product company: What solution has a market? Key partners Key activities Value proposition Customer relationships Customer segments Key resources Channels Cost structure Revenue streams 9 building blocks of business model generation Customer segments Value propositions Channels Customer relationships Revenue streams Key resources Key activities Key partnerships Cost structure 6

7 5/1/18 The LSC s Guide to a (Successful) Product Launch Ideas for products So you have an idea? Did you create a product for internal use? Is there a problem that you are helping client(s) solve repeatedly? Listen to your customers Ask your customers Stick to your DNA Look for complementary opportunities Sifting through ideas Value proposition Sift through ideas for products Sift through ideas for features Sift through ideas for revenue models 7

8 Minimally viable product What are the core features that your customers want and need? Validate prototype with a trial customer Offer discounts or free trial to beta customers Build a product company within your service company Stay true to your core vision for your product and services At the same time, create an agile product organization (with an agile company behind it) to support it Rule #1 Fail quickly 8

9 Funding your product with services Create a product development budget Develop a realistic timeline time is money Be careful about diverting resources for services to your product efforts Outside funding Venture capital firms are generally not interested in service companies Revenue-based loans Angel investments Rule #2 A product requires a product owner, someone with professional product development and product management experience 9

10 Think like a product owner Mistaken competency in selling services for competency in selling products Product development has a distinct life cycle How to translate what clients are complaining about into product features requirements gathering Revenue model License by seat Software as a service Freemium 10

11 App development App for app s sake Look for opportunity to extend client s business via the app How an app can extend your service offerings? App as a differentiator? CONTACTS /steve-chu /treehousestrategy 11