I retired from personal blogging in July 2008.
But you can find me over at http://blog.xero.com.

Services to Products
Posted by rod@drury.net.nz in Old-blog-archives at 11:00 am on Wednesday, 12 July 2006

This morning I spoke at an NZCS breakfast on ‘Crossing the Chasm: Services to Products’.

We had a nice crowd of about 60 people and a great discussion.  Good to see so many familiar faces and meet a few new people.

The discussion was around transitioning from a Services model, where you primarily sell time, to building a Product where the revenue created is generated by product sales.

We covered

I finished off with some discussion points of what we can start to think about to begin this transition. Here is a summary of those:

  1. Start developing product skills. If you are committed to outsourcing find funded product development opportunities to gain experience and make contacts.
  2. Develop Interaction Design expertise.  User experience design and being able to model product concepts is a necessary skill for products. It also allows a concept to be shown early in the cycle potential reducing investment time to capital or revenue
  3. Begin to work out of your region. Sell outside your city, state, country to gain the experience of working outside of where you can walk to.
  4. Rethink Project and Organisational Structure. Start productising aspects of your service engagements.  Look for repeatable chunks of functionality and develop them into modules.
  5. Reward or incentivise staff for productising aspects of service engagements.
  6. Add product people to your team to influence the culture.
  7. Move people from services engagements to focus areas. Encourage an SOA model between bespoke staff and the component developers.
  8. Get offshore. Go to conferences, meet people, see opportunities, benchmark. Do a fact finding trip. Light up old contacts. Get out there and put yourself in a position where opportunities can happen. You need to do a major international event ever year.
  9. Link into ex-pat networks.  Often people want to come back and you can leverage their networks.
  10. Partner. Find other companies already in market. Find people with complimentary skills.  E.g. marketing, international business, legal.
  11. Sack some customers.  You will always be too busy if you have a full customer base so you may need to get rid of some.  Choose a specialisation and wind down engagements with those that are outside.  They will be fine. The next generation of services companies will pick them up and they can grow a business around those. In turn they’ll create a product company that pays taxes and funds your retirement.  Let those non strategic customers go.
  12. Identify opportunities to introduce capital into your business.  Maybe you can spin out a product idea and get that funded.
  13. Sell your business to release capital.  Think not so much about what your business is worth, but the opportunity cost of not using your skills to build a product.  Sell up, sell down to staff, introduce capital. You’re buying yourself the time to build the next big thing.
  14. Lobby for better Government procurement policy.  Reduce the friction to get those first great reference customers and cash flow to allow you to build a platform for going off shore.

 I hope a few people feel more motivated to start the journey.

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