Post on 14-Jun-2020
5/1/18
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Transforming From a Service Company to a
Product CompanyWe architect the future
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
We architect the future
STEVE CHUPHOTO
ABOUT USMission: Help companies
grow
There is tremendousdemand for strategicplanning, managementconsulting, andtechnology advisoryservices in the translationand localization industry.
Treehouse Strategy is amanagement consultingcompany that helpstranslation and languagecompanies around theworld grow and get to thenext level.
We devise strategies topenetrate more customeraccounts, broaden thespectrum of solutions andservice offerings, andbring them to market.
We architect the future
5/1/18
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Agenda
• Characteristics of service companies vs. product companies• Case study• How to transition from a service company to a product company
We architect the future
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
We architect the future
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
We architect the future
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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
We architect the future
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
We architect the future
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
We architect the future
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Case study 4: Interpretation company
• Interpretation company in a very unique niche • Built a one-of-a-kind product around this niche
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Other prominent examples
3M began as a mining company
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Amazon went from an online book seller to a legitimate product company
Microsoft began by providing programming language services
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It could be that the purpose of your life is only to serve as a warning to others
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Failed products, missed opportunitiesWe architect the future
The demise of AOL…We architect the future
• The world’s first social media• One of the largest sources of content
Instant messagingWe architect the future
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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?
We architect the future
Key partners Key activities Value proposition Customer relationships
Customer segments
ChannelsKey resources
Cost structure Revenue streams
• Customer segments• Value propositions• Channels• Customer relationships• Revenue streams• Key resources• Key activities• Key partnerships• Cost structure
9 building blocks of business model generation
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The LSC’s Guide to a (Successful) Product Launch
We architect the future
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
We architect the future
Sifting through ideas – Value proposition
• Sift through ideas for products• Sift through ideas
for features• Sift through ideas
for revenue models
We architect the future
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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
We architect the future
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
We architect the future
Rule #1
Fail quickly
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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
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Outside funding
• Venture capital firms are generally not interested in service companies• Revenue-based loans• Angel investments
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Rule #2
A product requires a product owner, someone with professional product development and product management experience
We architect the future
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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
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Revenue model
• License by seat• Software as a service• Freemium
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We architect the future
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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?
We architect the future
CONTACTS
steve@treehousestrategy.com
+1 609.379.2764
www.treehousestrategy.com
@treehouseG11N
/steve-chu
/treehousestrategy
We architect the future