Exponential Growth

Creating a digital venture out of a knowledge-intensive services firm.

 

Ian H Smith

In this blog post I talk about how a services firm can build growth from creating a new software business: a digital venture in the cloud. This is divided into three interdependent parts: Platform; Process; and, People.

The limitations of running a knowledge-intensive services firm are the inherent constraints of time and talent. There's only so many hours in a day you can productively convert into revenues and there are only so many people you can hire with prerequisite expertise to deliver these monetised services. This is a Linear Business Model. Your top line and cost line grow at the same rate.

There is another way to grow. You create a software business - a digital venture out of your services firm. This means creating software from brainware, and scaling. You can create a new, scalable Exponential Business Model for your knowledge-intensive services firm. Now your top line can grow exponentially away from your cost line. Software - specifically Software-as-a-Service (SaaS) - grows exponentially. It is not limited by time or talent. With no geographic constraints of a services firm, a digital venture also offers a great opportunity to expand and build value as export business.

From a founder/investor perspective, a new or spinout digital venture has the potential to generate shareholder exit values of at least 5-10x annual recurring revenues from subscriptions to software, versus typically x1 annual (non-recurring) revenues for a knowledge-intensive services firm.

Platform: Salesforce and Tangle.io

The best way to convert brainware into software is to build on an established, credible and secure platform. A great example is the Salesforce Lightning Platform. The key to this technology choice is the reduction of time and cost. Do not confuse lines of code with Intellectual Property (IP). Do not fall into the tech trap of thinking that a 'full stack' development of a new SaaS app gives you more control, more value from owning every layer in the technology 'stack'.

The best place to start a digital venture is on an established platform: a technology that provides all three layers of a modern cloud architecture, as illustrated below with the Salesforce Lightning Platform. In the jargon, this is the Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS) layers built on Salesforce and the underlying Infrastructure-as-a-Service (IaaS), managed by Salesforce, but running on Amazon Web Services (AWS).

By utilising the Salesforce technology, the services firm is free to take advantage of a prebuilt business logic and a proven secure solution, with the choice of region for data residency and a technology already used by over 150,000 organisations worldwide.

Salesforce enables the maximum use of No-Code features. This means that syntax-level coding is kept to a minimum, and where integration of the new software to existing apps is needed (e.g. accounting) then a Low-Code Platform such as Tangle.io extending Salesforce Lightning Platform is a combination I have delivered with success in recent new digital ventures.

All of this means innovations delivered in timelines measures in days and weeks. Through buiulding on a proven technology such as Salesforce Integration Platform and a complementary Integration Platform Tangle.io, a digital venture can be created for a services firm at very low entry costs and risks. So, having selected the Platform, let's talk about the Process.

 

Process: Brainware to Software

Capturing brainware and converting into software, specifically, a Salesforce-based Software-as-a-Service (SaaS) app, is best done through applying Design Thinking and figuring-out how to turn such know-how into an intuitive, digital solution.

You can read more about Design Thinking and learn about how to apply the Stanford d.school method to innovation. As the name implies, Design Thinking is all about thinking like a designer. This means creating empathy among all stakeholders in relation to a new product or service innovation. This is the foundation I apply in converting brainware to software.

In my work at Being Guided I also follow a set of Design Principles that turn Design Thinking outcomes into rapidly-generated SaaS apps. This is the conversion of brainware into software - and the enabling of a new digital venture that is built on an Exponential Business Model. As explained further in the above link and below, there are three important Design Principles in play here: Meaningful Journey; Fierce Reduction; and, Progressive Disclosure.

Fierce Reduction is expanded upon as a way to simplify digital innovation. Remove everything you can in the quest to make everything easier to build, and more importantly, easier to use.

This process can be extremely fast. In my experience, a new digital venture may be created within three months from starting a 5-step Design Thinking engagement to launching a new app with the Salesforce Lightning Platform and Tangle.io Integations.

People: Digital Venturing

Each new business created out of an established, knowledge-intensive firm will have different opportunities and challenges, but a common mistake made is when the existing services firm unconsciously constrains the new digital venture by blending existing services with new software 'tools' in a kind of 'hybrid' offering.

Of course, there may be a sound reason to blend established services with say, a new SaaS app, but the bigger potential usually emerges when the new digital venture is positioned away from the the existing services operation. When moving through the brainware to software process, the biggest value outcomes emerge when human expertise is captured and beneficial to other, often non-expert users - at scale.

This last point is true for emerging Artificial Intelligence (AI) but equally so for more mundane but powerful digitisations of human know-how. As illustrated above, the first step of Design Thinking - Empathize (and Empathy Mapping as a practice) - is the most important stage in converting brainware into software.

Let's imagine we have an online meeting with the subject matter experts from the services firm, joined by non-expert prospective users of the new SaaS app. In the Empathy Mapping process we will encourage the non-experts to ask the expert many questions about what could be described as one or more Meaningful Journeys in a given process, or set of tasks, from each User's perspective (in the jargon: the 'User Persona').

Through writing down and recording what people 'Say', 'Do', 'Think' and 'Feel' about each aspect of a particular process or set of tasks, this can then be reinforced by capturing each prospective User's Needs and Insights along the way. This becomes an iterative approach to feed into the second step in Design Thinking - Define - e.g. to Define a Meaningful Journey as a conversion of brainware into software. Here, we need to keep simplicity uppermost in mind. Remember: Fierce Reduction.

As we progress through the brainware to software process, we need to remember that we are translating expert know-how into an intuitive non-expert user experience with a new SaaS app. So, it is vital to also keep another Design Principle in mind: Progressive Disclosure.

A common problem with SaaS apps is to overload the User Interface (UI) for a Web browser screen (on say, a personal computer, tablet or smartphone) with too many options per view. Often, it is better to have fewer sections, components, fields or buttons on a particular UI view, but have more clicks through what should be a Meaningful Journey, with Fierce Reduction applied.

 

 

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