transforming from a service company to a product company€¦ · transforming from a service...

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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.


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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


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


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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


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


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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


Other prominent examples

3M began as a mining company


Amazon went from an online book seller to a legitimate product company

Microsoft began by providing programming language services


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?


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


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


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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


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


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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


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


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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


Revenue model

• License by seat• Software as a service• Freemium



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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?


CONTACTS

[email protected]

+1 609.379.2764

www.treehousestrategy.com

@treehouseG11N

/steve-chu

/treehousestrategy


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