Tech-enabled Service to Product Business Transition
Your portfolio company’s tech-enabled service business is growing fast but will hit the ceiling soon. Additionally, most employees spend time servicing a handful of key clients without a clear path to scalability. The company may have built technology for internal use to serve customers, but none are self-serving themselves via product creating a major blocker for scalability. I work with companies to validate the need and scope of a self-serve product. After validation, I take them through the journey to transition to a product business covering cultural, strategy and process changes, while significantly reducing risk and sunk costs.
Timeline: 9-12 months
Common transformation failures
How to approach the transformation of a B2B service business to a product business and achieve a scalable and product-worthy model, and common failures that cause service businesses to abandon efforts within months after starting the transition.
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Transformation Case Study — Lendis
Lendis offers solutions for employers to onboard and offboard new employees from anywhere in the world. At the peak of their hyper-growth phase, when Lendis struggled to keep up with customer demand, I worked closely with the leadership team to turn the ship around towards a product offering, aka a high-risk, high-reward move. We launched LendisOS, a self-serve portal for employees to create their ideal work setup, and validated and built a new business model that was insanely more valuable than the service business at many levels. We achieved this transformation success with zero customer churn and retained >90% of new customers with LendisOS.
Engagement: 10 months
Location: Berlin and London (Hybrid)
Transform Assessment Workshop
Your service business is thriving, with steady and predictable growth. Customers are highly satisfied and refer others to you. However, scaling up means constantly hiring and training staff, and updating your processes and team structure to serve high-value customers. Is it time to consider a partially or fully self-serve product for customers to help themselves? That’s the exam question for this assessment.
Many service businesses aspire to transition into a product-based business, but only a few can achieve a scalable and product-worthy model. Moving from a service-based to a product-based business requires significantly different skills, capital, people, culture and mindset, making the transition challenging. There’s no easy way to transition, but you can certainly adopt strategies and models to facilitate a smoother transition. This assessment will help you determine if the product is the right path for your business and what it will take to achieve that transition. You will receive insights and recommendations on the costs, timeline, process, culture and strategic advice to begin the transition.
Activities
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Understanding how your business operates, services, delivery, costs, margins etc.
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Assessing how teams are currently organised and how those teams deliver services, including communication and collaboration norms.
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Reviewing data, analytics, KPIs, and reports actively used to make or facilitate business decisions.
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Leadership interviews, especially Head of Ops and VP/Director of Ops, to gain insights into the processes, operational strategies, service delivery and process enhancements.
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Mapping or reviewing the processes utilised to service customers, including documentation, information retrieval and sharing, knowledge bases, inefficiencies and risk and compliance management.
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Shadowing the frontline project/account managers dealing directly with the customers to keep them happy and satisfied.
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To review and identify customer segments, customer profiles and their applicability to a product business.
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Mapping or reviewing the customer journey touchpoints to explore the gap and opportunities between customer expectations and service experience.
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Reviewing and exploring opportunities from the customer support desk by looking at interactions, customer inquiries, support requests and issue resolution processes.
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Workshops to explore the future state of a product-oriented business, go-to-market strategies, USP, revenue drivers and distribution channels.
Outcomes
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A process outline, based on your needs and circumstances, to conduct product discovery and validation. The process outline will cover steps, tools and techniques to evaluate market viability through experimentation, research and testing.
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A roadmap to transition from service to product business with key milestones and success criteria for each milestone. The roadmap will be designed for minimal disruption to the current business and successful customer transition in phases.
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A very high-level and rough estimation of costs and time involved in the transition, including some options for funding like customer-financed or VC financed. (I have a partner who can build a detailed financial model if necessary. It’s not my strength).
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An outline of the competencies, capabilities, mindset and cultural shift required within the business and the necessary buy-in required from the leadership team.
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Product strategy hypothesis for selecting and validating a product direction and positioning it in the market centred around customer needs and market opportunity.
Time
2 days to 3 weeks*
Location
Hybrid (Onsite + Remote)
Deliverables
Assessment report and the leadership team debrief
* It will take us 2-3 days to determine if it’s worth exploring the possibility of transitioning to a product business and another 12-15 days to determine the transition steps, requirements and roadmap.