Your business is stuck, bogged down, cannot move forward... That’s when many of my clients come to me, so this week we’re going to look at how a de-coupling strategy can help some ventures to move forward.
Let's look at some companies I've helped (their identities have been disguised).
FastFlow Software provide advanced AI software to factories. Their software should be in factories all over South Africa but it requires customisation for each client, and with their small team they battle to install more than four major clients a year.
Firebird Learning provide an elearning platform to corporates. The platform can easily scale to thousands of users but each deal requires many hours of work with the new client to convert their training material into elearning formats.
Solving the right problem
Both companies have worked both long and hard at improving their productivity so that they can complete more projects. Their strategy has been to try harder. But they’re tackling the wrong problem. The problem they need to solve is a structural one.
Both have businesses that have two components: on the right side a platform or product that can easily scale, and on the left a project component that requires hours of consultancy work that cannot scale. The amount of project work for each deal is holding them down from scaling to many sales of their product/platform component.
The solution is to separate these two components. The company should focus on their product/platform, and outsource all the project work to one or more partners.
For example the software company can team up with a large systems integration company like PWC or Deloitte if they are a big player, or a smaller systems integrator if they are just starting. Systems integrators make money through project work - this is their business - so they are well equipped and motivated to take on work like this - and the bigger ones can easily scale to handle dozens of deals, so our software house can close many deals a year.
Our elearning company could take a different approach and work with an existing programme like CapaCITI at the Bandwidth Barn or CoachLab at The Innovation Hub that helps unemployed graduates to enter the high-tech workforce. They could help them to create a programme to train folk in developing elearning material - and then leave them to train up teams of people who can tackle all the project work for each of their clients. They can now focus on sales of their core project, while their skills partner is fulfilling their mandate of training people to enter the workforce. Everyone wins.
Apply this to your venture
Look at your own business, and ask yourself “is there a labour-intensive component that we could outsource?”.
If there is, giving all the baggage you’ve been dragging to someone else could free you to run like the wind…
Neil Hinrichsen is the founder of Koi. An entrepreneur all his life, Neil has cofounded two startups both of which were acquired, and is now working to develop the next generation of entrepreneurs in SA through his Koi platform, comprising a methodology for startups, classes, coffee sessions, mentoring, the KoiTips newsletters and a thriving online group. He loves working with young entrepreneurs who want to change the world. Neil also helps Microsoft with their BizSpark programme for top startups, provides mentoring at the Innovation Hub and other incubators, consults with corporates, advises the CSIR in South Africa on commercialising research, is an accredited specialist with the University of Pretoria and serves on the advisory board for Stellenbosch University's LaunchLab incubator. On the personal side he's involved in youth ministry and mentoring township teenagers. Learn more about Koi: KOI GUIDE | EMAIL email@example.com
Read more articles by Neil....