Scaling your digital Platform
Scaling your digital platform product
The advent of digital technology has helped many to build extremely useful online products with immense benefits. However not all platforms are successful despite the best features and usefulness. With some hard learnt lessons and scars, hence sharing this to help others make more informed decisions.
While building your platform you can look at the business internally as well as customer/partners/investors externally and at the confluence of interaction with the external world lie revenue generating opportunities. These are represented as columns in the diagram above.
You can also see your product in a market in which you exist and you look at value maximisation through different business models. These are options represented horizontally.
The journey is usually to the bottom and right while scaling up however this may not be an ideal scenario in all cases. The sequence that I have found it to follow is shared here
A. Any new idea or opportunity starts from solving a problem. Perhaps one customer at a time. It starts a a consulting endeavour with tool ( product) that fixes it. Many businesses die of natural causes here very simple reason is that they don’t solve a problem. Sometimes the developers of the solution get too entrenched in it. When you are holding a hammer everything looks like a nail. My friend Josh Rogers suggests that solution may not be perfect it can just be a rubber band and band aid solution to keep you going.
I was in conversation with Kanwal Rekhi a Silicon Valley VC who has helped many companies reached stellar growth suggests focussing on a narrow niche is really vital you really cannot be everything for everyone. You need to focus on what you do and what you don’t. Sometimes what you don’t is also dictated by the marketing timing. One of the most famous TED talks by Bill Gross is the value of Timing. It is everything. Like many others I made the same mistake of adding too many features in many of my early products. It creates noise and distraction. Minimise them as best as you can to offer the best functionality in the features you offer. If your offering is bundled as a product and service then you should endeavour to gradually scale down the service component and scale up the product component. Service can be a bolt on offering however if service is undifferentiated from the product then again it becomes for a buyer to find where the boundaries are. What is a product and what is a service. Service Level Agreements ( if you are selling to an enterprise become complex ) which becomes challenging if the product is rapidly evolving. The concept that I have come across very often is Minimum Viable Product conceptually brilliant however there is ambiguity around what is minimum, what is viable and what is a product. In a market with rapidly evolving expectation and large number of free and open source products the viability of your suboptimal product can be questioned. That said some of the market players have managed to game the system by leveraging free and open source products or even WTFPL license products and sell at a premium.
Hence the moral of the story here is
Ensure there is a boundary between the product and service
Ensure there is a narrow focus.
Your mantra should be Focused
B. Any product at its early and evolving stage goes through a large number of changes or rapid evolution. It can die of natural causes if it cannot adapt to the market or client expectations. Sometimes the survival does not depend on being better but more on adaptability. Many of us know why Beta tapes had a demise and VHS survived. The legacy of QWERTY keyboards pins on adaptability. As the product is going through early iterations the sales effort is relationship driven as the clients are willing to excuse some shortcoming in the anticipation of long term gains. Many of the clients are loss leaders who may be getting something for nothing ( NOT everything for nothing as it can be a trap, if you succumb to it, you may never be able to get out of and make your business viable). Relying on growth on sales effort at this stage is a mammoth task and uphill battle. Sales team can go and promise the world to everyone and the development team will try and make it happen. The result could be loss of focus and the solution trying to become everything for everyone. If the founders take the lead on the sales the challenge will be that they are doing everything from development to sales and it becomes an uphill battle. Hence having a focus early on and working synergistically with the market and internal teams is vital.
The mantra for success here is Synergy.
C. While your product is rapidly evolving and teams are entrenched in improving the solution and aligning the outcomes with customers targeting new customers becomes the key. I am sure many of you would know about the success story of Facebook and how they got started. They did not make cold calls however ensured that they targeted their emails to all those who may become evangelists( Seth Godin calls them sneezers) and help progress your interest much further than you can . Many organisations prefer push based marketing which work for enterprise grade products which huge sunk costs in development and staff. Push based selling may also help in scenarios where there is a high transaction costs where the buyer may be buying value proposition which extends beyond the product or service being offered. Pull based marketing which helps entice the customers on the value being offered by interacting with them in roadshows or engaging in other form of public relations or event driven activity. I have come across a very large number of businesses who express their primary frustration is “We have significant value to offer unfortunately no one knows us” . This step will help you get over the hum.
The mantra tor success at this step is to be Discoverable.
D. Don’t deprive the sense of achievement your users will get when they do something within your system however making it too difficult to use or a platform which is full of features (bells and whistles) can work as a distraction. Users of your platform can get lost in the nuts and bolts without solving the true business problem. You will need to look at the customer journey and then look at the journey they will take while using your platform. At every touch point or a point where your user interacts with the platform there is likely to be friction. Your purpose should be to reduce the friction. While you are reducing the friction try and increase the reliability of the outcome so that the users become more and more dependent on what you have to provide. The friction may not necessarily come from user it may also be owing to the compliance and governance standards you may require to follow. It might just be a standard in your industry try not to redefine it, people are resistant to change. If you have to offer better value by breaking standards please do however once you have entrenched loyal customers who are less likely to run away. Make the changes incremental. Ensure your self service platform can be well integrated within your clients workflows. When it comes to compliance and privacy standards ensure you are not only following client defined standards but industry defined standards too. (for example for privacy some standards are US: HIPAA, Europe: GDPR, Australia: APP11 ). If your platform has a global scope ensure it complies to the imposed requirements in the jurisdiction it is meant to serve. Clients will never ask for a minimum viable Ferrari.
Mantra for success at this step is understanding and adhering to Compliance to Standards.
E. Online products do adhere to this mechanism of pricing. There is a sliding scale which tempts the user to pick a set of offering and price for the offering bundle. Usually it gets cheaper and cheaper to get get a service when you buy more services. Effectively you spend more however you get significantly higher value. Idea here is to ensure you have something for everyone My friend (Late) Mihir Thaker used to call it Las Vegas effect. You can play from a dollar to millions. There is something for everyone. Likewise in your platform you have something for everyone. From free explorers to those who want everything. You are differentiating and maximising the outcomes based on the customer’s willingness to pay however customers tend to get more value out of the scalability of options.
The mantra here is Differentiation.
F. Developing channel partnerships is a next logical step. Your product has reached some stability, however still going through iterations. If it is available as an online platform then you can iteratively test in a development service, validate the test on a staging service with real world data and then move the changes to production service once you are happy. Platform developers are very comfortable in regular updates some which can occur few times a day. Just like using Uber, bricks and mortar retailers have extended the reach, finding channel partners can help you extend your reach in a similar manner. If you have channel partners, the key thing to ensure will be not to step on their toes by taking any action that is likely to squeeze on their margins. Channel partners usually have local relationship and any adversaries action legal or otherwise can impact your business negatively. Some simple equations to look here would be that customer acquisition cost has to be less than what you can make from the customer in a lifetime. What you can make from your customer or Customer Life Time Value, has to consider a number of parameters. A simple example can be found here, however if you need a comprehensive study you can ask the author. Adwords are becoming another industry standard. However there are number of studies out there that question the effectiveness of it. Affiliate marketing and other form of partnerships should be considered while scaling up.
Mantra here is Partnerships.
G. The services offered by the platform can be extended by many different ways. If it is a product you can offer ongoing webinars, online training courses. Workshops, training classes, differentiate service on the turnaround time, phone/email support, podcasts. Maintenance remotely/Maintenance on site and a combination and permutation of offers. This requires no change in your core offering however the peripheral services. You can offer maintenance contracts that entitle the users to get upgrades for free if it a standalone product. .
Mantra here is to see your offering as a Portfolio
H. It is no fun if you have to do everything yourself. You can ask your consumers to become partners and co-create the solutions with you. Consumers can create solutions and then monetise it using your platform. Many businesses have successfully implemented this strategy including Apple, rapidweaver and Alteryx. The key to facility this co-creation process is to provide the infrastructure that scales with consumers. The infrasturcture can be a membership or invite only system where creators pay to be a part of and then exchange ideas with other creators. The value of the platform increases exponentially.
Mantra here is Scalable Infrastructure.
I. Raising money by a brand named investor, or partnering with a giant gives visibility. This visibility along with commercial acumen of an investor firm helps Fuel the growth. I have observed (without naming) engage in legal war games just to get their names out in the press. Win or lose the publicity is priceless. The purpose here is to sit on the shoulder of giants and create scale by creating Monopoly (micro/mega) . I have noticed that many investors have hailed Uber and many are cursing it because it is not profitable and keeps on consuming large amount to dollars. If you notice carefully it is systematically destroying the incumbent taxi industry by investing significantly( and contrary to the common belief it does have physical offices. and physical presence).
The mantra here is to create (with or without using leverage) Monopoly.