Earlier in my career I worked for a company that had, over a number of years, built a thriving service business. We took esoteric software and created demos that sales people used to sell their products.
We kept the company lean and only hired when the client work exceeded our staff. We’d found our niche, and everyone we added to payroll had to contribute to our mission of creating killer demos. We charged a premium for our services, and our clients were willing to pay for quality work and attention to detail.
The company was humming along nicely.
And then one day, our CEO decided that we needed to go into the software business. But providing a service is very different than building a complex piece of software. Different skill sets are required. We’d never created software before but how hard could it be? To many, it seemed like a natural extension of our current business. Few CEOs understand what it takes to create even the simplest piece of software. It’s a lot more difficult than tossing money and a spec at a developer. It all seems like magic to them.
But it wasn’t.
Payroll swelled as programmers, testers, and program managers were hired. A few people were hired because they were considered “super stars”. One “super star” earning six figures spent his time creating an online accounting system. We didn’t want to lose out on hiring this guy, but we hadn’t given much thought to what he’d be doing day to day. I worked with him for a year and, to this day, have no idea what he was hired to do.
Our culture slowly changed. No longer were we a close-knit group who knew what each other worked on. The new software project quickly became the cute new girl in school that everyone wants to date. Employees working on our stable services business were pulled over to work on new software. The focus of our company changed from a solid if somewhat less flashy business to one with untold potential. Never mind that we’d yet to sell a single software license. But the potential for sales was staggering. At least, what’s what we were told.
I began to wonder out loud if any company, let alone one with 30 employees, can run a successful service business and product business.
We knew we were great at creating demos, but got distracted by the margins and sexiness of creating software. Our CEO got bored of selling merely a service and decided to jump into the software business with little experience or plan.
In less than two year our small company was a shell of itself. The software project ultimately crippled the services business. Potential failed to pay the bills.
How does your company go about growing the business? Do they stick to what they do well and try to expand on that? Or do they blindly jump into new markets?
The lesson I learned was to pick something I’m good at and go after that with as much passion and grit I can muster. It’s easy to get distracted by what competitors are doing. It’s easy to be blinded by the shiny new technology. But doing so will ultimately pull you away from what you do well.
Which begs the question: What do you do well?