People of Product is hosted by George Brooks and Dan Linhart.
The show is edited by Larissa McCarty.
Brought to you by Crema.
Crema is a digital product agency that works with partners from top innovative brands to funded startups. Our team of creative thinkers and doers simplify the complex to discover the right solutions faster.
Welcome back to another episode of People of Product. My name is George Brooks and on today's episode, I had the pleasure of talking to Eisha Tierney Armstrong. I chose the CEO and co-founder of Vecteris. Vecteris is this incredible organization that works with everyone from service companies, startups, all the way up to fortune 500 companies. Helping them think about how to productize their services and offerings and how to manage a portfolio of products that can help them to scale beyond the billable hour.
She's also the author of “Productize”, the ultimate guide to turning professional services into scalable products. I had a chance to read this book and I was so excited to talk to Ayesha. She is a wealth of knowledge for thinking about. There's so much that goes into this process. It's really a mind shift of going from how do I provide these services?
How do I market and sell these services to maybe how can I productive these services? How can I offer the world a product that will scale these services? So I think you're going to enjoy this conversation if you work in a service-based company or any company for that matter.
And you're thinking about how can technology-enabled products maybe help us scale? This is the episode for you. So let's jump right in.
Well, Eisha thank you so much for joining me today. I'm super excited to talk to you. I've read your books. I'm ready to just dive right in. But I want to first hand it over to you. Why don't you tell us a little bit about yourself?
Sure. Yeah. So again, my name is Eisha Armstrong and I am the CEO and co-founder of a consulting company called Vecteris.
We are headquartered in Cincinnati, Ohio. But I don't think that matters anymore. Actually, even before the pandemic, we were what we call “fully distributed.” So yeah, but I live here in Cincinnati and I have spent most of my career developing, managing, leading, information services or data as service products.
And I did that for a long time for a company that was bought by Gartner in 2015, and then a few years in the media industry. And then I launched Vecteris three years ago.
Congratulations. You made it the three years! Which is the big mark I think they say. You're still going. That's awesome. That’s fantastic.
Yeah. Right. in the middle of a global pandemic and everything.
I love it. Well, tell me a little bit about your organization and what gets you up in the morning? What are you thinking about that you're really trying to help your clients or your customers with?
Yeah. So we focus specifically on B2B services companies who have some type of intellectual property that they're trying to monetize, or the title of my book “productize.” And they don't have the in-house capabilities to do it themselves. And they want a thought partner. Perhaps they want some capacity to do some market research, to design some products, to test some products. They want some help going to market successfully with new products.
So that's where we focus, but we specifically focus on those companies who are trying to make that transition. From one-to-one customized services to more one-to-many using technology.
So I may take this time to kind of selfishly unpack some of that. Because in some ways it's pretty much who Crema is, which is our organization.
We design and build custom software, right? So we're oftentimes doing it as a one-to-one. I have to hire enough people that are experts in doing that, and I have to sell enough projects to get that done. So that's an example of that.
Or a lot of our clients are consulting clients, right. So they're thinking about the fact that they have to have enough people to do the research, to do the interview questions, to kind of go in and look at the finances of an organization, and then enough clients to serve. That's a really big challenge, right? Because it's always a one-to-one formula. You can only ever scale as much as you have a workforce to do it.
Exactly. Yes. If you want to add new customers, then you have to add more people and that's not very scalable. So the companies that we work with are trying to get out of that business model and use technology to productize their services so that they can reach more people without having to add headcount at the same rate.
So give me an example of what that might look like. Cause I know what that might mean for us, but what's an example of how you might approach that.
Yeah. So let's say you are a marketing agency. And when you work with your clients on media planning or creating a marketing strategy, you're looking at certain sets of data. And perhaps you've come up with a unique methodology to analyze that data, to help maximize marketing spend, to help with efficient media planning.
But you're still using that methodology as part of a one-to-one customized engagement that you have with the client, right? Could you take that data and create a self-service portal that heads of marketing could go into. And access your data set. Maybe you turn your algorithm into some software that they can apply using that data set. And come up with their own media strategy or marketing plan using that approach.
In that model then that marketing agency could in theory be selling a subscription or membership at a scalable price. So instead of one-to-one, it could be one-to-many.
Interesting. So what does it take to kind of know - “Okay! Yeah I know how to do this consulting thing” or “I know how to do this service providing thing.” How do you go from - “I know how to bill an hour” to “I think I might have something that could be possibly...”
It's not easy, which is why I wrote the book. So one of the things that we noticed is that organizations tend to massively underestimate how difficult this is. Because not only does it require a different mindset. Like going from one-to-one to one-to-many is a different mindset. But if you're going to use technology that may involve skills that you don't currently have in your organization. If you're going to sell successfully, you probably need to start investing in marketing. Cause you're trying to like market to a bunch of people as opposed to one-to-one relationship building. So it's a totally different marketing and sales methodology.
So I guess then how do you know if you have something that can be productized?
Yeah. So the first thing I ask companies - is this solving an urgent and expensive customer problem?
Explain that. Cause when I saw that in the book, I thought, that's a provocative question but I had to dig deeper to kind understand what you meant by that. So explain that to us a little bit.
Yeah. Good question. So urgent means they have to address it, like in the next 12 months. So it's not something that they can continue to delay. It's something that they need to take action on. Expensive means they'll put resources toward solving that problem.
So ideally you're solving a problem that is both urgent and expensive. Because then you're getting to a real customer need.
And then I asked, who has that problem? So is it just one client that you talked to? Right? Because that's not scalable. So you need to find an urgent and expensive problem that an attractive customer segment has. Do attractive customer segment could be large.
It could be small, but high willingness to pay. Thinking through those types of screens. But that's the first thing you need to solve is something that solves an urgent and expensive problem for an attractive customer segment.
I hear it's really helpful. Because I know in our company's history, in some ways we kind of do some of this with our clients.
So a lot of the software we build today is going to be mostly helping organizations to run more efficiently. So they're thinking about using technology to help them productize, but more so internally productize. Right? But in the past when we worked with either small or medium-sized businesses or startups, they were trying to productize something that could be a one to many.
And the challenge was they went well we found a client. And we built this for them and they love it. And they're like head over heels and we're iterating on it. We're getting this feedback loop and it's totally the lean process. And I'm like, “Sweet. Where're your other clients?” Nobody else has bought it yet.
So I think when you're thinking about making sure that you're not just going back to your roots, which is just building custom software for one company. But then you point out in the book that the reality is if it’s just urgent or just expensive... it has to be both. So maybe you can unpack, like why does it need to be both? Or give me an example of where it can go wrong if it's just one or the other.
Yeah. So again, urgent is there. It's a problem they need to solve in the next 12 months. And that's because I want to go out there and test quickly, like the product-market fit. Like is there a market for this product? So if it's an urgent problem, I'm more likely to get market signals faster. Expensive again, because hopefully, you’re not giving your product away for free. You actually want people to pay money. Will they fork out the cash?
So for example. We were working with a company that had come up with a new way to visualize data. And there are a lot of other data visualization tools out there. There are also, you know, there's Excel, which most people have you know, on their, on their laptop or their desktop already.
And so what we had to discern is if it was something that people would spend money on. What we found is it wasn't a sufficient enough replacement or improvement upon what they already have to warrant any additional spend. Even though it was better, it wasn't an expensive problem in the eyes of the customer because they already had it a good enough solution.
How do you get to figure that out though? What's are some of the processes? Because I know we worked with a company for a short period of time. But come to find out the product they'd spent five years building - they'd spent over $3 million - and they had one customer. And it was themselves.
And all of their investing was an intention to scale this out. The question was, how might they have gone about this differently and figured out whether or not there was a market segment or not?
The good news here is this is an area where it's not rocket science. We apply lean startup methods when working with our clients and take a very rapid “test and learn” iterative approach. The way that we learn whether or not there's a market for it depends on the type of product.
It could include interviews. And you don't have to go out and do a hundred interviews. Usually, you know, 10 to 12 is enough. It could include a survey. It could include, you know, trying to sell the product before it's built to see if you get any. We call that sell then build testing.
So there are a lot of different ways that you can do this, that don't have to take a lot of time or effort, but you know, another, maybe two or three weeks added to the process to get some signals, to get some feedback, like that's really good hygiene and you can learn a ton that way.
And in theory, you end up saving six or eighteen months to a year of development.
The problem is I think then it's, it's a change of mindset, right? I mean, you're trying to convince someone, not that they shouldn't invest or they should invest. I think there's sometimes a willingness to invest, but the question is are we investing in the right thing?
And that's usually where people get frozen. Which the lean methodology - “build, measure, learn” - does teach us you don't have to MVP (minimum viable product). You can test these ideas out.
What does it look like when you go into a conversation with a key leader or maybe a key point of contact inside the organization and are trying to get them to shift in this way of thinking. From the services to the potential product or from the long-term investment into short experiments to prove a market. What does that conversation feel or look like?
So, fortunately, usually the leader I'm talking to is very bought in, like, this is their strategy. This is their vision. Their question is how do I get my team to implement this? And sometimes it's that you may need to bring in different people because the team may not have the technology acumen.
The team may be used to thinking very one-to-one as opposed to one-to-many, and can't make that mindset shift or jump that has to happen. The other thing is performance measures are going to have to change.
So talk more about that. Cause I think that's a big challenge that's often missed. What does that look like?
One thing is that usually services businesses are great from a cash flow perspective. So you know, great cash in the door right now. Really hard to say no to those one-off client requests because it means I get money right now.
Versus a product business, you have to make an upfront investment. So you at least have to invest in exploring, like, is this a good market to go after. Designing your concept, testing your concept a little. Putting enough in development that you get that minimum viable product.
There's a lot of upfront investment that has to happen before you start to see revenue. And that means that it needs different performance measures than your services side of the business.
And that's a huge shift. I think every product shop that I've ever met or talked to has said, well, cool. Have you tried to build your own product yet? Yeah. Like, cause we have all these people capable of building a product sitting around us and we're building other people's products. Why wouldn't you build your own? Right.
And it is that shift exactly what you described that going from, you know, what they're going to pay me, which means I'll have capital in my bank account revenue tomorrow, relatively speaking.
And then we can keep this thing going. Versus that investment that you talked about, the appetite for that investment, a tolerance for that investment and that ability to say, okay, it's a risk. You know there’s a potential this doesn't work out and that investment is a loss or, you know, like a good entrepreneur it’s a risk-reward. There is a potential reward on the other side. That's big.
To be successful, it requires ring-fencing those investments that you make and building the product. So a big mistake that I see organizations make is they try to build products off the side of their desk.
So you maybe have a consultant who isn't fully utilized, right? So you put him or her on developing a product or working on something for a few weeks. And then they go back to client work that, you know, the instant, another big client comes in. That is not a recipe for success. You need people who are fully devoted to this.
Which requires investment. And those individuals need to have different performance measures, different compensation structure than the services side of the business needs to have. And in fact, this can be such a shift for organizations that I'm seeing more and more companies decide to split the two businesses. Because it's too hard to have them both under one roof, especially when you get to issues of valuation and things like that.
Yeah, that's insightful. We've seen some other product studios, larger ones that have literally said, well, we're going to spin this out as its own company. Because it's just too much in conflict. Or even then becomes a morale or a culture issue because it's like, oh, well that's the fun project.
That's the one that's making high margins potentially. Or that's the one where we get to explore, test, and learn. And we don't always get to do that with our clients. So there's, there can be even a cultural distance as well.
When you get an MVP, if you find that something is sticking and they're getting some customers, what does it take to keep going?
Because again, it's a little bit different. We've done this where we've had. Or actually a couple of different products where I was like, Hey, people liked it. They used it even paid for it. But again, clients are knocking on the door. We don't know how to continue to sustain that. Is it the same issue of having to have dedicated resources towards this?
Yes, and… so we call it “launch boldly.” And the reason why we call it launch boldly is that you have to do a couple of things. The first thing is you have to overcome your fear of cannibalizing your services revenue. And again, this gets back to like mindset.
For example, the one that I used at the beginning, like the marketing agency that uses this data set and this approach to do media planning. If they all of a sudden create a portal that a head of marketing can go into and for an annual subscription fee can access the same data, do the same analysis. It doesn't require them anymore. Like, is that going to eat away at their services revenue?
And if the product is aimed at the same target segment of their services line of businesses, it probably will. So you have to think through that, like, do I want to create a product that serves the same segment that I'm serving right now in services? Or do I want to go perhaps downmarket and create something that a more price-sensitive segment could use for example? But even then you're running the risk that it could eventually cannibalize your services revenue with your higher price segment.
The other thing you have to think about is if I don't do this, will somebody else? So we talk about it. And it's outlined in the book - the three C’s of cannibalization. Which are customer segments - so can I go after a different customer segment. Complimentary - can I offer or create a product that compliments my services as opposed to replaces replace the services? And then the third one is “Christiansen” after Clayton Christianson who wrote the book disruptive innovation. And really the encouragement there is like, think about disrupting yourself before somebody else does. And what might that look like?
So that's a big part of launch boldy. The other part is the other thing that I mentioned previously, which is if you're going to go and sell one-to-many, that is a different sales strategy / marketing strategy. Which requires investment, like building the product is not enough. You also have to invest in getting it to market.
We talk with our customers a lot about this is that there is this adage or this mindset, I think, unfortunately, because of the journalism that happens around tech companies, in general, gives the sense that they built it and people came and that it became successful. Unicorn status like overnight.
And if you go and talk to the people that were a part of those organizations or are a part of those stories and say, tell me what it took. It's like, well, it was a huge investment, a huge risk. We almost couldn't eat for, you know, forever, however long. We didn't figure out even how to market and sell it to a lot of people until we kind of stumbled into it. It's this much messier and heavy thing than if I just had the piece of tech we'd be successful. And I think that that's what you're getting at is it, it takes so much more work. It is hard work to do.
I don't want to call it trendy. It's super important right now. If COVID taught us anything, it's that if we've been lagging and thinking about digital innovation and how to digitize the delivery of our services, like we've got to catch up.
Not just because people are more digitally savvy than ever, but also like there are so many startups, very well-funded startups out there. We're so well-funded, they're buying market share, that you're if not competing with them your business eventually will erode. It's not trendy.
I like that language a lot. Cause it's important, especially in services. You talked about the fact that primarily your target is you're helping people with services to turn it into a product. And I think the reality is the services are pretty comfortable.
This model worked and we know how to do it. We just think it's always going to be here. Blockbuster thought movies would always be sold from a retail store. But the model can always be changed. One of the mantras we have here at Crema is if we're the same two years from now, as we are right now, then we're on our way to be being irrelevant.
It’s just either you have to change and adapt. Or the world will change and adapt you out. And so I completely support the idea that people have to be doing this. If they want to make meaningful changes, if they want to serve their customers well.
What are some of the biggest challenges people come up against? We already talked about resourcing and investing. What are some other challenges that they come up towards? Maybe the ways that they get it wrong?
I outlined in the book, what I call the seven deadly mistakes of productization.
And one of them is thinking that if I just get the right process. Like if I can just implement lean for example. Or if I can bring in like an agile coach that'll solve everything. And unfortunately, that's not true. It starts with the people. And part of that, which I mentioned before is skills.
So it may mean bringing in new people that have new technology skills that you don't have working with outside developers - rather than trying to build your own development team from scratch. Like, you know, you really have to think through like, how am I going to access the skills that I need to do this. Then also you've got a culture clash between the services side and the product side.
You have to think through the culture change. So, what are the behaviors of a product-led organization versus a services-led organization? How do you get your leadership team to start practicing those behaviors and embodying those behaviors and modeling it from the top.
So you're saying leadership should start doing this then others will.
Yeah, absolutely. Performance measures, that's another key thing that has to change. So all the things that affect people and their skills, how they feel about themselves, how they're compensated like that, unfortunately, gets short shrift. And it's what stands in the way of a lot of organizations being successful.
It's one of the reasons we named this podcast People of Product. One of the challenges that we saw was that people kept talking about products and process and technology or tools. And nobody went back to the fact that there's human beings doing all that work. This is about bringing in a diverse group of people together with different perspectives, unique perspectives, getting them to be aligned and moving something pretty hard forward.
It is hard. Yes. And if I've made my career out of being really good at knowing what does George Brooks want and how do I deliver it to George Brooks? I'm going to feel threatened when people say, this is no longer about George Brooks. This is about like a market segment with these attributes and thinking about how do you get, you know, certain penetration of that market segment. I'm going to feel like the way that I create and add value is under siege.
And that's an identity crisis right there. This is a counseling session. I get it. It's funny because I had a mentor one time who said, George, if you want Crema to scale, you need to replace yourself.
Because early on, I was a designer by trade. So people were hiring me to do user experience design and I would product manage it. And then I couldn't get it all done. And he said that. But if you want to do anything more than work hundred-hour weeks, then you have to figure out a way to scale it.
Now, this was just for me to run my organization. But the model I think is what you're talking about is the exact same thing as it applies to the company serving the market, correct? How do you replace yourself so that you can scale? Scary! Because now I have actually done that just as of January this year, I have nobody to report.
As of right now, we have 55 people on staff and I don't do sales. I'm involved in a bunch of things and I'm influencing things, but this organization has figured out how to do this because we've invested in this. I'm like, what do I do? Podcasts?
And I think it's just an example of the personal attack that you can feel if somebody says your company needs to do this - whether you want to or not. We had a conversation with a big consulting group. We were kind of targeting them as a potential client and his title was “product.”
And he said, here's the issue. I built a cool product that would make all of our consultants do less work. And they all went, “I don't want to use that.” Because to your point earlier, it was a huge threat. They were like, I get paid by the hour, or I get incentivized by the hour to write long reports in Microsoft word. With a Microsoft Excel visualization at the end of it. You just automated this with some artificial intelligence, I'm no longer valuable. So we are sure as heck, aren't going to open that piece of software. But you could unlock the potential of that organization just scaling like crazy.
Yeah. And the trick here, George, is that if they don't use it, one of their competitors will start doing it. And then they'll free up their consultants to spend their time on more value add things. Or they'll use that efficiency to lower their rates or whatever, but like, you know, this is going to happen.
I know I want to be respectful of your time, so we're going to wrap up or get close to it. So. I didn't ask you this before we got started, but what's something that you're excited about?
So where I'm most excited right now is the changes in corporate structure that I alluded to. Organizations are finally realizing that yes, the services business is very attractive.
Like cash flow is great. I've got a great team. I figured out how to do this, but in order for me to be successful at the product business. You almost need to carve it out and make it a separate thing.
So what I'm most excited about has nothing to do with technology or design. It has everything to do with the organizational structure changes that I'm seeing our clients finally get around to.
And again, I love that because it ring-fences product. It gives them their own separate culture, their own separate performance measures. And I think sets them up for more success than if they're trying to do it off the side of their desk.
Oh, I love that. That's exciting. And I think more organizations need to hear that leaders and organizations need to hear that, but there is a huge potential for them to do this great work, but it takes a lot of intentionality.
Well, this has been fantastic. Thank you so much for exploring this with me. If you, oh man, I want you to plug the book because it's so good. I got a chance to read it. And I really mean that. So I want you to go ahead and tell us a little bit more about where people can find you and the work that you're doing.
Thank you, George. So the book is called “Productize: The Ultimate Guide to Turning Professional Services Into Scalable Products.”
You can get it on Amazon or wherever you prefer to buy your books. And you can learn more about me and Vecteris at vecteris.com or theproductizebook.com. So either one of those URLs will take you to all of our great stuff. I'm on LinkedIn. People can feel free to reach out. And this has just been a delight, George.
It's my pleasure. Well, thank you for what you're doing. Because I think that's a big thing. Is that again, we go back to the fact that this is about people. And this is not an easy business to be in. What you're doing to kind of get people to change. People don't like change! Thank you for coming on the show today.