How I Did It Event Recap: How I Turned My Product Into a Service (and vice versa)
Two Inc. 5000 CEOs, David Harouche of Multimedia Plus and Bruce Eckfeldt of Cyrus Innovation, shared their strategies for transforming their business models with an audience of Greater New York area business owners and executives. Held at Inc. Magazine's headquarters in downtown Manhattan, David and Bruce both have a common goal: to improve their respective businesses through radical business model evolution.That's where their similarities end, however.
David's company provides training programs for the retail industry (for example, teaching a Gap sales associate how to sell this season's new sweaters). Based on a purely transaction model, David creates training packages whenever his A-List clients require them. Seeking a more integrated relationship with his clients, he's evolved that "product" model into a "service" model where he provides cloud-based training programs which allow the client to track the training progress of each employee and correlate that to their sales output. By transitioning to a "per user" model and away from a "per training program" model, David has been able to create a recurring revenue stream that will increase the valuation of his company by nearly 8 times!
Bruce's company provides programmers to large companies undertaking mega-scale software development projects. His company is paid by the hour for the services his programmers provide. He and his partners have been experimenting with a "product development" model so he can get beyond the "tyranny of the hourly wage." By redirecting internal resources to collaborate with other businesses who have specific market vertical expertise (for example a travel industry company), Bruce envisions moving into product development using his developers as a form of "sweat equity" in a series of start-up ventures. A home run would be a product that scales up and monetizes quickly, creating revenue in the short run and a big payoff down the road.
Both David and Bruce are facing the kinds of developmental stages of growth that's common for Inc. 5000 companies: they've developed successful client relationships, built a team, created cash flow and produced a lifestyle business, but scalability is a choke point to further growth. By evolving their business model, they seek to use their expertise and existing resources in a new fashion to produce a more scalable result.
Thanks David Harouche of Multimedia Plus and Bruce Eckfeldt of Cyrus Innovation for sharing your own evolutionary progress with our regional business community!
LEWIS SCHIFF | Inc. Business Owners Council
Lewis Schiff is the executive director of the Inc. Business Owners Council. His latest book is Business Brilliant: Surprising Lessons From the Greatest Self-Made Business Icons.