Join the club

If you’re looking for a great business model, look no further than to the subscription model. The idea of having a customer pay for your product or service on a recurring basis over and over again for all eternity is mouthwatering. Of course customers seldom stick around for that long, but I am sure you get my point; the subscription business model is where you want to land in terms of both profitability, predictability and viability.

But the subscription business model also has its huge risks. And the primary one at that is the obvious risk that some day your customer will wake up and for whatever reason decide that she doesn’t want your product anymore – and then she cancels her subscription and leave. Gone is the ongoing revenue, the nice profit margins, the predictability of your business growth and the viability of your business model. You’re left with wondering what went wrong, a challenge to replace the customer with a new one – and cost you won’t get covered in the short term.

Nevertheless the subscription model works. It has mechanics that works like clockwork; smaller customers love the ability to stay on one month at a time and have the flexibility to say yes and no, when they need to access your product. Bigger customers love the ability to sign longer term deals, so they don’t have to spend time on handling the expense every thirty days. There are winning scenarios for all.

The question thus becomes if there is another way of looking at the subscription model from another angle than one of pure financial mechanics and convenience? Potentially one that lets you work with the model in the context of your startup and enable you to build an offering around your subscription model that will add rocket fuel to the value of the offering, while significantly reducing the risk of customer churn?

It can be little surprise that I think there is. And basically it has to do with framing the model in a slightly different context; moving it from a pure business model to a strategy about creating a sense of belonging with customers.

If you want you could call it a club. I have always been fascinated with clubs and their ability to get people from different walks of life together in supporting the same cause or team. I am especially fascinated when that sense of belonging to and supporting something endures during times of hardship. Times where you might have every reason to walk away, but you decide to stay because you are addament or perhaps just hopeful that better times and success are just around the corner.

Those dynamics have power and real merit, and I think it could make sense to try and work on transforming those into a startup context; i.e. how can you create your own ‘club’ and a sense of belonging with customers, where they will stay with you almost no matter what because what you’re delivering to them is above and beyond the product or service as it is right now.

In order to become a club, you need to define a mission and a sense of purpose that customers will want to buy into. While I realize that most startups – and other companies for that matter – have vision and mission statements ad nauseam, this is different.

This is no afterthought. This is absolutely core. This is what you and your customers need to believe can become true at some point in time that is not too distant out in the future. Where do you plan to take your customer? What’s the promise, you deliver to them? How does ‘the promised land’ look and feel once you get there? Is the attraction, benefits and value of it enough so that customers will buy into it, because they can already sense it now?

Next up you need to figure out what the perks of belonging to this club are, as you embark on your journey together. Just as with any other form of endeavor, you cannot succeed without gas on the engine, so what is your gas? How are you going to keep the engine running and provide your customers something that is more than enough to keep them engaged and believing in the ultimate destination? And, importantly, what is the cost of keeping them happy along the way? Is it at all tenable, and if not what can you do to ensure it becomes so?

It is about creating fans of what you do. Kevin Kelly described the 1000 true fans theory years ago that basically says that if you can find 1000 true fans, who will buy whatever it is, you produce, you’re set. At least as an indenpendent provider. But there is no reason why that shouldn’t be scalable to a startup scenario; consistently building a following that is passionate enough about the quest you’re on that they will be buying into everything you do the path towards the end goal.

When you manage to do that you not only delight fans and retain them for the onward journey. You also have the potential to look into decreasing price sensitivity, aka you can start working with your pricing. Fans are not necessarily that picky – they will support you a long, long way before they start being concerned – and most of them will (at least if you operate in the B2B space) be deploying other peoples money. For them the price concern will be even less important – provided of course that you stay the course and stay loyal to what keeps you together.

That in turn will enable you to get to predictable growth. You will start being able to pretty accurately model the potential of adding new things to the mix and as a part of that also figure out when the timing is right to adjust the price in return for added benefits from the ‘club’ membership. I am not suggesting it becomes easier as such, as these things are still very complex to get right. But I am suggesting that it should be much more fun, since you have got the mechanics of the model working on your behalf.

So with all the above things being said, what do you need to create a ‘club’ feeling around your product or services and give customers the sense of belonging and wanting to belong to your cause? The answer, of course, is the right mix of talent and the financial means to get there.

To address the finances first, I am pretty bullish that if you can come up with a model where you can show investors the predictability, reliability and viability of your model from a financial perspective, they will be keen to support it. Investors are always looking for growth opportunities, and if those come in tandem with manageable risk at an acceptable level, it starts getting interesting for them. So that will most likely not be the biggest challenge.

The bigger challenge is likely going to be to find and attract the talent that will make the model work for you. Because it takes some special skills both within storytelling but especially within customer success and support. Furthermore it also takes a mindset that gives above and beyond the short term optimization one. If you are looking to making this model work and base your startups growth and future success on it, you need to be clear with both the team and your investors that you’re in it for the long term.

That’s what it takes to create a real movement that is above normal considerations for retention and will deliver the predictable growth and bottom line year after year; a club people will feel passionate about.

(Photo by David Jackson on Unsplash)

Amplification beats disruption

Disrupting markets have for years been a formula for success for startups. Be nimbler, nicer looking and cheaper than the incumbents in your market, grow at a blistering pace whatever the costs associated with it and you will be on to doing great things taking your idea from it’s inception into potentially a unicorn scale-up.

While these startups have been blasting the competition to the roadside, there are a couple of things, we haven’t really discussed. One is the obvious fact that the expansion has only been possible due to a presence of excessive funding, sometimes with very little prospects for developing a viable business model going forward (Uber comes to mind as the poster example of this). The other is the more important one; that in the quest for disruption, more value has been destroyed than has been accrued by the startup.

Of course there is no rule anywhere in the capitalist world that suggests that challengers should be mindful of not destroying more than they create, and you could also very well argue that for customers that are left with a better service at a cheaper price, it’s a pure win. But in terms of the prospects of economic growth on the longer term, I would still suggest that the business of disrupting things just for the sake of disrupting it runs counter to what should be our common interests.

The challenge with disruption is that in the absence of real innovation, disruption doesn’t create anything. To put it in other terms the size of the pie stays the same, as there is no real growth anywhere. Now, you could argue that customers being able to get more for less increases the overall economic activity and make the individual better off, because he gets access to more, but we need to ask ourselves whether we really do think that improving our economic prospects by going cheap is really sustainable?

Just ask the American middle class. Think about how much of their economic growth is really down to the availability of ever more cheap products and services – aka crap IMHO – than, say, an ongoing positive development in their disposable income? It’s a lot more of the former than the latter, and it’s actually quite a systemic problem that we have done preciously little to try and fix but will need to fix sooner rather than later. If not for anything else then for ensuring social stability in society.

It might be a small detour to take, but in essence my point is this: The things we celebrate as being innovations and creating value are really the opposite. A lot of it is piggy backing on extracting value that already exists other places while creating nothing meaningful new, and the end result is that while it undoubtedly leaves a few better off, it leaves more worse off. That’s not a winning recipe long term. It is a race to a bottom, you don’t want to reach.

So the question then really becomes how we might work to change this dynamic? How do we get from celebrating the gold calf into innovating in a way that is not only positive in itself but net positive for economic growth and with that society itself?

We need to get back on the track where innovation is about creating breakthroughs that unlock new kinds of value instead of sucking existing markets dry. We need to come up with technologies that create new markets that can in essence function as amplifiers of new markets.

For startups this means that instead of looking to disrupt someone already there and try to get their slice of the cake, the focus should be on how to ensure that the cake itself gets bigger, and whatever is added to said cake the startup in question will be well positioned to grab its significant share off.

Doing that will surely require a vision above and beyond 99,99 % of all vision statements ever presented by startups or corporates. But think about the opportunity? Think about being the innovators edition of Christopher Columbus setting sail to find something that no-one has found before only to end up with far more than what you were able to imagine, you would ever find?

We need that kind of imagination to replace the fighting for scraps in areas we already know really well. We need this to get a situation, where innovation is a net positive of a more significant nature than used as a cover up for ideas that could in essence very well be net negatives for all.

I’ll be curious to see who sets the standard first, and what kind of vision could emerge from this.

(Photo by Daniel Chekalov on Unsplash)

The future work OS

For quite some time I have been thinking about how the new hybrid work culture requires a new operating system facilitating getting work done through collaboration and efficiency.

I fully realize that there are a plethora of legacy systems for all parts of the journey out there, but on the other hand, I believe the opportunity is so fundamental that it warrants thinking about in OS terms. With all the different takes on how this is done through stitching things together, I think there is a need for a more hardwired system.

If that is true, the big question of course becomes, what the key components of such an OS could and should be. I have been thinking about that too, and the following is nothing more than a list of four different key components that I would personally love to see in such an OS. That’s by no means the same as somebody ever doing it, but bear with me and allow me to hope.

Fundamental to any work OS is the ability for me as a user to control how I can get distracted, when I am doing work. One of the big challenges to collaboration is the reality that you’re essentially always adapting your work to somebody else’s agenda, and I just think there is a huge loss of productivity in that.

I would even argue that the control of distractions would be as essential a component to a work OS, as privacy controls are in many other types of software. I need to be put in charge of defining what’s needed for me to be most productive, and the OS just seamlessly need to comply with that, once I have configured it. Putting some ML on top could allow to suggest adjustments to my configurations based on how I actual work, but that would be about it.

While unrivaled distraction controls should be a cornerstone, the OS should also be adaptable to different types of work cultures. That’s the second component of the five, I would love to see in a work OS.

Think of adaptable work cultures as essentially an extension of a role based user interface, where I get the experience, flow and features that’s essential based on how I work and how we work together as a team. That’s the cultural adaptability.

It’s an important component of a work OS, as there are significant differences in how different organisations like to work together. Some have a more conservative approach with a ‘command and control’ set of values, where others on the other side of the spectrum have more of a ‘we’re all in this together, so let’s help each other out’-approach.

The point I am trying to make is that the work OS should be born with a rich set of templates based on research and market insights that allows you to configure the OS for your culture with a few clicks max. That would be really powerful, and done right it could serve as an important digital custodian of company values and ways-of-working.

With both distraction controls and an adaptable work culture facilitated directly by the OS in place, we can focus our attention of actually getting meaningful work done. This is the third key component of my ideal work OS.

How does meaningful work get done? In many ways but one of them is by making it easy, fast and efficient to not only make business critical decisions but also to execute on them. Like a startup, I met lately put it, it is all about creating ‘the path of least resistance’. I really like that way of looking at it.

There are many approaches towards getting work done in an efficient matter and a lot of frameworks and tools that support those in various ways. I think the important part here is that the method applied resonates with the adapted work culture as mentioned above, so that decisions and execution are as closely aligned with the individuals and the teams preferences for getting things done as possible. The less we need to think about it, the better and more efficient it is.

Getting things done efficiently also includes tying things together in logical ways ensuring that conversations are transparent, and that meetings called have meaningful agendas and outcomes, and there is a process for follow-up that ensures that things actually get done and nothing gets lost between different chairs. A lot of those things can be automated through flows, and I think it should be a core part of the work culture templates with the opportunity to optimize the configurations as needed.

While process is important for getting things done and make efficient decisions, it is equally important to have the context for the decision present and ready. Thus a significant part of being able to have an efficient work OS is to have the data supporting decision making ready and available at any time.

Thus doing the mundane work of ensuring that the work OS can integrate towards any type of data and platforms that your organisation uses for storage and work will be crucial. There are already a lot of precedent in how to do these types of integrations, and there are several providers, who already provide a federated view from one interface into countless different tools and platforms. So it can definitely be done.

The more the data you already have gets integrated into the work OS, the more supercharged it will be. People tend to live their work lives digitally wherever their data is stored and available, so it will probably be one of the key drivers to easing the adoption of the work OS.

The goal with a work OS should be everybody in the organisation becomes part of it. Why? Because it’s the cornerstone of the fourth and potentially most critical component to why a work OS could be a cornerstone of the future of work both on premise and in a hybrid mode:

Programming and automating the ways-of-working policy of the organisation.

Ways-of-working will be increasingly important as the means of turning a set of values and policies into a modus operandi for how the organisation and the people within it work and behave with and towards each other as well as externally.

As organisations become even more hybrid, and most of the people in it will in periods of time be working remotely, having a firm set of values and policies will only increase in importance. It will be the glue that keeps the organisation together. But it won’t happen by itself. It will need help. By a set of configured and carefully calibrated and adapted rules and policies for the individual organisation that sets seamless boundaries for what’s good and productive behaviour and what’s not.

Most of us working with software in our daily work lives are used to systems setting up rules for us or at the very least having the capability of creating our own. But they are perhaps to disparate across different systems and in some ways also too much in flux all the time to be truly efficient. Ensuring a broad, common adoption and custodianship of the set of rules of the entire organisation will perhaps be the one point where the work OS will really be able to make a foundational difference.

In summary there should be more than enough opportunity in this space for someone to have a go at creating a true work OS; something that could be foundational to powering the way we work efficiently in ways that resemble the original PC OSs. Yes, that’s how big this opportunity is. Question is whether someone has the audacity to go after it in a way that is bold enough?

(Photo by Leone Venter on Unsplash)