It's not just founders who need to switch their mindset, it's the whole team.
Big Shout Out to the brilliant People and Culture Expert, Ginni Lisk for her insights and feedback on this article.
The decision to become a more ‘productized’ company may be a no-brainer for founders. But for their team, the benefits might not be so obvious. Some may be up for it, some may be cynical and some may simply not be interested at all. Here are some things to consider.
There is a big difference between the work you do for clients when you are primarily providing them with professional services vs when you are delivering a SaaS solution.
People may love the variety that working with multiple clients and on multiple projects brings. Depending on what they do, they may find the focus on getting just one product to be the very best it can be less appealing.
Similarly, if you currently work with well-known brands, switching from producing creative work for ‘Brand-Your-Mum-Has-Heard-Of’ to hustling for ‘Unknown SaaS Solving a Niche Problem’ might be an issue for some people. I have a friend who worked on the Super Bowl halftime ad for Apple. She had meetings with Beyoncé, for f**k’s sake!! My fledgling SaaS app is never going to compete.
There has to be a change of attitude from ‘there isn’t a client request yet we haven’t been able to solve’ to ‘the client gets what we decide is most beneficial for the product’. Switching from thinking that each client can ask for bespoke work because they pay the bills, to being resolute about sticking to an agreed roadmap may feel uncomfortable to some.
Shift in Company Mentality
Companies may not realise it, but there has to be a mindset change and sometimes this isn’t always obvious to start with. It’s only over time that the extent to which a company’s philosophy is at odds with what’s needed becomes apparent. Some specific examples that I’ve seen include:
We’re not building the client’s business, we’re building our own. As an agency you’re basically a gun for hire and that’s OK. You’re creating something for the client’s business that they don’t have the time or expertise to do themselves. But your SaaS product has to support your business’s objectives first and foremost, albeit by providing something of value to the end user.
A focus on growth, sometimes at the expense of near-term profit. Managing your capital will always be important, but agencies often limit their investment in say new hires, to the margins they are making. SaaS requires a longer-term view about investment and ROI.
Individual Creative Outcomes vs New Product Features. At an agency we may celebrate the awesome TV ad we created for a client that everyone is talking about. But in SaaS, it’s more likely that the high fives will be on the back of a successful new feature launch. Is that going to float everyone’s boat?
Service companies often differ from SaaS companies in their organisational structure and their hiring priorities. For a start, where agencies like to find ‘rough diamonds’ (people with high potential but lower salary expectations who can learn on the job), SaaS companies don’t have the time. While early stage SaaS hires are often generalist (becoming more specialist over time and as the company scales) they tend to go straight to the most experience they can afford.
Similarly, consultancies might evolve their organisational structure slowly and organically, whereas at a SaaS company org design requires intention and - just that - to be designed! Suddenly someone used to reporting to the CEO may find themselves one or two levels removed as the company introduces its VP layer, for example. For some that might be difficult and they may feel that they have been sidelined. This is going to impact your highest performers the most; your best talent wants to feel close to strategy & direction setting conversations, creating a significant culture challenge in SaaS.
There are some specific adjustments based on roles, too.
Sales. When I ran my agency I used to love responding creatively to a brief. Each brief was different and you often won the work on the basis of your creative response to the problem the client had. At a SaaS company, you have to quickly ‘productize’ your response so it is uniform and consistent in order to be able to scale. If your sales people are really creative thinkers or solution architects, then depending on what your SaaS offering is, they may not like it. If they really enjoy closing deals more than writing proposals, then they’ll probably love it.
Project Management. In an agency, PMs will likely have multiple client projects on the go. Or else they might have multiple projects for one client on the go. Either way, they will probably know the clients’ quirks and preferences pretty well. Moving to SaaS, unless they are solely involved in on-boarding, they might feel like they are more removed from the client and much more focused on the internal elements of project execution.
Account Management. In an agency it will be about keeping the client happy. Being a trusted advisor and having a degree of expertise about the client’s sector and their longer term plans and aspirations. An Account Manager may only have one or two clients at any one time. At SaaS this role falls more within the realms of Customer Success where they may be responsible for multiple clients and the focus won’t be on the specific strategic ambitions of individual clients but more on making sure they are getting the most value that the platform can deliver.
Design. A designer could be working on multiple projects for big brands in an agency. But at SaaS, it will be about constantly improving the product and its promotion. There will be little opportunity to design anything for the clients however cool and sexy they may be.
Finance. At an agency where margins are king, the best people will be the ones who can ensure the company makes a profit whilst ensuring they do all they need to win and deliver the work at the right level. At SaaS, there will be more of an emphasis on growth at the expense of profit, even if that’s because they need to get to EBITDA positive in the next year or so. You can’t expect to operate an early-stage SaaS business entirely out of margins and grow quickly.
Inevitably, pushing your own product will require some level of investment (even if that’s of a bootstrapping nature) and some time before you start to see the levels of return you’re expecting. Some people might get twitchy about that. They may not understand why you would pivot from what seems like a sure thing to what seems less clear cut. They might worry that the company could run out of money and they lose their job. This isn’t a trivial concern especially if you have a family to support. Team member retention becomes an important and complex challenge in product companies
How to manage any transition like this?
This stuff is hard. I mean anything to do with people and their jobs isn’t going to have a one-size fits all answer, because it’s uncertain and personal. But I recommend three things you can do to help make things more manageable.
1. Discovery. Do an audit of who you’ve got and where you think they may fit in. Truly understanding the range of skills present in your organisation is going to go a long way in supporting this transition. A games developer in your agency is probably not going to be the best person to help you build your fledgling Insurance SaaS Platform. But a designer who agonises over a mis-placed pixel even as the client is screaming for the artwork NOW, might love the chance to spend all of their time making a product the very best it can be. What’s your priority? Do you want your best performers to come to the SaaS business, or do you need them to keep driving the agency forward?
2. Communication. When people are uncertain, they’re anxious. When people are anxious, it’s not fair, or sensible, to leave them to assume. Talk to your team about your ideas. Even if it’s just exploratory at the moment. Authenticity is more important than “selling” to your employees. In fact, creating a gap between expectation and reality will come back to bite you. You don’t have to reveal any major changes if you haven’t decided what they will be yet, just that you’re thinking of pushing harder on the product side and how would they feel about being a part of that and/or not working in the agency anymore?
3. When you have the plan - share it. None of this is going to happen overnight. For a while someone might be straddling both parts of the business. That’s OK, but if you can create a bit of a longer-term vision for where you think people will go, it will make the transition feel less overwhelming. As is always the case when nurturing people through a period of change, sharing a transparent roadmap anchored around milestones plotted to a timeline, is going to go a long way to smoothing out the process.