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What I Learned from Interviewing Founders of Digital Agencies

Apr 10, 2020

I'm putting my podcast 0-100 on a pause. I hope to continue these podcast interviews after the worst of the COVID-19 situation is behind us.

While this pause is unfortunate, it's still a great opportunity for me to look back at the past interviews and see what I have learned from them.

0-100 is a podcast about how to start a digital consultancy or an agency. I interview founders of Finnish agencies (in Finnish) and ask them how they got started on their journey. You can read more about the background of the podcast here.

Here are some of the main lessons I learned so far from my interviews.

Your network is your biggest asset when starting...

The initial growth engine of almost all the companies I interviewed was the founders' personal networks. Before you get your first customer references, you will end up contacting the people – mainly friends and old colleagues – who already trust you and know your work. It almost seems like one of the variables with most impact in your company's success equation is the size and influence of your current network.

If you can't rely on your network to bring in projects for the first year of operations, you should probably start building relationships now and consider starting your company later in the future.

...but cold contacting can still work

While it's easier to find new business and employees using your personal network, Wunderdog and Motley are both great case examples of the value of cold contacting (contacting people who you don't yet have any professional relationship with). Wunderdog's CEO Mika Viskari found his co-founders using LinkedIn and contacting roughly 200 people he didn't know before. When Motley was still starting out, it got Finland's national public broadcasting company Yle as its client by relentlessly cold calling people and suggesting possible projects to them.

When you find your "why", marketing becomes easier

One of the youngest companies that was featured on 0-100 is Mavericks – a software agency of around 15 people. Instead of having a cool office and lots of fun employee perks, Mavericks tries to minimize its fixed costs and maximize salaries as best as it can. This approach has allowed Mavericks to differentiate themselves from other software agencies in terms of recruitment.

Jouni Jaakkola, founder of Mavericks, told me that in the previous agencies he had worked at, standing out among other software agencies with similar names and vision statements was a big challenge. Now with a very clear and different value proposition Jaakkola has a much easier time marketing his company both to employees and customers.

Running a consultancy can be fun

There are some inherent downsides to agencies and consultancies compared to product companies: you can't scale your business and you constantly have to adapt to your individual clients' needs. Because of this, I always thought that running an agency is much less fun compared to running a product company. However, after interviewing the founders of Kisko Labs and Coventures (who have professional experience from product startups), I learned that the huge pressure venture-backed startups have to grow can make your work life much more stressful in a startup than in an agency.

Also, to avoid difficult customer relationships, you can do what the marketing agency Unfair does and allow yourself to say no to clients who are not a good fit for your company.

What doesn't bankrupt you makes you stronger

Many businesses are currently going through difficult times due to the economic slowdown caused by COVID-19. If you are working at a startup or a younger company, your company history up to this point might have been a story of continuous growth of revenue and profits. Maybe you're worried what the current crisis will do to your company culture that's so used to never-ending success.

If you are able to make it through the storm, your company might be better off in terms of strategy and culture than it was before the crisis. For example, digital agencies Motley and Kisko Labs have at one point had to sail through troubled waters only to come out stronger in the other end.

Final notes

You can find the feed of 0-100 at nollaviivasata.fi. Here are links to the interviews mentioned in this post:

Unexpected Lessons from Lean Startup

Apr 4, 2020

I read Eric Ries's Lean Startup from cover to cover for the first time this year. The book was first published almost ten years ago but it didn't take me so long to get to the book because I was unaware of the movement around it or because I disagreed with its basic premise. Having read individual chapters from Lean Startup and hearing a multitude of people discuss its lessons, I thought that sitting down and reading the whole book myself would have meant me studying concepts I already knew instead of uncovering new ideas.

But having finally read Lean Startup, I can gladly tell you that this was not the case. Some Lean Startup concepts and ideas were familiar to me, but I was surprised to read about some topics in the book. In this post, I'll share some of these unexpected lessons from Lean Startup.

All quotes are taken from Eric Ries and Lean Startup.

The uncomfortable truth about agile development

I was a devotee of the latest in software development methods (known collectively as agile development), which promised to help drive waste out of product development. However, despite that, I had committed the biggest waste of all: building a product that our customers refused to use.

Agile development teams pride themselves in collaborating with stakeholders and responding to new, unexpected business requirements instead of isolating themselves from rest of the business. However, these agile teams don't usually take any responsibility for the quality of the business requirements they receive. Agile principles assume that business is making smart decisions that are based on customer understanding and data. In reality, business might misinterpret data or try to convert their existing customer understanding from the offline world into the online world without enough new learnings.

In these situations, agile practices aren't going to save you from creating features that no one wants.

Cross-functional teams beat expert functions

Imagine you're a product designer overseeing a new product and you need to produce thirty individual design drawings. It probably seems that the most efficient way to work is in seclusion, by yourself, producing the designs one by one. Then when you're done with all of them, you pass the drawings on to the engineering team and let them work. In other words, you work in large batches. From the point of view of individual efficiency, working in large batches makes sense. It also has other benefits: it promotes skill building, makes it easier to hold individual contributions accountable, and, most important, allows experts to work without interruption. Unfortunately, reality seldom works out that way.

Why is it that in practice cross-functional teams end up being more efficient than organizations of expert functions?

Unlike a joint effort of different expert functions, cross-functional teams are able to work in small batches. When you work in small batches, you are able to reduce delays, handover time, rework, and interruptions caused by problems overlooked by other functions.

The benefits of small batch work and cross-functional teams are counter-intuitive. Which is probably why businesses are still obsessed with specialization and experts over autonomous teams with more individual breadth than depth.

You need to unlearn what your learned in school

As the head of product development, I thought my job was to ensure the timely delivery of high-quality products and features. But if many of those features were a waste of time, what should I be doing instead?

The ability to plan and analyze is one of the key skills of business graduates. However, in the world of new product and service development, those skills have very little value. You can only plan and forecast when you have a long, stable operating history. Engineer students on the other hand might focus on building things reliably and efficiently instead of figuring out what is it that they should be building in the first place.

New product and service development is filled with stories of failure. From the perspective of your business and engineering studies, this failure might seem like professional failure: not being able to provide accurate forecasts or deliver value as promised can be seen as a sign of an unskilled analyst or manager. However, in Lean Startup, this failure is a necessary step towards learning more about your customers. Discovery work is much more closer to trial-and-error than professional craftsmanship.

No tool is omnicompetent

Those who look to adopt the Lean Startup as a defined set of steps or tactics will not succeed.

Eric Ries does retell many validation stories from the likes of Dropbox and Zappos in his book. For example Dropbox's minimum viable product was simply a video in which they demonstrated how file sharing works using Dropbox. However, for every "proven" validation tactic you can find at least one counterexample. Readers of Lean Startup should take with them an understanding of the underlying principles of new product development – not a set of steps they can use to replicate success.

Billiard Balls and Predictability

Mar 28, 2020

Why is it that even the best billiard players can't reliably plan combination shots (shots where the cue ball hits another ball which in turn hits yet another ball and so on) that have three or four ball collisions? Wouldn't it be possible to simply calculate the required angles of the collisions and then as a world-class professional execute the shot with precision?

In the world of mathematical billiards (billiards where balls don't have mass) this would be possible. However, when playing real billiards you have to take into account all the uncertainties around us. The initial direction of the cue ball might be off by just a tiny fraction. But since this error gets amplified with each collision, the direction of the last ball might be something completely unexpected. The small imperfections of our billiard table have to be also taken into account.

Picture of an early billiards game

Let's say we replace our human player with a robot. This robot has mechanical arms that are significantly more reliable at shooting the cue ball compared to our human player. We also find a better billiard table with less imperfections. Finally we bring in a computer that allows us to input different data about our environment and then calculate the initial trajectory of the cue ball.

There are quite a lot of equipment and people around our table. We have the robot and the computer. There are engineers and scientists in white lab coats fine-tuning the robot and entering data into the computer. The human player is still in the room, curious to see if the robot can beat her.

At which point do we have to take into account the gravitational forces of all these people and equipment? The answer is after the sixth or seventh ball collision. The limits of our abilities to predict the events on the table are much lower than we might have guessed.

In fact, if you want to predict the movement of an oxygen molecule reliably after roughly 50 collisions, you have to take into account the gravitational effect of a single electron located at the edge of our universe.

These calculations are based on mathematical physicist Michael Berry's work. You can read his interview about predictability and chaos taken from the book A Passion for Science here. I first came across Berry in Nassim Nicholas Taleb's book The Black Swan.

Why do you need to care about the predictability of billiard shots? The point of this story is to help us notice the existence of uncertainties around us; even the smallest unknowns will start to affect our predictions dramatically as the chain of interactions grows longer. The mathematical world is unfortunately a fantasy.

Social Distancing and Habits

Mar 21, 2020

Because of COVID-19, we are all trying our best to switch to remote work, cancel social gatherings, and avoid public places as much as we can. What are the new habits you need to build to adapt to these current social distancing activities?

Before you can answer that question, it's probably a good idea to step back and look at what's happening around us. What's actually changing? There are obvious, immediate challenges that remote work and possible self-isolation has brought into your life such as having to take care of kids while working (this is something I have learned from my colleagues; I don't have kids myself) and not seeing your friends and colleagues in person. But there are also new things affecting your life that you might not have yet recognized.

In this post, I'll discuss some of the less obvious changes.

Physical activity

Team sports and group workouts don't go well with social distancing, and if those are your main forms of exercise, you have already had to figure out alternatives to them. However, have you noticed the other subtle ways staying indoors has affected your overall physical activity?

Some of my colleagues have seen their daily steps count drop by thousands of steps simply because they don't do their commute and walk around the office anymore. I'm personally not only taking less steps each day when doing remote work but also not standing up as often as I'm used to. Before I had to get up and walk to a meeting room when a meeting was about to start. Now I just put on my headphones and click a Google Hangouts link. Convenient? Yes. Good for my well-being? I don't think so.

Gratitude

Because of the virus, we are worried about our health and the health of our loved ones. In addition, the possible economic effects of the outbreak are frightening: businesses are already closing down and people are losing their jobs or getting laid-off. It's difficult to stay positive. These are definitely not the good times.

And because of this, it's also a great time to remember to be grateful. Instead of focusing on things that are taken away from us, we can pay more attention to the important people and things we still have in our lives. One way of turning gratitude into a daily practice is journaling or prayer.

You can read more about the research done about the positive effects of gratitude here.

Relationships

You are probably interacting less with your colleagues and friends and more with your partner. While having more time for each other is something that's generally considered a positive thing in relationships, suddenly spending more time together can easily introduce new tension and challenges.

Compare this to Japan's "retired husband syndrome": when couples that were used to spending long hours apart due to work started spending more time together after retirement, they started to resent each other instead of appreciating their new-found quality time.

It's probably a good idea for me to make it clear here that I'm not trying to compare your relationship to one of a dysfunctional retired couple. However, suddenly having more face time with your partner might not be such a blessing if your current way of interacting with each other doesn't also adapt itself to the situation at hand.

Final notes

What else has changed in your environment? What are the habits that you need to build to tackle the new challenges and prepare yourself for the upcoming months of social distancing? Remember that things like remote work are now your daily practice and not something you do every now and then – and that the best way out is through.

Tactical and Strategic Selling

Mar 15, 2020

To learn more about the differences of tactical and strategic selling, you can find a study about the subject in the context of project management services here. This study is the main source material of this post.

***

In this post I'll discuss the differences between tactical and strategic selling and why you as a seller should identify if your client is looking for a tactical or a strategic relationship.

Let's start by defining the terms tactical and strategic selling. In tactical selling the focus is on features and attributes that provide quick, limited scope fixes for your client. Strategic selling on the other hand addresses problems on the business level: the focus is on results and benefits that help your client achieve their business objectives as opposed to team or project objectives.

When you align your sales to match client needs, you communicate tactical values to tactical buyers and strategic values to strategic buyers. Otherwise you risk losing the sale or entering into a client relationship that is unsatisfying for both you and the client. But how do you know whether a potential client is a tactical or a strategic buyer? And what does this alignment of sales look like in practice?

According to a Harvard Business Review article by Frank Cespedes and Tracy DeCicco, buyers tend to be more strategic the higher up you go in seniority. More senior buyers are typically looking to address market challenges or opportunities whereas lower-level buyers are often looking for solutions to operational issues.

Because of this, higher-level buyers are much more receptive for valuable insights about the key trends in their business environment. Lower-level buyers on the other hand are much more concerned if you are a good fit for their project, and because of this, want to discuss more about features. It's also possible that your first sales meetings with a client are tactical and latter ones strategic as you start interacting with more people inside the client organization.

Do all of your clients get the same sales presentation or do you use the idea of tactical and strategic selling to address the right issues at the right level?

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