Productization of Services - Transforming Business Models for Scalable Success

As a business advisor and mentor, I've encountered numerous entrepreneurs struggling to scale their service-based businesses. My recent conversation with Eisha Tierney Armstrong, co-founder of Vecteris on Founders Unplugged, shed light on a powerful strategy that can help overcome this challenge: productization of services.

Watch Part One here:

What is Productization?

Productization is the process of transforming customized services into standardized, scalable offerings. It's about taking what you do best and packaging it in a way that can be easily replicated, sold, and delivered without being entirely dependent on a single person or small team.

Eisha provided a brilliant analogy that perfectly illustrates this concept:

Imagine a face painter at a children's party:

Customized service: The painter asks each child what they want and creates a unique design every time.

Productized service: The painter offers a menu of 8 pre-designed options, standardizing the process while still providing value.

Product: Instead of painting, the business offers face sticker kits that customers can apply themselves.

Recurring revenue: A "Face Sticker of the Month Club" subscription service.

This simple example demonstrates the spectrum of productization, from fully customized services to scalable, recurring revenue products.

Why Productize?

Scalability: Productized services can be delivered by more people, reducing key person dependencies.

Quality control: Standardization makes it easier to maintain consistent quality.

Efficient sales: Products can be sold through a professional sales force rather than relying solely on expert practitioners.

Recurring revenue: Products, especially subscription-based offerings, can provide more stable, predictable income.

Improved margins: Well-designed products often have higher profit margins than custom services.

Challenges in Productization

While the benefits are clear, many service providers struggle with productization. Some common challenges include:

Mindset shift: Moving from "I am the expert" to "This is our product" can be psychologically challenging for long-time service providers.

Skill gaps: Product development requires different skills than service delivery, such as the ability to run experiments and iterate based on market feedback.

Technology acumen: Many productization efforts involve technology, which can be intimidating for non-tech-native businesses.

Strategies for Successful Productization

Start with what you know: Look at your existing services and identify elements that could be standardized or packaged.

Embrace a test-and-learn approach: Don't aim for perfection out of the gate. Launch minimal viable products and improve based on customer feedback.

Invest in upskilling: Recognize the new skills required and invest in training for yourself and your team.

Leverage technology: Explore low-code/no-code tools that can help you create digital products or automate service delivery.

Consider hybrid models: You don't have to abandon services entirely. Many businesses successfully offer productized services alongside more customized offerings.

Overcoming Fear and Embracing Change

One of the most impactful takeaways from my conversation with Eisha was the importance of overcoming fear in the productization journey. Many business owners are hesitant to make significant changes to their model, fearing they might lose what made them successful in the first place.

However, as Eisha pointed out, the risks of not evolving are often greater than the risks of change. In today's rapidly changing business landscape, standing still is not an option. Productization offers a path to growth and sustainability that many service-based businesses desperately need.

Conclusion

Productization of services is not just a trend; it's a fundamental shift in how many businesses need to operate to thrive in the modern economy. While the journey may be challenging, the potential rewards – scalability, improved profitability, and a more sustainable business model – make it a worthy pursuit for many service providers.

As an advisor, I'm excited to see more businesses embrace this approach. Whether you're a solo consultant or running a larger professional services firm, exploring productization could be the key to unlocking your next phase of growth.

Remember, you don't have to go it alone. Seek out resources, join communities of like-minded business owners, and don't be afraid to ask for help. The path to productization may not always be easy, but it's a journey well worth taking.

Watch Part Two here:

Watch or listen to Founders Unplugged on the platform of your choice here: https://linktr.ee/foundersunplugged

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