Sometimes it doesn’t make any sense to sell it. But if you want to start a new project you need to make this company self-driving. That was always my goal and in this article I will share how I did it. Building a self-driving company is especially hard in the service industry, but still possible. I’ve co-created two successful software professional services companies and one design agency. These three companies operate successfully without my input.
It would be great to start from building / figuring out how your company really works. Maybe it was designed, maybe it just happened. This step is more about describing how it really works than about creating an ideal model. For Divante we see this positive feedback loop as a core business model.
As you see we started with the People, then we focused on winning clients from a specific sector (present or future leaders of the eCommerce industry), when building projects for them we were looking for opportunities to create some open source projects and publish them. By doing so we attracted even more great employees. The moment you start to see what it is that works for you, describe it in a detailed way. This is the core of your business model that you would like to keep. Then, create an excel/spreadsheet model with real company data to simulate how this business model is executed in real life. For Divante we have built massive excel sheets with more than 100 parameters to simulate how the company really works.
Just a couple of KPIs we were tracking
Spread forecast 2019 (how much is missing from the 2019 plan)
The actual rate
The billability parameter
Bill people currently
Max capacity of projects
Plan for a change
Working days / hours
Number of working days
Number of working hours (month)
Total h theoretical available
Total h bill
Total h bill / per person
By doing so, we figured out that for our future growth it’s crucial to hire developers who are not only good coders but who are ready and open to work directly with the client. This KPI of “how many client capable developers do we have” was crucial at that certain time. Then, we spent long hours with all the Directors to talk about this model. At some point we started predicting the next month using this model. After each month we checked how close we were and what we missed. Our model kept improving with every month. After a year we were able to predict future revenue and ebitda with 95% of accuracy. Our directors feel more and more comfortable with this model and at some point they become ready to take the responsibility for estimating the whole next year's numbers based on this model. This is crucial. To have some people in the organization that feel comfortable with P&L. The majority of Founders skip this and take personal responsibility for P&L. If you are not sharing this element of running the company with others you will not be able to delegate it at some point. Later on we use this same model to educate even more people in the company about how our company really works.
For every service company that would become self-driving it’s crucial to make people interested and motivated in taking the responsibility for the business outcome. The only path to this is to build trust, educate and make a step by step approach to build accountability culture. This process is never ending as you will hire new people, things will change etc. It’s important to build a culture of accountability. You can start from OKR and then implement a 4DX approach when possible.
This is how the dashboard could look like:
It’s also a good idea to share these numbers and dashboards publically.
Just a couple of goals that are clear and suddenly the whole company is on the same page. We use measurable goals for the whole company. For example, in Divante, we share the following goals quarterly: Revenue, NPS and eNPS. These 3 numbers are in perfect balance. We need to grow while keeping clients and employees happy. That’s all.
Talking about the culture. This is crucial for the succession of the Founder. We used a series of meetings to ask every team about behaviours they are proud of and they want to keep despite the company growth. Talking about real behaviours makes much more sense than addressing abstract ideas. All these behaviours we found we then group and we figure out cool names for every group. These became our values. Every single employee was involved in creating these ones.
We’ve never printed it on a wall but we refer to these values during the recruitment process and when we make serious decisions. This is also our safety net. When bad things are happening in the company, people ask questions openly, addressing our values and asking publicly whether these actions are in line with our values. At some point we even changed our logo to be sure we never forget about our values.
We carefully hired people who are better than us. We created a new Management Board and we slowly decreased our involvement in operations. We focused on R&D and Culture. At some point we were ready to inform all the People we are moving to the Advisory Board. In Divante with more than 250PPL we got only 1 comment that someone feels bad because Founders are leaving.
Timing: 2 years
It took us 1 year to establish an understanding of our Business Model.
It took us another year to discover and work on our company values.
In the meantime we hired 2 new board members. They spent a whole year in their new roles before we left.
I strongly believe that every mid-size service business could become self-driving after 2 years. You just need to spend about a day every week working on this project. It’s perfectly possible.