Mar 14 2011

Guest Post: Staying Innovative as Your Business Grows (Part One)

As I mentioned in a previous post, I’ve recently started writing a column for The Magill Report, the new venture by Ken Magill, previously of Direct magazine and even more previously DMNews. I share the column with my colleagues Jack Sinclair and George Bilbrey and we cover how to approach the business of email marketing, thoughts on the future of email and other digital technologies, and more general articles on company-building in the online industry – all from the perspective of an entrepreneur. Below is a re-post of George’s column from this week, which I think my OnlyOnce readers will enjoy.

Guest Post: Staying Innovative as Your Business Grows (Part One)

By George Bilbrey

As part of The Magill Report’s Online Entrepreneur column, I’d like to share some of Return Path’s learning about how to stay innovative as you grow. In Part One, I’m going to cover some of the organizational techniques we’ve been employing to stay innovative. In Part Two, I’ll talk about some of the practices we’re using in our product management and development teams.

When we were starting our deliverability business at Return Path, staying innovative was relatively easy. With a total of four people (two employees, two consultants) involved in selling, servicing, building and maintaining product, the environment was very conducive to innovation:

• Every employee had good conversations with customers every day—We could see the shortcoming of our tools and got great, direct feedback from our clients.

• Every employee was involved in every other function in a very detailed way—This gave everyone a strong intuition as to what was feasible. We all knew if the feature or function that the client was asking for was within the realm of the possible.

• We were very, very focused on creating customers and revenue—We were a startup. If we drove revenue above costs, we got to take home a salary. Every conversation and decision we made came down to finding out what would make the service (more) saleable. It was stressful, but productively stressful and fun.

We were lucky enough to come up with good concept and the deliverability services market was born. Our business grew rapidly from those two full-time employees to where we are today with about 250 employees in eight countries supporting more than 2,000 customers.
Growing our business has been one of the most challenging and fun things I’ve ever had the chance to take part in. However, growth does have some negative impacts on innovation if you don’t manage it right:

• Supporting the “core” comes at the expense of the new—As you grow, you’ll find that more and more of your time is spent on taking care of the core business. Keeping the servers running, training new employees, recruiting and other internal activities start to take up more and more of your time as the business grows. Clients ask for features that are simple linear extensions of your current capabilities. You don’t have time to focus on the new stuff.

• Staying focused gets harder as the business get more intricate—As your business grows, it will become more complex. You’ll build custom code for certain clients. You’ll need to support your stuff in multiple languages. You find that you have to support channel partners as well as direct customers (or vice versa). All this takes away from the time you spend on “the new” as well.

• Creating “productive stress” becomes difficult—At the point our business became profitable, life became a lot better. There was less worry and we could invest in cool new innovative things. However, it’s hard to drive the same urgency that we had when we were a start-up.

Of course, a bigger profitable company has advantages, too. For one, there are the profits. They come in awfully handy in funding new initiatives. And while they can remove the “productive” stress that comes from needing revenue to keep a venture going, they can also remove the distracting stress of needing revenue to keep a venture going. Second is the ability to capitalize on a well-known brand—the result of many years of marketing, PR, and thought leadership within the industry. Third, we have access to a much broader array of clients now, which I’ll explain the importance of in a minute. Finally, back-end support and process—an accounting team that gets the invoices out, an HR team that helps make strategic hires—makes the folks engaged in product development more productive.

So what have we done to leverage these strengths while also combating the forces of inertia? We’ve done a lot of different things, but the major focus has been, well, focus. For the two to three key initiatives that we think are fundamental to growing our business, we’ve built a “company inside the company” to focus on the project at hand. A good example of this is our recent Domain Assurance product, our first product to address phishing and spoofing. Initially, we tried to run the project by assigning a few developers and part of a product manager’s time with some part-time support from a sales person. It didn’t work. We weren’t able to move forward quickly enough and some of our folks were getting fried.

Our answer was to create a dedicated team inside our business that focused entirely on the phishing/spoofing product space. The key components of the “company inside the company” were:

• Fully dedicated, cross-functional resources—Our team represented very much the kinds of folks you’d find in an early stage company: development, system administration, sales and marketing. This team worked as a team, not as individuals. Many of these resources were fully dedicated to this new initiative.
• Deadline-driven productive stress—When we launch new products, they go through four discrete stages (I’ll explain this in more detail in my next column). We set some pretty tight deadlines on the later stages.

• Customer involvement, early and often—The team involved customers in building our new product from the very beginning. From continuously reviewing early wireframes, prototypes and then beta versions of the product, we got a lot of client and prospective client feedback throughout the process.

We’re still working on the exact right formula for our “company inside a company” approach, but our experience to date has shown us that the investment is worth it.