Last year we doubled our revenues with a net gain of one new team member. That might seem improbable for a mature service company. Especially considering that we are essentially selling the time of the people on our team. It’s not impossible, but it is very hard. The secret is in the details.
Like most of you we’ve grown tired of success stories and lists posted on social media claiming to revolutionize your business so let’s provide some context. To begin with, we’re not a new company. We’ve been around for almost 9 years. It’s been a bumpy journey and some of those years have been tough. Most of our real success has been in the last 5 years. The short story is that we’re not an overnight success.
We’re also realistic enough to know it’ll become much harder to replicate our revenue growth in the same way we did in previous years.
A Focus on the Little Things
One of the constraints we’ve placed on ourselves is to remain at about 30 full-time people. That restriction means we have to focus on other ways to grow value. The path we chose was to make as many small marginal gains as possible. Our belief was that the aggregate of these small gains would lead to a large overall gain for the business. We started this journey to making marginal gains with the knowledge that are no silver bullets in business. There is hardly ever just one thing that improves your business. Success is an aggregate of many small things.
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Before we start explaining what we did I’d like to make a note about data. There is no doubt that data gathering is essential to getting the marginal gains approach right but it can also distract. Information is nothing without context and insight. The process of gathering and analyzing data can also be very time consuming. To avoid going down the data rabbit hole we chose to only measure the key metrics. Measuring how much traffic our website gets is meaningless if we don’t know what we’ll be doing with that traffic. We focused on top-line revenue, P&L, employee retention and deal flow (number of qualified leads in our pipeline).
A lot of what we all are working on cannot be measured accurately anyway. By giving our attention to a few key metrics we didn’t get distracted by numbers and percentages when we were supposed to be spending time with our team.
A few more things; the list below is anything but exhaustive. There are lots of small things that we did that aren’t on the list. There are also several things that we don’t share here because they provide a clear competitive advantage. Additionally we tried to optimize many things that have not produced results yet.
Here are some of the key things we optimized:
Focus, Values and Vision
This one is less of an optimization and more about incremental reinforcement of something core to success. By focusing on just a small set of values and a clear simple vision we were able to optimize our other activities. We had already created a vision and a set of values when we started the company. As part of our optimization process we fine tuned them and presented to the team as often as we could. At every quarterly ‘state of the company’ and during Monday morning stand-ups I’d represent our vision and values in some form. I’d highlight one or more of the values and connect them to a recent story to contextualize the message. Repetition is important, but context is more important. Connecting the dots between the values and the day-to-day work makes the values tangible.
Optimization Actions
- Communicate the vision and values as often as possible.
- Connect the vision and values to every day events to provide context.
- Connect behavior and tasks to the values of the company.
Hiring
People are the cornerstone of our business. That’s true of all businesses, but especially true of a service business. The traditional hiring process wasn’t working for us for several reasons. Recruiters were bringing the wrong people in and we were frustrated by the lack of good people available to hire. In the UX/UI industry there is a high demand for smart designers and developers but a pitiful supply of good talent. As in any low supply and high demand situation the salaries of the good talent go through the roof. We needed a way to develop talent that would be immune to market fluctuations.
To solve the problem we decided to create our own talent from scratch. We developed the AUX program to recruit, filter and train ideal candidates. The details of the AUX program are best described here but the abbreviated version is that we created a way to find great talent, develop a pool of candidates and deliver productive people in a way that has became a profit center. Initially it ran at a loss but we figured out were we could connect the AUX projects to client projects, which generated money. Granted its not a huge profit but considering the high cost of recruiting and hiring we are way ahead of the curve.
Optimization Actions
- Create a way to develop a pipeline of talent that doesn’t rely on market conditions.
- Try connecting that talent pipeline to a profit center so it can be self supporting.
- Use this pipeline to establish the company values.
Training & Education
Closely related to the AUX program was our decision to invest as much as we could into our team’s hard and soft skills. To achieve the efficiencies we needed to grow top-line and margins without growing team size we needed a model that would add amplifications over and above what was standard. We turned to the Navy SEALs methodologies of training to find what we needed.
By emphasizing frequent and ongoing education we reinforced our core skills and added new ones as needed. If you hire lifelong learners you’ll find it’s easy to get your team excited about training. If we could improve soft skills like presentation skills, negotiation skills, and communication techniques by 10% we would make a significant overall improvement in client interactions. Here’s a real-world example of this is how negotiation skills would affect our revenues. If our marketing is generating $25M in qualified leads and our close rate is 10% then we’d be making $2,5M in revenue. However, if we increased that close rate by 10% we’d close $5M in business with no additional marketing or sales effort.
All our full-time team members get a budget of time and money to spend on a topic that deepens their knowledge of their domain expertise. We call this program UXPERT. Topics range from LEAN UX research to evolutionary influences on behavior. Where some companies choose to spend excess time and money on side projects we choose to invest that effort into our peoples education. Each person is matched with an internal and external mentor as well as a supervisor. Our mandate is to encourage our team to go deep on a topic and become a world leader in that domain. After several months of study and reflection it starts to feel a lot like a PhD.
Optimization Actions
- Establish ongoing education as a foundation of your business.
- Treat everyone as individuals and craft custom education or training programs.
- Align the career goals of each person with company vision and values.
Sales
Business development has always been a core strength of our business. From the moment we started the company we decided we’d be “a business that delivered design solutions” and not a “design studio that happened to be in business”. That early guidance has served us well but we still had work to do. If you’re reading this and looking for a simple tactical solution you’re going to be disappointed. Everything we have done has taken time to reap rewards. Without a strong, dedicated and patient sales team none of the solutions we implemented would have worked.
We started with the lead gen things we knew would pay dividends in the long run – great content and consistent SEO efforts. Our data showed that our leads were coming from our events, our content and from search (primarily Google). Events are nothing more than content creators so they fall into the content category of lead gen. By developing a podcast, writing posts on our blog and others we were able to create a significant amount of content that generated interest in our work. The events helped us create a center of gravity around that effort by giving the community a physical way to connect to our team and our work.
By building dozens of landing pages we were able to take advantage of the massive amount of search for services like ours. Constant optimization and analysis of our SEO efforts over the last 5 years has resulted in excellent results for many of the top keywords and phrases our prospects use to find us. These SEO leads get the phone ringing – 3 to 4 times a day.
The cornerstone of our sales process is The Lens. This is nothing more than a tool that gives us insight into the realities of a project. Our experience has taught us what red flags to look out for and how to weight each of them. By seeking out the potential negatives from the moment the lead comes in we can know how much time to invest in a potential project. By saving a few hours on each potential project we save weeks of time in aggregate, which we can invest in the better deals. Some items on The Lens list allow us to translate negatives into positives but others are signals to walk away. Having the option to walk away is sometimes the best option you can have.
Don’t fool yourself into believing that a deal is closed because the client gave you a verbal approval. Many a great deal has slipped through over eleventh-hour legal or political hiccups. We are currently using Pipedrive to track our sales pipeline. We like it because it tracks the tasks related to getting a deal done as opposed to percentage complete. The discipline required to get a deal to the finish line is harder than just ticking off a box in a CRM. It requires lots and lots of small steps that guide a project the to signature and receiving the check. Each one of those steps needs to be understood and optimized.
Our sales efforts are non stop. Several years ago we took our foot off the throttle and paid the price. It was a very sorry summer. Since then we have pushed harder than ever to drive sales.
Optimization Actions
- Have a dedicated sales team. There is no substitute for a full-time, year-round sales effort.
- Create a filter that excludes badly matched deals to avoid wasting time. Focus only on qualified deals.
- Optimize known channels of leads like organic search and referrals.
Marketing & Community
One of the lessons we learned early on is that our peer community is one of the best sources of opportunities. By seeking out like-minded people, who share our interests and challenges we surround ourselves with the right ideas and the right opportunities. While most companies in our space were marketing to senior decision makers in their prospective client’s companies we have been connecting with the broader community. We did this by crafting specific events for the different audiences in the UX/UI community. The lesson we learned here is that we had to be patient. One or two events were not going to get the results we needed. By establishing an ongoing series of events we created a lot of usable content for the community.
We learned that we couldn’t just create an event and invite some people that we wanted to talk to. We had to involve these people in every aspect of the event. By inviting our community to co-create the events with us we showed them that their ideas were important. We asked our design and development community to speak at our events, provide content, display their work and demonstrate their skills. It took us a little time to get this mix right. By getting feedback and optimizing the event structure and content we slowly developed a large audience for the content. We still have lots of work to do but we now regularly have waiting lists for all our events.
The reason why this approach generates leads is because the community is where the influences hang out. In our client companies the influences are the lead UX, UI, dev and product people. We want to talk to those people about their projects and their challenges. Our events help them solve their problems by putting them in front of thought leaders and successful cohorts. If they like what they see they’ll connect that with Fresh Tilled Soil.
Optimization Actions
- Develop ways to reach out to your community and invest patience into truly connecting to that community.
- Design specific events that can be repeated year after year and develop a both short and long term loyalty.
- Don’t just host events, involve the community in the events.
Culture & Environmental
This topic can be further divided into categories like office space, work/life balance, nutrition and how you are treated in the office. This really deserves it’s own blog post because there are a million little things you can do to optimize environment and culture. I should also point out that culture is a very difficult thing to create or change, but you can nurture and support it with the actions you take.
Last year we moved into an amazing new office space. Some might argue that having nice office space doesn’t influence much, but I disagree. Since moving into our new offices we have heard time and time again from both team members and clients that the space makes them feel more creative. High ceilings, large windows and skylights to let in natural light and comfortable working and socializing venues project a feeling that this is a great place to be your best. It might be argued that a bigger window can’t lead to greater profits but every small detail aggregates to create a difference. All those differences blend to build a worthwhile and rewarding place to work.
Of course it’s not just lighting and furniture that make you successful. Details like the food you provide in the company fridge also make a difference. If you supply your team with soda and potato chips don’t be surprised if they look listless by mid afternoon. Our team has created running and cycling clubs and a large percentage use the gym in the building. Keeping your team healthy reduces the chance of seasonal colds and potential sick days.
Our culture is one of work hard, play hard but we don’t flog that to death. We watch it carefully but let it find it’s own balance. We meet with our team frequently to discuss how they are finding balance in their day. If we notice someone working too many hours we intervene before they hit a wall and burn out.
The research Dan Pink did on motivation has been formative in how we structure the team’s time, recognition, career paths and remuneration. Our training is focused on individual needs, while our team finds ways to recognize good work and reward people who demonstrate the company values. Over the last few years we reinvested our profits into getting everyone’s salaries just above market. We have also added several benefits that are hard to compete with. Some examples are the best heath care we can find, unlimited vacation, workation, flexible work hours and lots of opportunities to attend conferences and seminars.
Being sensitive to our team’s needs is something we constantly struggle with and are always looking for ways to improve. I believe that becoming better at this will be our biggest opportunity to improve as a company.
Leaders of digital design and development firms will have to pay more attention to these soft skill topics in order to remain competitive. My interviews with digital design leaders will explore these topics further.
Optimization Actions
- We spend most of our time at the office so make the office space a worthwhile place to be. Fix broken things and buy the best chairs and workstations you can afford.
- Throw out the crap in the kitchen. Healthy bodies and minds make people productive and happy. Buy healthy food options and encourage people to exercise.
- Develop ways to nurture your culture but don’t think you can control culture completely.
Last Word
My final insight on marginal gains is about discipline. Without it, none of this success is lasting. As I mentioned earlier, a few years ago we learned this lesson the hard way. Our success had lulled us into a false sense of security and we took our foot off the throttle. What followed was two of our worst quarters ever. We barely scrapped though. The lesson is simple. Never, ever stop moving forward. Develop the discipline and habits to create forward motion even when you don’t need to.