In this paper, our consultants share common strategies to be pursued to be build a sustainable and profitable software product company

1. Browne & Mohan
Board & CEO Advisors, Management consultants
Building Profitable and Sustainable Software
Product Company

2. Browne & Mohan
Board & CEO Advisors, Management consultants
What common principles underlie success of Imitate, not Innovate
software product companies such as Newgen,
Nucleus, Tally, Polaris, Srishti, Mindmill, Quest While it is fashionable for academics to talk about
informatics, Druvaa, Infrasoft, Zoho etc?. Kim and first-to-market, most successful product companies
Maubrogne (1997)in their analysis of high growth are strategic imitators. They allow the first-mover
companies found that these companies focus on to discover the key features, educate early
bettering themselves, continuously let unprofitable customers, but ride on a me-too quickly to
customers go, and shed commodity capitalize on the market growth. This helps in lower
resources/skills. Hagel and Brown (2005) argue that S&M costs and improved ROCE.
growth opportunities will be monetized by
companies that deepen distinctive internal Let ideas fly from all, but focus to design for few
capabilities, mobilize resources of other companies Successful product companies seek ideas from
and accelerate learning. Collins (2001) in his widely multiple sources, beta clients, product demo
acclaimed book “good to great” identifies, the teams, end users, etc. But build the product looking
value of executive leadership, getting the right at where the friction is highest, pain is unbearable
people, focus on what a company is good at and and intension to pay is highest.
creating a culture of discipline, as the core
principles of great companies. On the product Design a product for reuse and as platform
development side, Reis (2011), Brown and
Design the product for big picture, but strip down
Eisenhardt (1998) have brought out the value of
to basic version to design first and market test.
building core (Minimum viable product or MVP) to
Later modules must be used for versioning and
reduce time to market and patching modules
bundling. Build modular products and products that
against market opportunity.
could be used in cloud or on-premise environment.
In this article, Browne & Mohan consultants Focus should be on minimizing customization, and
synthesize their learning of working and helping reduce variety at early stage to benefit from low
software product companies grow. code, feature and support variety.
Operative Market selection Exploit Ecosystem to maximize reach
While many product companies start off as services Successful product companies must learn to exploit
companies and later productize-their services, the product ecosystem. Whether it is the
successful ones are those that operate in markets technology OEM you have an ISV relationship with,
with periodic changes in regulatory requirements, analyst relationship, or a sales partner, they are
witnessing newer investments to scaling and good levers to reduce investments in your set-up
growth of enterprises in the industry and (people and other paraphernalia). Align your sales
operational friction exists due to proprietary resources to maximize the self-interest of partners.
approaches or tools. Long term sustaining software Align with OEM account manager to acquire new
product companies also look at markets where customers and “sales focused” no product
large MNC products exist, product acquisitions are companies in international markets to expand.
on raise and MNC’s are unable to address non- Partners and resellers help in market coverage,
behemoth companies in that sector. delivery and post-deployment support. Invest in
marketing and vendor management resources,
processes including training and certification

3. Browne & Mohan
Board & CEO Advisors, Management consultants
realised better results. Use every platform provided winning reference customers is a must, not all
by technology OEM to brand and reach out to clients must be treated as referential.
market.
Right pricing, adopt versioning
Academic institutes and interns are a good
Use versioning or hosted vs on-premise or CPU vs
platform to explore open innovations. Ideas for
new products, GUI modifications, market research, instance prices appropriate to the product
pricing and competitive intelligence and in fact environment. Create sufficient variants to allow
product development can all be areas where customers to do self-selection and a feeling of
qualified resources can be employed to your control.
company’s gain. Limited budget, Impactful Marketing
Keep sales structure lean and mean You do not have to splurge a lot to be noticed. In
Successful product companies need sales teams fact, many a business papers have paucity of good
where the client opening meetings may happen stories to tell on innovation, India based product or
through marketing events or resources on street, E-governance product. Invest in couple of resources
closures can only happen if they have sales team to engage actively with media and also create
that can inform and influence at senior levels of appropriate noise on social media.
organizations. Named account strategy will work if Many successful product companies has HR talking
the client organizations can be identified a priori, about the culture, what is unique and so on. Brand
they are far and few and the sales team has the all aspects of the company. See in what way your
ability to penetrate those accounts at all levels. unique induction program can become a business
Invest in sales operations case study or women employees returning from
maternity or other long breaks can immerse into
Successful product companies invest in sales the organization becomes an impactful article.
operations units, often led by a visibility into last
mile was high and the sales teams were mean and Hire for attitude, perseverance and initiative
lean. Successful software product companies do not
need hire noble prize winners, but committed
Credible and Consultative Pre-sales
people who would embrace common ambition of
To be a successful product company, invest in pre- the firm. They come with openness and curiosity to
sales who enjoy problem solving and consulting. learn, improvise activities within their control and
Use various platforms to positions them as solution innovate over time.
providers, thinkers, etc. Arm them with couple of
certifications, it helps to open many a closed minds While academic degrees and honours may matter
initially, what matters is positivism and attitude.
in many parts of world.
Choose employees who are keen to dirty their
Profitable license sales hands, shoulder a bit of other roles and open to
unlearn. Incentivize employees to attempt,
Many companies do not have the mix of license, appreciate failures and set them for win.
support and deployment worked out in detail and
with sales pressures may accept clients where the
license fee has been abnormally discounted. While

4. Browne & Mohan
Board & CEO Advisors, Management consultants
Rein in service cannibalizing product Hagel, J and Brown, J.S. The only sustainable Edge:
why business strategy depends on productive
Service revenues that come with product friction and dynamic specialization., HBS Press,
installations can be very tempting and wean away
Boston, 2005.
the focus away from the product if strongly not
reined. Many successful companies find themselves Johnson, R. and Soenen, L. Indicators of Successful
in service cannibalization over time and lose their Companies, European Management Journal, 2003,
long term sustainability. Limit your services play 21(3), 364-369.
and consciously promote partners to support roll
Kim, W.C and Mauborgne, R. Value innovation: the
out and de-risk yourself.
strategic logic of high growth, Harvard Business
Risk Management Review, 1997, Jan-Feb, 75(1), 1012-112
Product companies that grew and sustained Kopitov, R and Faingloz, L. Ways of transforming
momentum measured the risk and impact of their aims into results at Successful companies,
actions, though mostly subjective. Senior Technological and Economic Development of
management insisted on developing an approach Economy, 2008, 14(3), 312-327.
to estimate risks, their impact, however
rudimentary across organizations. Explicit Kotter, J.P, Leading Change, HBS Press, Boston,
identification and evaluation of risks helped the 2008.
companies question their assumptions and prepare Leonard, D. Wellsprings of Knowledge: Building and
for back up plans. Sustaining the Sources of Innovation, HBS Press,
De-risk, invest in R&D Boston, 1995.
Product companies must de-risk from technologies, Morgan, M. Levitt, R.E and W. Malek, Executing
products, markets and customer segments. Look Strategy: How to break it down and get it done,
out for related product usage areas where the HBS Press, Boston, 2007.
product could fit, refurbish the features Schnaars, S.P. Managing Imitation Strategies, Free
appropriate to a specific industry and monetize Press, New York, 1994.
extension of the product knowledge across
different customer segments.
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Browne & Mohan insight are general in nature and are
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Boston, 1998. approval of Browne & Mohan.
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make the Leap… and others Don’t, Harper Business © Browne & Mohan 2013. All rights reserved Printed in
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