What you need to know to successfully run a digital company?
Eugen B. Russ – 16. Dec 2016
I have been asked several times what it takes to successfully run a digital company like Erento. Reflecting on this question, it is not was to answer it.
I have tried to assemble a comprehensive list of areas which I believe are critical to running a digital company. Although I have been now running one myself for almost three years some of the things listed below, I still need to significantly improve on.
There are five main areas which are mission critical at any digital company:
- Agile Product Development
- Technology and Infrastructure
- Online Marketing
- Structured Sales
- Business Intelligence (BI) and data-orientation
Agile Product Development as success factor
Every successful digital company works with one or the other agile methodology: SCRUM, Kanban, Extreme Programming (XP) to name some of the most popular ones. There is a lot of literature on these methodologies out there.
There is no clear winner if you would have to pick one: it really depends on the circumstances of the project (run-time, predicability, reporting expectations, etc.) and preferences of your team. We are running one team on SCRUM and another team on “SCRUM-Ban”, Kanban combined with fixed sprint lengths.
If you would like to learn more about agile methodologies in Product Development I can highly recommend this guide by Atlasssian: https://www.atlassian.com/agile
or for something a bit more dogmatic on XP: The Agile, by James Shore.
Understanding the current state of technology
As a CEO without formal technical background, it is key to have a strong technical counterpart (CTO) and to be aware of major developments in technology (technology stack – programming languages + frameworks – used by your team and deployment infrastructure).
There has been a lot of change over the past years in web technology but some parts seem to be settling slowly. Some examples of winners are: WordPress for CMS/publishing, Magento for shop systems, Cloud infrastructure (vs. self-hosted), Docker (vs. virtual machines), microservices (vs. monolithic application).
There is no holy grail for the technology you should use. It needs to fit your requirements: find a CTO/architect who is pragmatic and thinks economical. You can waste a lot of time and money trying to design for beauty (“ivory tower”) rather than usefulness.
The second important thing you need is a functioning delivery chain: a modern deployment infrastructure that allows your tech team to deploy continuously and without effort. This idea originates from XP (eXtreme Programming).
Think of it as the ability to make changes to your live application instantly (fully automated builds and deployment) and not in fixed release intervals (like every 2 weeks). This area is called DevOps (in an agile environment) and explaining it goes beyond the scope of this article but you can read more about continuous delivery / continuous integration here: https://www.atlassian.com/agile/continuous-integration
If you would like to learn more on technologies on a high level, check out this video and corresponding tech stack overview here.
Online Marketing: Reaching your customer
In the last couple of years the role of an online marketer has shifted more and more towards the role of a CIO. It is less about being creative and more about gathering and utilizing user data as efficiently as possible.
To be successful you need a detailed understanding of the user journey: Who exactly is your user, in which buying stage (looking for information, shopping around, willing to close the deal) is he and where does he come from / go to.
Beyond having an excellent understanding of SEO and paid (adwords, facebook, affiliate), you should really look deeply into programatic. This video will give you a good introduction to what you can do in this field.
Running a structured Sales organization
Ini this blog we have written a lot about how to set up a successful sales team. In particular our Head of Sales, Robert has written several great articles on that topic, for example:
In summary, the most important ingredients are:
- A functioning CRM system: we are using Salesforce and are very happy with it. Be aware that you will have to customize the system to your needs. This will take between 6 and 18 months depending on size and complexity of your organization
- „Sales split model“: Split up sales into pre-qualification, closers and customer support. These roles are distinctly different and should be split in any sales team bigger or equal to 3 people. Read more about it here.
- Data driven sales: have clear KPIs which you track regularly and which are visible to the entire team (transparency). Display them publicly on a live dashboard.
Business Intelligence (BI) and data-orientation
BI is a hot topic nowadays with everyone speaking about big-data and machine learning.
These two words are the most overused at any conference and I will bet you that most people who use it in their talks don’t even know the basic definition of big-data and machine learning.
Big data is simply amassing large amounts of data (and the process of analyzing such large data sets) and machine learning is an algorithm which is getting better („by itself“) the more data it is being fed („M.L. gives computers the ability to learn without being explicitly programmed“).
Most companies over-complicate the approach to BI and build dream castles that don’t help anyone. I believe it is key to first build a four layer data architecture:
- Raw data layer
- Intelligence / integration layer
- Analysis / presentation layer
- Tableau, Qlikview or similar
It will take some time to get the data into a structured form in your DWH using ETL processes (extract [from source], transform [into usable format], load [as structured data into DWH].
If you want to get started, first hire a data engineer who prepares your systems. Once you are ready get a data analyst and scientist on board.
At Erento we have worked out a “Happiness Index” that shows the likelihood that one of our customers will cancel. Our algorithm processes data like how much the customer pays, how many enquiries he gets and how often he complains and spits out a probability for the customer cancelling within the next 12 months.
Our customer success team can work proactively against the cancellation by optimizing the items of the customer, adjusting prices and thereby making sure his performance on Erento increases.
As noted, there are five main areas you need to master to successfully run a digital company: Agile Product Development, Technology and Infrastructure, Online Marketing, Structured Sales and Business Intelligence (BI) and data-orientation.
There is a lot more to be said about all of these topics: I have only superficially touched them.
Everything around us is moving very fast and will most likely be outdated in a couple of years. As a Chinese „curse“ says: „May you live in interesting times“. – we are definitely living in very exciting times!