In previous blogs, we have discussed the rising demands of PS businesses embedded in large companies. They are being asked to do more, solve more client problems, and provide material growth. When optimized, PS can drive differentiation and intimacy for the greater business. However, there are two primary challenges that can occur when growing an embedded PS business:
Challenge 1: Many embedded PS businesses historically grew to size and scale through product-attached services and solutions such as installation, implementation, and product optimization services. The staffing model therefore is often comprised primarily of technology Subject Matter Experts (SMEs).
Challenge 2: As PS businesses are asked to do more, the staffing model falls out of synch. The talent often lacks the soft, advisory skills and industry and market knowledge necessary to drive PS growth.
As a result, product-attached PS businesses often have diamond-shaped staffing models that primarily employ skilled and tenured product-based SMEs. While not inherently a bad thing, it can present challenges to achieving the “new” PS business’s growth goals such as:
- Higher Cost: Due to current employees’ experience level and niche expertise, they command high salaries.
- Harder to Scale: Hiring more individual contributor SMEs does not readily allow for transferring specialized skillsets to other less experienced employees, thereby constraining team leverage across more clients.
- Higher Business Risk: Lack of knowledge transfer may result in experienced SMEs holding the business “hostage,” as they independently possess unique skills and knowledge integral to business operations.
Therefore, solving the growth curve and corporate mandate often requires embedded PS businesses to shift their staffing models.
Transitioning to a pyramid – or leveraged – staffing model can benefit the business in a few key ways as it grows:
- Margin Enhancement: In a PS pyramid staffing model, leverage is created by having lower-cost employees doing most of the work that is led and reviewed by more senior talent that can then be more available to support additional client accounts.
- Scalable: SMEs serve as guides, sharing their insights with less experienced employees. The pyramid facilitates (and requires) knowledge transfer and normalized resource allocation.
- Risk Reduction: Because knowledge and skills are transferred throughout the organization, the business reduces the risk of “being held hostage” by any individuals; individual knowledge becomes team knowledge.
Changing the skills and staffing mix over time lays a new foundation that allows the embedded PS business to better achieve its updated strategic mission. In the next blog, we will describe the factors necessary to transition the staffing model.
Written by: Mark Slotnik
About the Author: Mark Slotnik has spent nearly 20+ years advising clients in the areas of designing and taking to market high-value business solutions, solution portfolio management, talent development, resource management, business process re-engineering and commercial software.