May 4 | Dave GibsonSince its been said that we’re in the worst financial period in the lives of many of us… some seem to be interested in how we’re doing. The short of the short: yeah, it sucks for us too, but what doesn't kill us, makes us stronger.
The longer of the short is that there are two stories here. The first is financial. The second is about roles: Russ has stepped aside and Eric Smith has taken the reigns as chief geek.
So back to my favorite topic… this lovely recession and our reply.
Our adjustment started last summer when we were enjoying a record profits and revenue believe it or not (we ended with growth in the mid 30%). The second half began to drop and in the fall we began planning for as much as a 40% drop for 2009. Sure enough, that planning was wise as marketing budgets began to get sliced more aggressively world-wide. Our plan focused on three things: cost cutting, sales, and operational restructuring.
Cost Cutting Beginning in December we began a multi-phased cost cutting plan aimed to reduce total costs by 45%. We cut our space in half, and our lovely office is still spacious and provides plenty of room for the inevitable growth that awaits on the other end of this.As any organization like ours, 70% of our costs are people. Good people. Great people. Painful as it has been for the crew, we’ve cut 6 positions. To no disrespect to those good people, the remaining crew represents the core team as we shift to a more elastic organization with a hub and spoke structure.
The hub and spoke model is a fundamental structural shift for us. The hub is our core team of strategists, creatives, project managers, system architects and managers who will utilize external resources to deliver the goods once our internal resources are exhausted. A model like this enables us to be elastic to expand and contract – to bend, but never break.
We’ve also discovered many places to save – its almost a game now. Hosting is the latest spot where we’ll save 58%.
As one of my geek peers recently reminded me though, “you can’t cut yourself into profitability”.
Sales To take advantage of the increased demand for value-added services we’re introducing 8 new service families (next week) designed to add value and efficiency to existing interactive investments. In today’s climate, there’s going to be less investment in extensive web infrastructure, and more in lower cost projects that speak more directly to revenue. Marketing services like SEO, PPC advertising, social – Facebook, Twitter, YouTube, etc engage and drive visitors into revenue paths. Social provides exciting new channels that are cheap and provide a lot of strong opportunity right now. The marketing manager on the client-side is really overworked right now, so we’ll be offering some new support packages to reduce that burden and provide better communication and project transparency. We’re also introducing a lower cost website solution that will include the awesome design we’re known for, but a more standardized set of functionality. Finally as the online marketing spectrum grows more complex, we’re very well positioned to provide the strategic consulting to set the course.
Operations My keywords for 2009 are elasticity, process, standardization, and systems. They serve as the core of our Evolution Revolution that we’re in the midst of. In this revolution, we’re embracing the concepts of agile development and applying them to enable us to deliver better systems that we can deliver faster and for less. We’re “off the island” and engaging with fellow developers and designers in the open source community, and are finding that knowledge and code sharing is good stuff. Many of the processes we’re introducing aren’t especially radical, but provide the assurances that delivery will be consistent and steps not skipped. The system work involves developing a new customer extranet with a client dashboard to deliver project status, centralization of communications and documents, and a mechanism to submit issues, work requests and feedback in a way that captures better information right from the start. I think this will reduce the impact on account services dramatically while giving the client the level of project transparency they crave. There are so many more efficiencies we’re finding every day to continue listing. Its all the same stuff we’re doing in our personal lives to get more from less. The Russ to Eric Story
Two years ago on a trip to Montreal, Russ explained that he was thinking of exploring new territories. Russ has managed the technical side of the business and had been the primary system architect, so this news did kind of freak me out. Eventually we worked out a plan that would involve setting up a replacement and then slowly pulling back his role.
Eric Smith joined us last spring and we soon knew he was the guy to fill Russ’s shoes (he even has dark rimmed glasses!). Eric has the experience in management and system architecture, and a work ethic like nobody I’ve ever met – plus an excellent sense of humor (a must have). He began taking over Russ’s duties in December, and in January became fully in charge of the production team and technical direction for us. Russ still has his equity and is serving in a technical and sales advisory role. Russ, the serial entrepreneur that he is, is pursuing a number of other ventures to include real estate, a new surf cuisine restaurant, and has revived Scully Interactive to develop an ecommerce product.
No doubt it’s a crazy time, and no doubt Propeller will be even stronger for it.