Turning Skills into Money
As I began marketing Responsive Design, I ran into an unexpected stone wall. I’ll take a minute here to think about it.
Say you are a services company, billing other people for your employees’ time. You are looking at investing in training. How will that investment ever pay off?
The range of effectiveness of developers and teams is much broader than the range of billing rates. While effectiveness can easily vary by 10x, a team charging a 50% premium has a tough sell. In addition, the range of salaries is also wider than the range of billing rates.
Here’s scenario 1: the senior team (the numbers are roughly in range but may vary in your situation).
Revenue: 5 people @ $2000/day = $10K/day
Cost: 5 people @ $1000/day = $5K/day
Net: $5K/day (minus a whole bunch of other stuff)
Now you invest $50K in improving the skills of the whole team. Your billing rate of $2K/day is already at the high end (let’s assume), so there’s no way to increase your profit. If the team learned something valuable, then they’d be able to do the same job with 4 people next time, earning less money, not more. From a narrow-minded perspective, the $50K just got put on a bonfire.
Let’s say you want to increase your revenue and profit. It’s hard to find senior people but it’s easy to find junior people. Here’s scenario 2: senior-led junior team.
Better revenue: 2 people @ $2K/day + 10 people @ $1200/day = $16K/day
Slightly worse cost: 2 people @ $1K/day + 10 people @ $500/day = $7K/day
Much better net: $9K/day net income (again, minus a bunch of stuff)
For the services company, this is a win–more revenue, more profit. And there’s no need for training. Some of the juniors will go off and learn on their own, and they’ll be next year’s seniors.
The best interests of the client are served by having a tight team of expert developers. The best interests of the developers is to learn as much as possible as fast as possible. It’s only the vendor that is served by having (in the limit) hordes of junior programmers with just enough adult supervision to prevent disaster. Most of the services companies I’ve worked with have taken a long enough view that they don’t push this model to the extreme, but two companies I talked to last week were aware of the tension between providing the best service and billing for the most brains.
Am I the last person in computing to board this particular cluetrain? It sure feels like it. In any case, it matters.
I got started on this line of thought because I tried to market Responsive Design to services companies that publicly prided themselves on their technical skills. I got zero nibbles and that didn’t make sense. If skills can’t turn into revenue, though, their lack of interest makes sense. (It could be that Responsive Design has no commercial impact at all, but that doesn’t seem like a useful or likely assumption at this point. It’s worth validating, though.)
I always wondered about the seemingly cavalier attitude of services companies towards turnover. If I assume the model above holds, then turnover makes perfect sense. The services company doesn’t want a senior-heavy staff–turnover is necessary to keep the margins up. Just enough senior people need to remain to provide the leadership necessary to keep projects from failing. More than that is a burden.
Product companies, on the other hand, have compelling commercial reasons to learn Responsive Design early. The ability to create and then accelerate a steady flow of features can be turned into money by a product company. Being able to change the direction of the flow of features allows a product company to rapidly address new markets. Being able to operate more efficiently can either be used to increase margins or to fund greater innovation at a given margin.
Customers of services companies can also use the model above to get better service. Customers would get better results paying the price for a mostly-senior team that would allow the provider to maintain their margins. The higher price per person per hour would likely be made up for by requiring fewer people, finishing the project sooner, and reducing the risk of problems. However, the provider is likely to need higher prices as an incentive to put together the team that is in the customer’s best interest.
Programmers interested in Responsive Design and working in a services company will likely have to invest in their own learning. Currently no paid training is available, so at least it won’t be cash out of pocket. The price of learning is time invested in reading/watching the available material, time invested in experimenting, and time invested in becoming part of the community of responsive designers.
Finally, in marketing Responsive Design I would be best off inviting individuals into the budding community, then focusing my efforts on product companies. Good to know.