Stop Setting Money On Fire

Today your company will likely burn $1 million in potential value. Soon, it'll have burned enough to build the next Salesforce or Veeva Systems. And you can't even smell the smoke.

That fire? Your services business that could have been a product powerhouse.

Let me put some numbers to that blaze: according to PitchBook, product companies are valued at 10-20x more than their services counterparts. That's like your house being worth either $500,000 or $5 million depending on whether you call your kitchen a "cooking service" or a "meal production platform."

So why do we keep striking matches? Because building products is hard. Really hard. And most of us are doing it wrong.

Most services companies are either addicted to customization, suffer from the scale myth, or adopt template thinking by turning their best projects into templates. And these approaches often fail.

But why?

The Paradox

What makes a great service often kills a great product.

Think of services like bespoke suits - perfectly tailored to an individual. Products are more like well-designed jeans - they fit lots of people well, even if they're perfect for no one.

This fundamental tension explains why over 70% of productization attempts fail despite technically sound services. The skills that make you exceptional at services are exactly what you need to unlearn to build successful products.

“But every customer is different."

And yes, on the surface they are. But look deeper and patterns will appear. Not obvious ones - but the similarities in the problems you’re trying to solve.

Pattern Recognition in Practice

The answer is seeing the million-dollar patterns hiding in your thousand-dollar projects.

Taken from personal experience, I had separate meetings with executives looking for help:

• One executive needed help finding diverse clinical trial sites

• Another wanted better physician targeting

• A third needed better patient support programs

• The fourth was hunting for regions with low biomarker testing

On paper, these were completely different projects with different price tags - anywhere from $350K to $500K and 30-45% margins. But squint your eyes and a common pattern will appear. They all wanted to find care gaps at a geographic level – they just didn’t know it yet. A common solution? Perhaps a geospatial analytical disparity tool.

The key is to not look at what clients are asking for – but rather look at what problem they're really trying to solve. That's where products are born.

Here, try three simple “squint tests” to spot product potential:

• The “Everyone’s Asking” Test

  • Does this problem show up in more than 40% of your projects?

  • Are you making at least $2M a year solving it?

  • Do requests keep coming, or is it just a fad?

• The “Copy-Paste” Test

  • Can you reuse at least 60% of your solution?

  • Does each new project take less time than the last?

  • Could a junior team member handle most of the work?

• The “Real Money” Test

  • Will margins improve at least 20%?

  • Can you make twice as much per employee?

  • Will sales cost less than 25% of last year’s revenue?

Running our example through these tests, here’s the outcome:

• Delivery time reduced 50%

• Increased margins from 35% to 60%

• Smaller deal size ($475K to $275K), but twice the growth rate

• Free up a quarter of resources for other activities (skill building, continued innovation, etc.)

What’s the ROI? Let’s put out a fire by pulling out a calculator and following along.

Start with a typical $10M services business:

• Today: 35% margins, 2x valuation multiple

• Current Value: $20M

• Status: Still burning

Now watch what happens when you extinguish just 30% of the fire by transforming it to product revenue:

• Services: $7M burning at 35% margins

• Products: $3M generating 60% margins

• New Multiple: 8x (the market rewards transformation)

• Value Created: $60M

That’s $60M in new value and additional $0.75M in revenue – without adding a single customer.

Building the Factory

But here's the thing - this isn't a one-time thing. You need to build what’s called a "product factory." Think of it like an assembly line that turns service insights into scalable solutions.

This factory has three stations:

• The Pattern Station

  • Spots common problems hiding in unique requests

  • Measures reusability and delivery time improvements

  • Tracks margin potential

• The Standardization Station

  • Builds for 80% of customers’ needs

  • Creates clear boundaries (learn to say “no”)

  • Makes things configurable, not customizable

• The Reality Check Station

  • Tests with pilot customers

  • Validates pricing

  • Confirms you’re ready to scale

Where do we see this factory in action? Look around and you'll see this approach was used, being used or currently discussed by companies like Health Catalyst, Press Ganey, and Humedica (now part of Optum). Each followed a similar journey - spotting patterns in their services, productizing common solutions, and aiming to multiply value in the process.

Will this transform your entire services business? Probably not. Should it? Definitely not. The goal isn't to turn everything into a product - it's to spot those golden opportunities where one solution can create exponential value.

Now stop playing with matches.

Tomorrow morning, look at your last 20 projects and circle every deliverable you've provided more than three times. That’s not a service – that’s a fire waiting to be put out with a product.

Now pick just one of those circles. Map how often it appears, what it costs to deliver, and how much value it creates. That's your product roadmap.

Voila!

So, what's burning in your business?