Scate: From e-Learning to Software Development

You took a tool that you used internally for productivity in developing training and productized it to market it externally as Ignite. There was obviously a void in the market that you were able to see as an opportunity, which is definitely a sign of the entrepreneurial spirit. You took a question from a customer and were able to shortcut the product feasibility analysis. By first knowing that at least one customer was willing to purchase it, you could then move on to determining whether you could provide it to customers at a profit. I’m assuming that part of this was a consideration of the potential loss of revenue from your company providing some services to your customers. Since the product was already developed for internal use and probably needed only “tweaks” to make it usable by customers, you were in a position to determine what sales price would make it profitable. This would have allowed you to save significant steps in the primary and secondary research as well as product prototype stages. I’m wondering if your company updated the business plan when you added the external marketing of the product to your previous internal use of it. The most important part to update when making this kind of change would be the business strategy. This is the business view of what would be needed to beat the competition. I’m not sure if you had any competition at this time or whether other companies created competitive products afterward, but you were in a good position to sell to your existing customer base. They had already seen what your product could do for them when you were using it to provide a service, so you definitely had an advantage over any competitors that would surface.

Scate's management's ability to see opportunity and shift gears is the essence of entrepreneurship. There's no better gauge of what to bring to market than what customers are definitively saying they want. It's Scate's willingness to turn on a dime and explore a new market that really makes this case interesting.

Perhaps a good question is how did Scate decide that this one customer's request was consistent with the market at large? Surely Sadler, Holth and their colleagues spent plenty of time strategizing for the company's future. What has to be present to make the management confident enough to pursue a new direction?

It's interesting to consider how possible this kind of about-face would have been in a non-digital industry. Consider a specialized manufacturer, producing goods by way of custom machines. Such a company would have substantially less flexibility in changing its business model and offering. Their capital is physical and particular to the task for which they were designed. Contrast that to firms like Scate in the digital age, with largely intangible capital.

This intangible or "intellectual" capital can be broken down into three categories: human, structural and customer. Scate certainly has the human capital in their programmers. Unlike physical capital, whose construction is based on vastly different disciplines, in software, programming languages can be used broadly to create very different products (i.e. eLearning software and social media applications). Their structural capital was also strong. After all, Ignite was already developed when they decided to start selling it on the market. Finally, the customer capital was also optimal for this digital-offerings company. Customers who are looking for e-solutions are probably interested in further options that can help them compete. Converting current customers into consumers of a whole new line of product offerings is a feat much more achievable in a digital age, as Scate has proven.