Building a 100% digital company

We formed Avalon CX on February 28th, 2020, and 12 days later WHO declared CV-19 a pandemic. That’s not what people generally refer to as fortunate timing, but it turned out to be so. This blog post highlights some of our choices and how those have helped us build a profitably growing, 100% digital company where processes and tools help us work rather than define our work.

People want to help in building success

Our intention had always been to do things differently. Any fool can be different. Getting great is the tricky part. Luckily, we’re surrounded by friends and ex-colleagues that are more capable than us in many areas. We didn’t do this alone – we solicited the advice of 150+ friends, ex-colleagues, and other contacts who’s helped us build the company we have today.

Doing things better than a big company does

We’ve had the luxury of working in companies big and small. Many of them are great companies we have fond memories of. But could we do things even better? Oh, yes. In theory, the support functions that big companies have let you focus on the core activities, whether they are serving customers, innovating and building offerings, or something else.

Myth 1: Support functions like HR, legal, and finance will take care of the non-core nuisances of your life. 

Sometimes these support functions start to live a life of their own. We’ve experienced HR department can get so busy with their processes they couldn’t offer help for recruitment. Nor performance management. Talent management was offered, but there was no money left for it. Budgeting and forecasting can turn into black holes that set deadlines but offer little in return. Battling lawyers can delay customer deals by weeks or months. 

Myth 2: Mature companies have well-functioning digital tools and processes

In many fast-moving tech companies, this is more of an anomaly. Think about an IT project like setting up HR, CRM, or similar systems. It typically takes months of planning and implementation, during which time the line organization driving this change is overloaded and not offering the ‘usual level of support’. Then, for a short time, things may work as planned. But, alas, a disruption manifests itself in the form of an acquisition, organization change, new product introduction, or new market entry. Something always comes up. Note that this change isn’t driven by the support functions who’re caught by surprise. For months the business operates on excel sheets, emails, or tools not designed for the new situation.

Myth 3: Building on top of an existing business means you have fewer problems to solve

During a disruption like CV-19, quite the opposite is true. An existing team of people likes to operate a certain way and expects a specific infrastructure and support. But then: what are you supposed to do with the office where nobody goes? How do you change the process requiring physical signatures, in-person whiteboarding, and travel to F2F meetings?

Myths summarized

Putting the three myths together, let’s consider these somewhat self-centered organizational support units. In our experience, they aren’t always capable of responding to the day-to-day changes without disruptions between the processes and tools. How well do you think they’ll react to disruptions like CV-19?

How did we build a 100% digital company?

Let’s get back to doing things differently and hopefully better at Avalon CX. Our plan was always to build a modern company, and CV-19 pushed us further down this path. Rather than building a digital-first company, we set to define a 100% digital company.

Identifying our core

A recipe for success is to clearly differentiate between our core activities (SW development, design, and taking care of our people and customers) and everything else. We automated and outsourced everything else. 

• We have a high level of financial literacy in the company to make smart decisions, and for a nominal fee, an online accountant works our reporting through Quickbooks. Less is more.
• We handle recruitment, onboarding, training, benefits, and soon performance management through Bamboo HR and we don’t need an army of HR people for this. The time we spend on people topics is meaningful and rewarding rather than forced and frustrating.
• CRM happens in HubSpot, and while the tool is almost free, it better reflects our sales pipeline than any CRM I’ve worked with before.

Building digital with half the effort

• Since we had nothing to tear down, we could focus on the fun part: building new. It’s a lot easier to establish a creative culture where anything new you put in place is an improvement compared to nothing. We can freely try out new ways of working as we can always roll back to the previous nothingness.
• Digital processes have a low total cost of ownership. SaaS licensing is pay-as-you-go and you don’t need an army of experts managing the system and another group of people supporting the first army.
• We’re not burdened by the historical inertia and costs. We don’t pay rent (for now), and we haven’t employed people whose main focus is to justify their existence in the new, 100% digital world. Since everything is transparent, we can avoid hidden costs and structural inefficiencies. 

Building a healthy business from the get-go

• One thing we don’t have going for us is government subsidies. In the USA and even more so in Canada, governments have rushed to subsidize salaries, forgive loans and offer guarantees – but only for businesses impacted by CV-19. As a new company, we don’t get any of those. This is an unfair disadvantage for us, but we’ve turned this into a positive. We have to build such effective and profitable operations that we succeed without subsidies. Now that the governments are rolling back those subsidies, it’s our time to shine.

The way ahead of us

We chose to build a 100% digital company, and it enabled us to grow profitably. In our previous post, we mostly talked about forecasting the future. Since then, we’ve been busy building the digital future. And now we feel it’s time to move on. We miss some aspects of face-to-face interactions that provide irreplaceable benefits. In the 2nd part of the blog, we’ll look into ‘How to tear down a 100% digital company. We intend to keep the streamlined efficiency of automation but add the human touch (that so many of us miss) to the equation. We’re actively hiring and would like to hear your feedback.