So, How Much Will it Cost?

I had a call last week with the CEO of a $37 million dollar manufacturer. He wanted to talk about a specific web site application for their company and was referred to us by an existing client.  I asked him to tell me about his company and the industry in which he operates. He then described what type of application they needed and how it needed to work. I jotted down some notes asked a few questions and then he said, “So, how much will this thing cost?”

After a bit of a chuckle I said "That’s a funny question. I have no idea. In order to get there I have a few questions for you.”

I asked him if he had ever built or renovated a house, to which he replied, “Yes.” I said, “So was your first question to architect, 'How much will it cost?'” He smiled because we both knew the answer.

We had a lengthy conversation about his business: what is working, what is not, what pressures he is under that didn’t exist a year ago, what trends he is seeing in his industry that could cook his goose if he fails to execute, what matters to the company and the staff, why the company is in business and what legacy will he and his team leave if they fail to achieve the strategic objectives.  This was a serious talk.

After an hour of chatting about his business and the implications for this web site application, he came to appreciate that he had started off asking all of the wrong questions. He came to understand that thinking strategically about his web project would yield more value for the business and for his personal goals than being able to say confidently that it was done on the cheap. He acknowledged the import of starting off defining the required return on his web investment, not the amount of the investment itself. He began to to see that increases in revenue per employee can be achieved by being smarter about how the company uses the web. He warmed to the notion that his ability to execute on the business plan depended on his leadership and this type of critical thinking. He knew it all along, but he had forgotten it.
 
At the end of the call, I gave him some homework and asked him what he took away from our discussion. I could hear his smile on the phone when he said, "Well, you taught me how to buy web development services today.” We both laughed because had the conversation gone any other way, he knew he would still be asking for something cheap rather than something valuable. 

The call ended and he emailed me the following message later that same day:

 
So there are two morals to this story:

1. a company’s ability to execute strategically will demonstrate its effectiveness and value; and
   
2. Don’t waste money on getting it cheap when buying value is the only thing that matters.