An MSP business following a proprietary model will likely end up having greater success than one that doesn’t. Don’t take this the wrong way. There’s nothing wrong with operational transparency, but that doesn’t mean you put the ingredients of your “special sauce” on display. Tell the public how you operate and why. Say, “We add a dash of IT proficiency, a heavy helping of technological trend recognition, some exceptional customer support, a cloud computing sauce just full of technologically protein-rich ingredients, and the bread of professionalism.”
The point is, you don’t have to reveal that what’s in your sauce when saying you use a “sauce.” You can be transparent about what it is and why it’s there without giving away your advantage. Transparency doesn’t require putting all your knowledge on display— that’s what a foolish marketer does.
Certainly, there may be some small immediate benefit in revealing your sauce, but that’ll be dwarfed by losses in revenue when your secret becomes public and services a commodity. Services that aren’t individualized and unique and can be had at any IT services provider don’t have any demand to increase value. Economics 101 will teach you that as supply decreases, demand increases. But as supply increases, demand decreases.
Consider this: Smartphones have become so prolific that they’re even being provided to the homeless. This a beautiful humanitarian gesture, but what’s the value of such a device in the mind of the public? It’s steadily diminishing. Today, people feel entitled to a cellular device of the smartphone variety. It has become a commodity. Breaking into that market is about impossible now… it’s all sewn up.
What Do the Billionaires Think?
Marcus Lemonis of The Profit, Mark Cuban, and Mr. Wonderful— a.k.a. Kevin O’Leary of Shark Tank— all prefer to invest in companies that maintain secrets and have proprietary means of operations, be those of the software or hardware variety. It’s true that some MSPs don’t like secrets, but you’ve got to look at the data to make your decision.
Ask yourself: Are there big-ticket organizations who have been able to achieve success through maintenance of proprietary information? Here’s a short list of fast food chains:
- Coca-Cola
- McDonald’s
- KFC
These three organizations maintain proprietary information. They’re known worldwide as a result, and an MSP business could learn from them. In contrast, consider the rivalry between Macintosh and Windows. It seems that Gates may have stolen from Jobs, though the truth is hard to pin down.
Apple nearly sank until Windows was accused of monopolization and forced into a position where Steve Jobs could bounce back, making a deal with Gates for the support of Apple products through Windows investiture. This made it so that Apple would become the most valuable business on the planet.
The point is: Apple nearly sank because they were too transparent in their protection of proprietary software. It was only quick, bold thinking that managed to offset that loss. Can you afford to push your company to the brink of bankruptcy hoping on a rebound opportunity like that? You want there to be no services like yours available on the marketplace. This allows for the maintaining of your margins. Cuban, Mr. Wonderful, and Lemonis became billionaires in just this way.
Proprietary Transparency
There’s substantial value in maintaining proprietary operational secrets with your MSP business. You’ll likely experience some quotient of criticism as a result, but ask yourself: What’s worse, criticism or failure? True, you may be able to bounce back from a foray into entirely transparent operations, but it’s a lot more likely that you’ll eventually find yourself losing substantially.
Be wise about what you provide and how you provide it. Guard those idiosyncrasies of your service provision carefully. You don’t have to hide it; only hide that which cannot be made public. Say you’ve got secrets that you’re maintaining. There’s certainly nothing wrong with that. If you do this, you’re more likely to have a product whose demand increases, as you’re the only one who even has the ability to supply it.
