One of the simple lessons I learned in business school –the simple lessons were almost always more valuable than the complex ones – was the story about horse buggy makers and the arrival of the automobile. Carriage making was once a huge industry in the U.S. At the end of the 19th century there were 13,000 companies in the carriage business. Then came the arrival of the horseless carriage and, by 1929, just 88 companies remained; 98% of the industry, gone.
I happen, to live outside of Amesbury, MA, home to a thriving 26 buggy firms back in the day. It’s still a very nice area, nestled between the ocean and the Merrimack River. But from a commercial standpoint, a century later Amesbury still hasn’t recovered.
The arrival of the automobile spelled the end of horse buggy industry, but what led to the collapse of the horse buggy companies was how they defined themselves. Those that defined their business as “horse buggy” didn’t have a chance. A few of the more innovative companies that had the vision to define their business as “transportation”, survived the transition to cars.
I had a similar “understand the business you’re in” lesson here at Scivantage (fortunately, with a much better outcome). We’ve taken great pride in developing the best cost basis platform available. Maxit is more automated and offers better strategic integration options than any other similar product. And, yet, some of our clients weren’t entirely happy. Turns out, while we thought we were in the cost basis business, most of our clients associate Maxit as the gateway to the tax reporting process. The success of the tax reporting season shaped these clients’ satisfaction, regardless of how well Maxit handled the cost basis calculations. A couple of difficult weeks could undermine the terrific work we produced over the entire year.
Fortunately, we’ve been able to respond much quicker than carriage makers. We built out a year-round tax reporting team last year and the results have been excellent. As we’re nearing the end of the official tax season, we’re already developing additional tax reporting support services to roll out later this year. Most of our clients don’t pay us specifically for tax reporting and yet we’re making a significant investment in this area because we know how it impacts overall client satisfaction.
We also continue to think about our core products and how clients can use them in different ways (not unlike the carriage axle, lamp, and ball bearing companies that modified their buggy products to extend their success into the automobile era). We’re in the process of introducing our Sqope Tax analytics suite which takes plain old cost basis data and makes it a strategic weapon for improving after-tax performance (and, for advisors, client relationships in the process).
The lesson here is to constantly keep abreast of innovation and client perspective. Being the best at what you do doesn’t matter much if customers don’t value what you do. Focusing on customer needs, not on specific products, is essential to achieving lasting success.
By Cameron Routh As Chief Commercial Officer, Tax & Analytics, Cameron Routh is responsible for the overall vision, leadership and management of Scivantage Maxit® and tax analytics products. Under his direction, Scivantage has developed the next generation of investment management applications, including pre-trade decision tools.