Scarcity in Training Business. Interview with Fabian Schwartz.

Fabian Schwartz

Hi Sergey, thanks for having me.

Fabian Schwartz

I think it maybe did not, and throughout the years we started to see that it actually played in our favor, but it took a while, so let me explain that. So we're talking about Scrum certifications, right?

Fabian Schwartz

From the client's point of view, it is very easy to see it as a commodity. The client wants to get a Scrum master certification, and if he has no more information than that, then he basically decides on the price or he decides by prices, which is the same for probably every other commodity. Now, if you are a monopoly within a commodity, then you can use scarcity in your favor. But if you are not, which is the case with all these Scrum entities and Scrum trainers, then selling a commodity doesn't work. So we started pretty early to not promote that we certify based on a certain entity, but we try to differentiate ourselves, so let me explain that a little bit.

I guess everybody is familiar with the famous Intel Inside logo that is probably part of every laptop in the world. And the interesting thing is, by these laptop brands like HP, Lenovo, Acer, Asus, Dell, and I know there are lots more, they have this Intel Insight logo on their laptops. And for me, that's probably not the best metaphor, but for me, what they're trying to do is they're trying to use that to show that their laptop is better than other laptops. The problem is everybody has these Intel Inside stickers on their laptops. So what happened, in the end, was that all these laptops are more or less the same. They don't really differentiate. Not even the brands. It doesn't matter which laptop you buy.

Now, if you look at Mac, it's totally different. When they changed from PowerPC to Intel, they also had Intel Inside, but they never used it as a major marketing gimmick. They sold the Mac experience. So what we are trying to do is we're trying to be the Mac in the Scrum certification industry. I don’t know if that makes sense to you.

Fabian Schwartz

Okay. So, we obviously cannot use the Intel Insight, so we cannot use the certification itself as the major highlight of our trainings. But we had to establish a differentiator. And that obviously takes a while. You cannot just decide on day one, you have no track record and then you decide on the differentiator and then the next day, the customer buying it.

But if you establish yourself as an expert in some niche in your field, and in Scrum, there are lots of niches, for example, Scrum in Hardware, Scrum in Outside Technologies, Scrum in AI, and Scrum in whatever it is out there, and you have a track record, then you can use that to differentiate yourself. Then suddenly you're not selling the certification itself, but you are selling two days with the expert in Scrum Outside Technology, for example. And not that others can’t copy that, they can, but they need at least a similar track record to do that. So then you have a differentiator and you are now selling something that's not a commodity. You can raise the price. If you have trainings every day and there're always free seats, then that doesn't matter either. But if you have this differentiator, you can use that to create some scarcity and then you can raise the price. So actually, we raised the price during the pandemic significantly, and it worked.

Fabian Schwartz

Exactly, exactly. That's exactly it. We tried to find something where we are the best, and I believe right now we are the best at that. So that's what we're using right now to differentiate ourselves.

Fabian Schwartz

That's a good question. That was a question that we had in the beginning and I myself had been thinking quite a while. In the beginning, it was basically just me and my track record, so I had a differentiator. But then I had exactly this question. I was full, my schedule was full for the next month, sometimes a year in advance. And how do you scale? I think it's important that you can link your differentiator to your brand and not to your name. If it's only to your name, then that definitely doesn't scale. And now our advantage is that we are not just the training business, we are also a consulting business. So we actually do have a track record of implementing Scrum with really extreme results — 300, 400, 500, 600 percent of performance improvement in clients outside of technology. We do have lots of technology clients, but particularly in clients outside technology like retail, oil and gas, and others. All these case studies and all these experiences in the company. So if we have a new trainer (and we have several trainers now) come on board, we show them and teach them these experiences and these case studies. It doesn't work from one day to another, but it's relatively fast that the learning curve goes up and then they can use these cases and these experiences in their trainings, even though they might not have actually implemented them.

Fabian Schwartz

Yeah, exactly, that's what we are doing. In the beginning, it took a while because it was basically just me, the assistant, and the accounting company, and it took a while to establish this differentiator. But once we had the differentiator, then the job was to move the connection of the differentiator from my name to the Scrum Network name. And I think it worked. Obviously, I'm still associated with this differentiator but so is the Scrum Network and people trust us. And then we got, particularly in COVID, we had so many requests, now it’s actually almost more consulting than training, that we are continuously hiring people and we can’t keep up with the demand.

Fabian Schwartz

Let me just say one thing regarding the COVID. So, obviously, first in April 2020, which was when a little bit after a lockdown was declared here in Colombia, we also were affected. Actually from one week to another, our consulting business went literally to zero because everything was face to face and it just went to zero and it took a while to recover. But then because COVID forced a lot of digital transformation, which usually uses Agile teams, the demand became so high that now we are better at consulting than before.

To your question. I think I didn't really plan to go exactly in that direction. When I prepared to become a Scrum trainer I thought: “Okay I should learn from the best.” So I took some classes before, but it didn't convince me and I got mixed messages. It almost confused me, it actually almost went to a point that I said "No, Scrum is not for me" because it was inconsistent. So I just started to train together with Jeff Sutherland, the co-creator of Scrum, to get to the source. And it has been an approach from me in other topics also. If I can then go to a person that is a real instance or a real expert, well-known world expert on the topic, I did that before with other topics. And first of all, it helped me to understand Scrum. And it also created the small differentiator without actually trying. I was trained directly by Jeff Sutherland that worked better, particularly in South America, then probably trainers that had like a third, fourth, or fifth level connection to the real root of Scrum.

And the interesting thing about being with the experts is that other experts are working together with that expert. So in that case, then I started to do more trainings with Joe Justice, who pioneered the Scrum in Hardware, it was a company that produced cars with Scrum. And during one of these trainings, we thought we can we actually write the guide on it, that's not so difficult, we just have to put it down and people keep asking for it. So, that's what we did. And step by step then, somebody asked, "Can you help me with that?" Then you get to talk on that, then the company asks you "I need some implementation", and once you are moved in this direction, also this direction pulls you in.

Then I got a call from a big oil and gas company, and they wanted to use Scrum to improve their drilling time. And at that point, in the beginning, I had no idea if that even works, if you can use it there, but step by step you gain the experience and you get even more requests and more requests because you become the expert on that topic. And then that became the differentiator. So in conclusion, I didn't really plan to become an expert in Scrum Outside Technology, it was just a coincidence, I think, of things that happened together.

Fabian Schwartz

I think for me it was a coincidence, but you can also choose, right? In the end, I think it's not so difficult, you can look at the market, what is already there and what's not there or what's just coming up. So for Scrum, Scrum in Governance could be something like just to put out some idea. And once you have identified the topic, then you have to invest some time and really study on that and learn more about that. But also become known for that — go to meetups and give talks about that, go to conferences and give talks about that. You may offer your service for free to a company to get a case study on that, to establish yourself as an expert in that. And I think if you planned it and if you do that with real intention and discipline, it would be a lot faster than it was for us, because for us, in the end, it wasn't really planned, just happened. But I think you can actually do that on purpose.

Fabian Schwartz

I don't know if I want to become an expert. I'm highly interested in artificial intelligence. I took already two courses from the Harvard Business School to get an initial idea. I started talking to some experts. My objective is not on a technical level, I don't want to be an artificial intelligence developer. But I do believe that artificial intelligence is the next big thing, let's say, so what the Internet did to change productivity and change the way we work together now, it's probably artificial intelligence for the next generation. I think we just haven't figured out how to really use that, it's in its baby shoes, I think. But I think that's the next big thing. And right now I have no idea how to apply that really, just learning, still learning. But I guess at one point in time, something will show up where we say "Okay, this is how we're gonna do it.”

Fabian Schwartz

Sorry, I misunderstood. I think we already have the knowledge, we can work Scrum with artificial intelligence companies or teams, that's already there. Probably it's not a differentiator yet, so we're not the experts in Scrum in Artificial Intelligence yet, like we’re, for example, for Outside Technology. But if today a client would come and say "Okay, we want to work with you Scrum in Artificial Intelligence", we're ready, the knowledge, the basic knowledge we need to start, we already have.

Fabian Schwartz

I think it does. We are still not 100% certain what's the real vehicle to become an expert in that. For example, in Scrum Outside Technology, the thing that kept things going was the Scrum in Hardware Guide. From there were talks and so on. I'm not really sure how that would work now in artificial intelligence, but definitely I see that as the next big topic.

Fabian Schwartz

Yes, thanks a lot, Sergey, for having me. It was an interesting conversation and talk to you soon.