Agile Businesses: Michael Schmidt Of Nerdery On How Businesses Pivot and Stay Relevant In The Face of Disruptive Technologies
An Interview With Fotis Georgiadis
Make evidence-based decisions. Better decision-making is something we all strive for. The companies we work with that achieve better results often have a strong data strategy that supports the decision-making of the team. Plan for and build into your products the ability to capture the right data in a way that allows for fast and accurate analysis. This approach supports not only making better decisions but can also accelerate the pace at which they can be made.
As part of my series about the “How Businesses Pivot and Stay Relevant In The Face of Disruptive Technologies”, I had the pleasure of interviewing Michael Schmidt.
Michael Schmidt is CEO, Co-Founder and Board Vice Chair of Nerdery, a premier digital product consultancy. He is a seasoned leader with 20 years of experience in digital business consulting, where he is best known for solving complex business challenges and maximizing client outcomes through technology. He co-founded Nerdery in 2003, serving as CIO and then Chairman of Nerdery’s Board of Directors until being named CEO in 2020.
During his tenure at Nerdery, Michael has helped organizations across a variety of industries make long-lasting, transformational change. As CEO, Michael is passionate about guiding clients in making an impact through digital technology — ultimately, improving the lives of their end-users while growing their business.
In 2014, Michael co-founded and helped launch Prime Digital Academy, a full-stack engineering and UX bootcamp to provide training to help fill Minnesota’s IT talent pipeline, and has also guided various startups across industries. Away from work Michael enjoys spending time outdoors — fishing, skiing and wake surfing — and, most importantly, spending time with his family.
Thank you so much for joining us in this interview series. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I didn’t grow up with technology as a part of my day-to-day life or in my home. In high school, I took a few classes on an Apple IIe and thought it was interesting but didn’t think much more of it. School was not a good fit for me, and ultimately, I chose not to go to college. However, in my late 20s, I discovered my interest in software development and enrolled in a night program at a local college. Here I learned that software development came very naturally to me. I saw a lot of early success during my first job and found myself quickly rising to the top. And a few years later, I co-founded Nerdery with two people I met at that job — Luke Bucklin and Mike Derheim. Along the way, I’ve learned a lot about technology, consulting, business, how to run a company, and ultimately how to be a leader.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
I wouldn’t say it’s a particularly funny story, especially at the time, but I can share the one that sticks with me the most. A couple of years into my career as a software developer, I had an opportunity to work with a very famous Twin Cities band. They wanted us to rebuild a platform for them. It was a very challenging request with a very tight timeline.
Knowing we had some long days ahead of us — the team and I got to work. But, due to my inexperience at the time, we built it on the wrong hardware infrastructure. In the scramble to fix the initial issue, we neglected to load test properly. During the big reveal, the site lasted all of 30 seconds before it failed. This was back during pre-cloud days when you couldn’t just scale resources. While we got the platform fixed, it was incredibly stressful and, frankly, embarrassing. It is one of those moments that changed me. Going through that experience helped me grow into a seasoned software developer. I learned the value of stepping back and truly understanding the needs of the client.
When we first started this company and began hiring more experienced developers, one of my favorite questions to ask was, “Tell me about one of the biggest mistakes you made.” When people couldn’t come up with a meaningful answer, I knew they either lacked experience or the humility to admit a mistake. Regardless, they weren’t a fit for the team.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
There are many of them. I believe life is filled with people who really help you on your journey. My former business partner Luke Bucklin was definitely one. He taught me the value of people, of doing the right thing even if it hurts, and the importance of great work. Running a business is hard, and every day is a challenge, so you have to love what you’re doing. Luke helped me grow and mature as a business leader.
Extensive research suggests that “purpose driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
Nerdery was founded by the three of us — Luke Bucklin, Mike Derheim and me. We met at a previous job where we saw early on that it is hard to attract and retain great talent in an environment that doesn’t trust or respect people. Because of this, we knew the importance of building a business where people could be known and valued.
We believed a place that empowered people to do their best work would be the place where people wanted to be. We never judged a book by its cover and let “Nerds” lead with their character, hard work, and genuine talent. In that, we found that it’s not always about the most obvious person for the job; it’s about giving people a chance to show what they can do with the right attitude and aptitude.
Looking back, what I value most is all the great people that have come through this organization. Many folks have built careers and gone on to do amazing things. Their dedication, curiosity and passion are the ultimate drivers of their success, but getting the right opportunity can be a big lift.
Thank you for all that. Let’s now turn to the main focus of our discussion. Can you tell our readers a bit about what your business does? How do you help people?
Nerdery is a digital product consultancy that helps businesses grow revenue and serve customers through well-designed digital products. Our expert teams partner closely with clients to truly understand their business and the ever-changing needs of their customers.
The economy today is changing rapidly and putting a lot of pressure on businesses, so there’s a huge need in the market today to help companies learn how to compete amid this fast-paced change. We do this with end-to-end capabilities across strategy, analytics, design and development. Our strengths lie in delivering digital products with the speed, quality and agility to drive business results.
Which technological innovation has encroached or disrupted your industry? Can you explain why this has been disruptive?
There isn’t any one technology that’s been disruptive. The disruption stems from macroeconomic change caused by the wholesale advancement of technology. The digital economy is all about leveraging technology in a way that is highly connected to customers and provides value in different ways. Today, the internet, cloud computing, machine learning, and a myriad of other technological advances have created an environment where it’s significantly faster and easier for businesses to stand up new products and compete in different ways. And so, traditional companies that have been around for a long time are under constant threat.
Those threats come from startups and incumbents, but it’s the shift in the market and the way value is delivered and created that is forcing everyone to pivot, creating the space for us to evaluate where and how we best support our clients.
What did you do to pivot as a result of this disruption?
It’s all about creating focus. We started out as an execution partner for organizations — early on, it was very tactical. The way the market has shifted has forced us to rethink how we provide value to our customers. We have narrowed our focus to the types of engagements we pursue. We pivoted from saying, “Hey, we’re a generalist that can do everything,” to specializing in digital product consulting, where we need to show up in a very particular way, targeting a very specific buyer. Focusing on our business has absolutely been a big shift for us.
Was there a specific “Aha moment” that gave you the idea to start this new path? If yes, we’d love to hear the story.
It was more of a series of incremental changes in the industry, paying attention to where we saw traction, understanding our skill sets, and really knowing the market opportunity. During that time, we obtained a sharp perspective on how we deliver value, which is in understanding the needs of our customers and our iterative approach to digital products. To some extent, we allowed the market to provide direction on where to focus and align our expertise.
So, how are things going with this new direction?
I think it’s going really well, and that’s exciting. We’ve helped several amazing organizations embrace technology to deliver new value to their users and customers, positively change their business, and re-invent how they work. This business is about people, and when we get to work directly with our clients to help them achieve their goals, it’s rewarding and, frankly, fun!
Can you share the most interesting story that happened to you since you started this pivot?
Businesses need to be innovative to compete in the digital economy, but many don’t know how to start. To help support this early engagement stage, we created Nerdery Innovation Studio — a dedicated space for companies that need custom digital products and a partner who can help them step out of their comfort zone and realize what’s possible — and do so quickly.
Learning faster creates a competitive edge in a competitive market — it doesn’t matter if you operate a VC-funded startup or enterprise business with complex ecosystems. The Innovation Studio gives clients the space to learn quickly by strategically validating ideas and leveling up hypotheticals to working concepts that deliver marketable value right away.
Often innovation is viewed as an intimidating feat, but through the co-creation environment we established, innovation happens at the scale and speed that works best for each client. Whether the engagement is for incremental improvements or leading-edge transformation, successful outcomes are measured through building clarity around potential products and aligning business outcome owners on a shared future vision that creates the business value they seek.
What would you say is the most critical role of a leader during a disruptive period?
For me, personally, that means being unflappable and stable in the face of change. That doesn’t mean you can’t be vulnerable and honest, but trying not to let change negatively affect you. Begin with casting a clear vision, ensuring the team understands how that vision impacts them and how we win together.
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate and engage their team?
By winning! This goes back to setting a clear direction for the team. Being really clear on what our goals are and what success looks like. When change and uncertainty are omnipresent, communicating and celebrating wins together helps bring us back to the center. If you can start showing traction, people get excited about it and want to provide support where they can.
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
Take care of your customers and take care of your people. For customers, understand what matters to them, and you will be able to accommodate accordingly. For your employees, providing the right work helps keep your teams engaged and excited to deliver for your customers.
Can you share 3 or 4 of the most common mistakes you have seen other businesses make when faced with a disruptive technology? What should one keep in mind to avoid that?
Often, companies looking to innovate will start with what they think the product should be based on what’s important to them and they end up developing a product the customer may not want or need. When bringing products to the market, it’s really important to focus on what the end-user cares about.
Another trap that businesses can fall into is believing that they can deliver products using their internal IT teams. This in no way has to do with the team’s abilities; rather, it’s the methodology and approaches they use that make building a product challenging. Typically, the internal software team is a cost center, so they will normally think about an engagement through the lens of efficiency leading — thinking of each product as a project. While there is nothing inherently wrong with this approach, it makes it challenging to align with broader business objectives.
Lastly is not inviting their customer in to provide feedback throughout the process. It’s not uncommon to build something with a lot of unnecessary features or a product that doesn’t perform the way that it could or should. Without user insights and perspective, you miss a crucial opportunity to learn as well as the ability to pivot and understand what your customer truly wants.
Ok. Thank you. Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to pivot and stay relevant in the face of disruptive technologies? Please share a story or an example for each.
1. Understand your customer. The pace of business is accelerating and so are the demands and expectations of our customers. Their voice should be the driver when prioritizing and grooming a digital product roadmap. One mistake we see companies make is equating what is important to the business is equally important to their customers or assuming they know what their customers care about. This is very often not the case. Truly understanding your customers is the best way to avoid building something they don’t care about or want while meeting the business outcomes you are after.
A major food services company needed a partner to help transform their customer experience to meet rising home delivery demand and also streamline expenses. Through technical thought leadership, skilled execution resources and profitability analytics, we were able to achieve continuous improvement in customer experience and consistent KPIs to measure that progress.
2. Speed. Every day, the barrier to entry to compete in the digital economy is becoming lower as technology enables companies to bring products to the market faster and cheaper, which means the threat of competition or disruption is ever-present and it makes speed an important component of a company’s success.
Today, we are seeing success with a two-pronged approach to this. First is speed of learning which is the new unfair advantage. Businesses that can learn what their customers care about more quickly can beat the competition because they provide better and immediate value to their customers.
The second is speed to value. Using an approach that gets a digital product in the hands of your customers fast not only supports capturing monetizable value, but it also supports the team’s ability to accelerate validating a product and learning to get to the crux of what the consumer cares about.
The head of deployment for a major medical device company had identified that they were losing millions of dollars in lost revenue, largely due to delays in releasing new patient apps. We provided best practices for app release management and a tech stack assessment, which quickly and cost effectively gave them a better path forward.
3. Continuous innovation. Avoid the trap of trying to deliver a near-complete and perfect product on the first pass. Instead, start with a true minimum viable product (MVP) and build on it by taking incremental steps, measuring what happens, learning from it, and taking another incremental step. That continuous innovation cycle is critical when faced with disruptive change or competing in the digital economy. Not only does this approach support delivering better products, but it also helps to de-risk the engagements by allowing companies to make better decisions and pivot faster.
A premier marketing agency needed to simplify the customer experience and modernize the fundraising platform to bring their vision to life and grow engagement and revenue. We designed a user-friendly app and helped optimize their efficiency by migrating infrastructure to the cloud, as well as streamlining business and technical processes, databases and integrations.
We had one high level road map, but continuously built and pivoted. It was about having an eye to the long game but being willing to be flexible along the way to meet customers’ needs. With the launch of the new app, user engagement and revenue increased significantly and nearly immediately.
4. Tackle your riskiest assumptions first. As companies look to find new ways to create value for their customers, sometimes there is a natural and healthy desire to push the bounds of technology. Sometimes, those challenges can be overcome, and other times they cannot. Just as often people get excited about their idea and in that excitement, they don’t prioritize correctly, overlooking their riskiest assumptions. We recommend first identifying if those assumptions are deal-breakers, and if so, not spending time or money on anything else until you prove those assumptions.
A major pet food company that we worked with came to us with over 70 web properties, which caused a costly, hugely disconnected brand experience. We provided them with best practices to refresh both infrastructure and development processes, which significantly improved time-to-market, while also streamlining more than $2 million in costs annually.
5. Make evidence-based decisions. Better decision-making is something we all strive for. The companies we work with that achieve better results often have a strong data strategy that supports the decision-making of the team. Plan for and build into your products the ability to capture the right data in a way that allows for fast and accurate analysis. This approach supports not only making better decisions but can also accelerate the pace at which they can be made.
I am one of those people who wants to trust my experience and intuition when making decisions. I have learned that verifying my gut with supporting data, can bring peace of mind and is a winning strategy for making better decisions and thriving in a disruptive world.
Due to the highly customized nature of this manufacturer’s product, waste scrap is unusable. The team had already implemented a simple machine learning model and were taking action on the data they had captured (adjusting humidity, changing the physical environment) but they needed smarter, actionable data to predict yield and make better business decisions. They partnered with Nerdery to leverage IoT and data science to improve the production planning process, reduce overrun and increase the on-time/in-full (OTIF) rate. This work resulted in an 85% yield increase for the company.
Here is a link to a video explaining more about these five things: https://www.youtube.com/watch?v=L5R79b4tp9A.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
It changes often, but there are two:
Admiral James Stockdale has a quote in Jim Collins’ Good to Great that has resonated with me over the last year. “You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be.” To me there’s a difference between having hope and confronting the reality of your situation and doing it directly without hesitation.
The other one is by a guy named Zig Ziglar, and that’s: “Anything worth doing is worth doing poorly, until you learn to do it well.” Part of my life lesson is that challenges are actually good, that’s when growth occurs, that’s when you become something more and really learn to do your job well. So really leaning into the challenges and knowing it’s a learning and growth exercise is important.
How can our readers further follow your work?
People can find me on LinkedIn at https://www.linkedin.com/in/mike-schmidt/, and follow Nerdery at https://www.nerdery.com/, and on all the usual social media channels at https://www.facebook.com/NerderyOfficial/, https://twitter.com/nerdery, https://www.instagram.com/_nerdery/, and https://www.linkedin.com/company/nerdery/.
Thank you so much for sharing these important insights. We wish you continued success and good health!
Agile Businesses: Michael Schmidt Of Nerdery On How Businesses Pivot and Stay Relevant In The Face… was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.