"Directive or free enterprise? One is not better than the other. Some people like this one, some people like that one. Building a free company is not for everyone. You need to make it work for you. For me, it was a 10-year process."
Lukáš Cirkva is the founder of BCV solutions, a company that has a narrow and specific market. They develop and implement CzechIDM identity management.
Imagine it like this. You hire a new employee in a large corporation and you have to give him a million accesses to different accounts, application rights. And hand on heart, this takes days, weeks and sometimes months in corporations. And it's frustrating for the new employee and it's frustrating for you. He can't work right away, you can't make him work right away. And that's what Lukas and his company are all about. They help automate account and rights management for many applications.
Lukáš built a consulting company into a product company. And he turned an authoritative firm into a free one. It didn't happen right away. He had to change his setup. The settings of the management and, not least, of all the employees. Now he has a company where everyone sees into everything and comes up with their own ideas for improvement. From how to replant the plants in the office to how to educate each other.
As Lukas himself says, it is not a path for everyone and it does not happen overnight. It takes time and patience. It has to be lived.
Lukas and I talk about how to turn theory into practice. Because he is the proof that it can be done. In Ignition, we'll go through that process and answer some important questions.
🔸 How to build a product company from a consulting agency?
🔸 How does a sales department adapt to change?
🔸 How to deploy OKRs in practice? And what are the benefits?
🔸 Are employees willing to take responsibility?
🔸 What does a self-learning organisation bring to the practice?
THE INTERVIEW
Martin Hurych
Hello, I'm Martin Hurych and this is Zážeh. Today's Ignition will be with Lukas Cirkva from BCV solutions and I would like to show you today a lot of things that we have discussed here so far in theory, in practice. Lukáš is a shining example of how a lot of topics from past episodes can be implemented relatively quickly in one company. Hey, Lukas.
Lukas Cirkva
Hi, Martin. Thank you for inviting me.
Introduction of Lukas and his company
Martin Hurych
Your company is in a relatively narrow market. It's an identity management software company. Can you quickly tell us what that is, so we can understand the angle you're going to be looking at my questions from?
Lukáš Cirkva
We're experts in identity management, which means we help automate account and rights management in many applications. Imagine a large corporation. You come into a bank as an employee and need access to applications on your first day. In large companies, it can take days, weeks, sometimes months to request, approve and create those accesses. So you can't work, you're frustrated. We install our system, consult with the client and integrate their applications. The way it works is that typically when you are a new employee, you have some sort of contract in HR. Our system retrieves the contract, sets up standard accessions, and sends a questionnaire to the supervisor. The system automatically sets everything up. I, as an employee, then just come to the workplace, the supervisor gives me the accesses and I can start working.
Martin Hurych
This means that your target is typically a large corporation, a large company. Is that right?
Lukáš Cirkva
As we were looking at our CEOs' meeting just now, these are billion-dollar companies. They typically have at least 300 employees. Our business is beneficial to them when they have historically diverse systems and a lot of events in them. They either have a lot of accounts, employees or patients, for example, if they are hospitals, or they have dozens, hundreds and thousands of those systems. We have a telecommunications company that has thousands of systems that are integrated in our system. That's where our system has a benefit.
Martin Hurych
To give context to what will subsequently be discussed here. You started practically from scratch, today you have your own product. I found on your website that you manage about 5,000,000 different accounts. Can you give us a quick run-down of your journey from zero to here?
Lukáš Cirkva
I'm historically a computer guy, kind of a hard-core system administrator. I didn't want to do two things, manage people and do accounting and law. I started gradually at Avnet, where we evangelized what we were doing in the Czech market. Back then in 2002, it was that when we came to a big company and offered them software that would help them automate everything, the managers said they'd rather hire a person to do it manually.
That's no longer possible today. Today, IT employees are expensive and hard to find. My colleague Zdeněk Burda, the second partner of our firm, and I started as employees with the first identity management projects in the Czech Republic. We taught our partners by doing their first project, those tend to be the hardest. These projects can take 3 to 10 months and we did them for companies like ČEZ or CCS. When we did the first project, the partner then took the customer and did the follow-up projects and service on their own.
We were gradually losing clients, but we wanted to work with them for the long term. So we decided to start our own company. In the beginning we continued to work as consultants for end customers and then we started developing our own software. It cost millions of crowns just to buy the software at that time. So the return was only for banks, telecom companies, the biggest ones in the market. Since we sold the system to various customers on the Czech market, we knew what was really needed in the software and what was not. So we agreed with the first client that we would not make connectors to all systems, but only to the ones he really needed. Instead of 100 reports, we will make him 3. This is how we gradually bootstrapped our software to other clients. First we acted as consultants, then we started developing our software and gradually we picked up a portfolio of customers.
How to build a product company from a consulting agency?
Martin Hurych
When we met a few months ago at David Kolar's place in MasterMind, you already had some software. But you were still operating as a consulting agency. Today you're much further along, you have your own product, you're a production. How did this pivot come about? Because it's something that a lot of people dream about. They search very hard for the product and few people reach the very end. How did you do it? What stage are you at now, how much are you an agency and how much are you making software?
Lukáš Cirkva
We started out as an agency. The contract was for a multi-million dollar job, and the company wanted to use their processes in the organization and have the software adapt to them. Over time, these large customers who are willing to pay big money have exhausted the Czech market. We saw a big opportunity in customers who don't need so much customization and will use a standard product. We have worked tremendously on our product. Today it is already world class. Our uniqueness is that a huge number of things are set up in the system by the administrator, by the operator. In contrast, our competitors have a large number of features, but then a team of developers has to come into the company to set up. It's not wrong, but it's for someone else. I always equate it to building materials. Either there's a construction company that builds, designs and delivers your house, or there's a company that builds standard houses that may not be for everyone, but are cheaper and faster to build.
We had to overcome two things. The first was to push the product significantly. Today, an administrator can integrate the end system themselves to some level and can handle accounts and rights within it. That was one problem, to pull the product together in a way that required as little customization as possible.
The second thing, much harder, was that we had to change our mind-set that if a customer comes to us and has a request, we will tailor the software to them. We'll trade our time for money. It's a one- off for one client, and the next time they need to upgrade to the next generation of software, it costs more money, of course. We've been set up over the years to sell our time. We needed to switch to the fact that what the client needs is in our software. If he's 80, 90% comfortable with that, let him use that 10, 20% to integrate another system into the solution. The more you integrate into identity management, the more benefit it has. We've had to learn to sell software in the business already, not our time. It's been a long journey, we started in 2017. Today it's been 5 years, our business is about selling software and not time. We needed to check if the customer is even willing to pay for the software. The first year we verified that it was possible. Our turnover at that time was about 700,000 CZK. The second year we verified that they would pay for it again and the next year again. It cost us a fraction of the sales time. You have to deliver value. Today we already have 20% of the product turnover.
Martin Hurych
So the licensing policy is SaaS, or what do you call it?
Lukáš Cirkva
On-premise. The reason is that our business, our specialty is on-premise large applications like SAP or internal AD. It's already moving into the cloud, but the customer still wants to keep it in- house. We are able to have our software in the cloud, but there is no demand for it yet.
Martin Hurych
How much do you want to expand the 20% versus the 80%? 80% is still consultative, if I understand correctly. Where's the ideal state, where are you going?
Lukáš Cirkva
We have a strategic goal of being 50-50 in four years. That logically means, having gone from scratch and consulting we don't want to dampen that, we want a company like that one day than we had before.
Martin Hurych
Can it all be done with one product, or will you be expanding your product portfolio?
Lukáš Cirkva
We started on one product and have been a one-product company for a long time. It's an up and down journey with business. When we started the company, we were selling consulting, training, Linux administration, or supplying other identity managers. But gradually we became very specialized. The trend today is that we are adding other products to our software, with a lot of trying to be in our circle of competence. Our software is so well done that it's basically a platform. We add a few reports, a little bit different forms, and all of a sudden it's software to solve slightly different problems. Think of it like medication, the active ingredient for headache and toothache is actually the same, but they're different medications because of the marketing.
Last year we added 2 new products. Last year was a lot about learning how to create new products. After creating them, we went straight to customers to see if there was interest. The first product was about license management. Imagine a problem where I, as a sales director in a large company, pay licenses, RPs, pay cloud licenses, but don't know who to use them. It's managed by some IT guy that I have to call and I'm basically paying a deadbeat. It's still identity management, but in a slightly different form. We were able to sell it to existing customers, but none of the new clients bought it. At the same time, we tried a second product, access management. There was huge interest there, and we were able to sell it to several clients without any effort. So by testing it, we found the right way.
How does the sales department adapt to the change?
Martin Hurych
How are traders managing to complete this roll? There is a belief that either I sell a service or a product well. Your people are making a big pivot right now. How are they doing?
Lukáš Cirkva
It's hard. It's a journey, a multi-year journey.
Martin Hurych
Are you thinking of separating these sales from each other?
Lukáš Cirkva
Yes, that's one of the possibilities. Our product is very difficult to absorb and sell technologically. We're optimizing a customer's system, of which there may be hundreds. And you, to be relevant, you have to understand what SAP is, what HR is, what service desk is, and that's hard. A product that has some features is easier to sell. So we go against that and every year we do meeting templates, offer templates, some target concept templates. We're going down a path where we're trying to give the salesperson as many resources as possible to make it easier, easier for them to sell and to focus on the customer.
How to deploy OKR in practice? And what are the benefits?
Martin Hurych
I said at the beginning of the episode that you are an example of how to put theory into practice. I've made a few points here, let's see how many we can get. Mira Vlach was here the other day and we were discussing OKRs. You've recently implemented OKRs into the company. Come tell us what your experience has been. What was the deployment process like and what have you gotten out of it?
Lukáš Cirkva
This was, and still is, a very interesting journey. When I first met OKR, which was sometime in November last year, I thought it would be a small thing. And being the inquisitive person that I am, I sat down and wrote our goals that we had for last year into the Gtmhub software. While writing it, it forced me to formalize the goals in a completely different way. The principle is some sort of objective - a goal that is supposed to be high so that even if we reach 70%, it's a success. And in writing it, it made me think about those goals in a completely different way. For example, we have employee satisfaction in our annual objectives. That's easy to measure. We get resumes coming in on their own, employees sending people to us on their own, and the third measure is standardized internal questionnaires.
When I first sat down with our managers and showed them my newly rewritten goals, they just took it as stalling. At the second meeting, I sat down with everyone personally. It clicked with them there, they already saw the benefit. At the third, joint meeting, we planned the goals for last year. We understood what OKRs were, what they were for, and we put them in place.
We then planned for the next year, one of the goals being to increase turnover and profit. I told the sales director to come up with a proposal. Together with the head of implementation, they came up with a proposal of 20 percent growth. I looked at it, scratched it and added another 20%, saying I could imagine it, but I didn't know how to do it. Everyone looked at me in surprise and asked if I was crazy. They came to the next meeting and said they believed in it, wanted to go for it and would find a way to make it happen. Last week we did a quarterly review. It's already been applied, approved this year and that goal was small. We met the quarter before it ended.
I had a great ambition to involve all employees in the annual OKR targets. I wanted to be involved in both financial targets and employee satisfaction. We're very much going down the free companies. In management, we decided what goals we wanted to achieve and we went to the employees with it. I told them to convince me that the goals should be different or that we should approve them. My colleague Marcel Poul told me that it was our responsibility and that the employees would want nothing to do with it, that it would take time. He was right. We spent at least 10 hours explaining the objectives to each employee. It was demanding. No one believed in a 40 percent increase in sales. They didn't want to contribute to the other targets. That was at the first meeting. At the second meeting, they told me they agreed it would be hard, but they believed in it. Everyone individually agreed to it. They came up with suggestions on how they could help.
Then we had a company-wide meeting where we took another look at the goals, everyone approved them, and we started talking about how everyone can contribute. The consultants came in saying they wanted to get involved in recruiting people, replanting flowers in the office, doing team building. Now I'm naming the side tasks on purpose.
First they said how they didn't even want to be involved, and then each team had their own ideas without the help of management. It was an absolutely amazing experience for me. I felt like I could close the office behind me and fly to the Bahamas for a month because I had achieved what I had dreamed of for x number of years.
Martin Hurych
So how long did this process take? If I understand it correctly, only a few months to completely change people's attitude.
Lukáš Cirkva
First, we rewrote the goals we had for last year in the management. That was November. Then in December we proposed the goals for the new year and it took us a month to discuss it. The next month was budgets. Imagine Bata's workshops. Each team has its own budget. Everyone is afraid of targets. Here, developers define their own tasks on a 14-day basis. Something comes from the project manager, something from the shops, but colleagues have a great deal of freedom to choose specific tasks. And I try to give them a methodology so that they can decide which customer they're going to work for. So that they can decide based on how much they get paid. That's one goal that I have.
The second goal is to teach employees to give and receive clear feedback. We talk about customer satisfaction, the functionality of the solution, the speed of service, and now I want to incorporate feedback from the financial side. That's one basis of OKRs.
A free company does not come into being easily, it has three parameters. You have to give very clear information, be transparent, empower people, which is often said but the reality is different, and be patient. It's a journey, it doesn't happen right away. For example, I show the internal finances of the company, unless it is payroll. Payroll is a very personal thing and I don't have the courage there yet. Imagine Thursday, second hour, I walk into a room where there are 7 people. It's a form of training. I show statement after statement, I ask questions and explain. The purpose of showing it to my colleagues is to raise questions, to involve them in the solution and to help them make better decisions. I ask them very critical hard questions. That is the culture we have. Employees ask why they only get a fraction of the company's earnings, where that money goes. So we talk about costs and we show it in numbers. I give them room for suggestions on how to change it. The consequence is that colleagues take on tasks themselves. For example, a colleague took a negotiation with Vodafone and negotiated great terms in a month. That's exactly what the consequences are. The other colleague came to me and told me that she had been really successful, that she had negotiated a lot of money for us, and he wanted me to give her a reward. I told him to give her a reward. Then the colleague came and said that the colleague had helped her a lot and that she wanted a reward for him too. I told them to make arrangements together. I know they did. I don't know how it turned out, how much it was, but I know they did the right thing.
Are employees willing to take responsibility?
Martin Hurych
Are people generally willing to take responsibility? Because what you've done so briefly can only work when you empower people and they take responsibility.
Otherwise, it'll be anarchy. I sincerely congratulate you on making it so quickly. How do you see things around you? Are you a lucky man, or is this actually normal and we're just afraid to do it?
Lukáš Cirkva
I personally think that a free company is not better than a directive company, and vice versa. It suits some people, it doesn't suit others. I was also a directive, performance driven company at the beginning, I pushed people and I counted every minute, accounted and kept track of everything. But my employees were leaving, it was impossible to sustain it in the long run. We have values of longevity and I was very sorry when someone left like that. It was also because I was not pleasant.
I searched for that path for a long time, until I came to the state that I am today. It took about 10 years. Of course, it starts with the selection of people. When a new candidate comes to us, we make it so that he comes to work with us for the day. He's talking to that particular team, not some HR. We come across as giving very hard feedback. I hired one employee last year who was not successful. A colleague came to me and told me that I hadn't done a good job, that I hadn't asked him first, that he didn't like the person at first glance, and to do better next time. I thanked him. This is what we give to these people in the first round of interviews. We are quite very demanding in interviews and we try to convey to people what we are about. We offer purpose, responsibility and personal growth.
So the first is the meaning. Very often I have heard in interviews that the person in question has been developing software for two years in a company and has never seen a user. We are the exact opposite. With us, you do something in software and a week later the user you're sitting in the same room with is using it. And we have amazing projects to take on. For example, the General University Hospital has electronic medical records. They don't have to print, archive, shred, etc. They have it in electronic form, which looks easy in the twenty-first century, but there are legal issues involved. Everything has to be signed and legally recognizable. We are part of that solution on the digital certificate signature side. The doctor doesn't have to go to the post office to get an accredited signature. We mediate the communication between the post office and the hospital's internal systems. A digital ID card is issued through our software. This is a huge benefit and is the work of one particular colleague in our office who can proudly boast about it.
I said responsibility and authority, when a new colleague comes in, we put him in authority right away. He starts on a bug and ends up having responsibility for a system or a solution.
The last of the three parameters is personal growth, and we work a lot with that. We have at least one training session every week with 25 employees. The way it works is that if I learn something, I have an obligation to pass it on to others. I went to Radim Parik's negotiation training and the very next week I was passing it on internally to my colleagues. They loved it and immediately booked the training as well.
What does a self-learning organization bring in practice?
Martin Hurych
You've picked up on the other topic I wanted to open up briefly today, self-learning organizations. Honza Mašek was here the other day, we said that there are not many companies like this on the market. You just said that it's you're actually doing it yourself. Personally, part of the reason I think of it as training is that you're showing people finance because you're getting them into it. It's a lot of time and a serious investment in your business. What's in it for you?
Lukáš Cirkva
Ultimately, this results in an increase in the knowledge and skills of employees, which translates into money, into profit. It's as simple as that. We had one long-term employee leave last year and our profits went up 20%. Of course internal training is a huge investment, but if you don't do it, it will catch up with you one day.
Martin Hurych
How do you organize it? You said you had a training session once a week. Do you have to go, or is it voluntary? And how do you choose the topics?
Lukáš Cirkva
I am a person who has a need to learn something every day. I listen to podcasts, read books, go on MasterMind and constantly seek out information. I hire people like that. It didn't used to be that way. I used to have to go around the company and tell employees to go present what they learned. I basically had to enforce it. My colleagues told me they didn't have time and that no one would be interested. So we had to look for quite a long time, and after a few years it became the norm. I learn something, I pass it on to others, it's all voluntary. I've been to negotiation training, so I made an appointment for that and those people came. If I get the training wrong, they don't come again. On the one hand, everyone is encouraged to spend time passing on the experience to others. On the other hand, we don't slap ourselves for mistakes, but we give feedback on how much it helped.
It was a huge job. It took years for it to really take hold in the company. You know Ales Roman. He's the one who had the top-rated training from developers on how to get a meeting on the phone. We really do have all kinds of training every week.
What went wrong? Where are the fuck-ups?
Martin Hurych
I was gonna say it sounds great. I can totally hear some of the doubters behind the camera and behind Spotify. Is there anything you're not getting right? Where are the dead ends that don't always get mentioned logically? Tell the youngsters some fuckup.
Lukáš Cirkva
It's not for everyone. We've also had a well poisoner come into our business. Nowadays, colleagues have been taught not to keep it to themselves. They either go straight to him or they tell me or colleagues. We constantly need to make sure we are in line with the company culture. So I guess it's a fuckup that just goes with life.
And then there's the other thing. Now we're dealing with a business example. We have customers, billion-dollar companies, but we don't quite have the biggest ones in the Czech Republic. We don't speak the same language, we don't go to
coffee. We're the ones who make things happen, who make things move. When we sit across from someone who has a problem and is willing to address it and push it internally, we get along. The moment we come into a meeting and there are 12 people sitting across from us and one person is talking, we don't really understand each other. I'm not criticizing, it's not bad or good. Every company does it for a reason. We can't do the political ones yet, but we want to.
Contact
Martin Hurych
I understand. If listeners or viewers would like to consult with you about something from practice, because obviously what is written in books can be translated into practice, where can we find you?
Lukáš Cirkva
I'm on the web, LinkedIn, email, phone. Feel free to call or write me. You can find our website at bcvsolutions.eu.
Martin Hurych
Thank you for your participation and for your insight into the practice.
Lukáš Cirkva
Thank you.
Martin Hurych
That was Lukáš Cirkva from BCV solutions. I hope that we have convinced you that what we have often discussed in previous episodes only in theory can actually be translated into practice. Luke's company is a shining example of this. If we've intrigued you in any other way, give us a subscription on YouTube or in your podcast app. Check out my website, www.martinhurych.com, where there will be a bonus for this episode. We forgot about that one, unfortunately, in the heat of the interview, but I'll definitely get something out of Lukas for you. All I can do is thank you for your attention, keep my fingers crossed and wish you success, thanks.