Drivers of Innovation in TICC

Caveat
Before you read this piece, allow me to provide an important caveat.  When I sat down to write this exposé, I had a vision for what it would be.  Despite that vision, the final draft read like a “sponsored content” piece; it is not.  However, I could not figure out a way to write the piece in a way that is both comprehensive and completely unbiased and impartial.  I had a choice between scrapping the piece altogether or posting it for the benefit of others, and chose the latter.  With that clarification out of the way, enjoy.

Preface
We’ve all read stories of disruptive innovation.  Most of these focus on well-known consumer facing B2C names, such as Amazon (ecommerce), Apple (mobile communications), Netflix (streaming media), and Tesla (electric power storage).  While each of these companies deserve due acknowledgement, few B2B companies receive similar public appraisals.  In this piece, I examine one such company, a new entrant that is changing the way certification and compliance is done on a global basis.

With this context, I offer an exclusive look into a business looking to disrupt the testing, inspection, certification, and compliance (“TICC”) sector status quo, HAP, which offers a tech-enabled, network-based approach to compliance services in stark contrast to those of its more established industry peers.  HAP’s traditional competitors, prospective and current customers, and accreditation bureaus are taking notice.

HAP Platform Introduction
HAP is a Boston-based provider of disintermediated supply chain audit, inspection, assessment, and verification.  The Company markets itself as “the business of better compliance.”  With a network of well-vetted, independent, industry-focused specialists across 37 countries.  HAP offers its customers “on demand” access to these professionals, as well as a tech-enabled analytics, digital tools, and customer dashboards, all driven by a patent-pending artificial intelligence engine.  HAP’s dynamic and flexible network of worldwide human capital resources allows the Company to respond quickly and effectively with certified professionals who have local market language proficiency and regulatory knowledge.

HAP’s compliance services approach comprises a unique value proposition that no established TICC sector participants have been able to replicate.  The Company’s platform was built to cater to 21^st century, tech-savvy clients; the results are paradigm shifting.  Proof of HAP’s impending success comes in the form of growing market share amongst Fortune 1000 and Financial Times Stock Exchange 100 (FTSE100) customers on a global basis.

HAP’s approach to service volume growth, human capital management, and platform support infrastructure all contribute to its ability to flexibly scale up or down as it responds to changing market conditions and client demands.  In this industry expose, I juxtapose HAP’s business model to those of traditional TICC sector participants.

The HAP Difference
HAP is different, because it was designed to be different.  The founders (more on them below) took a “Tesla-like” approach to building the platform, similar to Elon Musk’s and the Tesla team’s use of First Principles thinking to reinvent passenger vehicles from the ground up.

HAP’s platform was born of a blank slate, with no pre-conceived notions of “the right way” to provide compliance services and with Musk’s first principle thinking leading the way of not copying what other industry players currently do with slight variations.  The founders identified and implemented several critical characteristics to differentiate HAP from its compliance and assurance services industry peers.  To compete in the crowded TICC space, the Company’s services needed to be asset light, on-demand, smart, and seamless.  In the process, HAP redefined the service paradigm for its customers.

Modeled after a blended combination of Uber, LinkedIn, and eHarmony, HAP pairs together “seeking” corporations with talented, experienced compliance service providers: the right person in the right place at the right time.  The Company’s proprietary cloud-based software platform includes a pre-qualified database of compliance professionals around the world.  The number of network professionals is constantly growing (new signups) and shrinking (as the Company prunes underperformers).  This continuous network evolution reflects HAP’s intentional strategy to allow only the strongest performers into their network, resulting in a proven stable of highly-skilled individuals.

Each professional deployment is accompanied by a customer review, which leads to a performance and satisfaction score (just like rating an Uber driver after each trip).  Each person’s in-system biography is available for review by prospective customers, and comes with previous and average scores earned from completed engagements, as well as a full list of credentials such as education, certifications, experience, and core competencies.  Prospective customers can select compliance professions based on these attributes, similar to hailing an Uber or picking a dating partner on eHarmony.  In addition, just like Uber, each customer can decide whether to order an UberX car (economy option) or a Black SUV (premium option), based on the experience and price points of each available local professional.

While HAP’s business model has certain similarities with Uber, its service model allows for more customized placement, ranking, and tracking:

• HAP’s customers are given the impression that each assurance professional is one of their own employees, while maintaining flexibility to “switch it up” based on each experience with, and the capabilities/credentials of, each service provider;
• while the ratings system is similar in concept between the two models, the Company’s platform provides much deeper insight into each “driver’s” track record on previous engagements (“LinkedIn on steroids”);
• if the customer has a good experience, that customer can retain the professional for as many days/weeks as it would like to do so (subject to prior schedule commitments), or even convert the contractor to a full-time position (equivalent to “getting married” in the eHarmony model); and finally,
• in HAP’s model, each professional determines his or her own billable rate (whereas Uber’s algorithm determines ride pricing based on local demand-supply dynamics). This remarkable flexibility allows each individual service provider to set the market on his or her own services.

In the same way that Uber’s ride-hailing alternative has gained market share at the expense of traditional taxi service providers, HAP has also grown by taking market share from more mature competitors.  However, HAP’s strategy is not just to win a zero-sum game; but also to create real value by increasing the total addressable market for all industry participants.  As the Company proves its business model, one mandate/assignment/project at a time, an increasing number of its customers consider outsourcing compliance functions previously maintained as in-house competencies.

There is also evidence that HAP’s business model itself is evolving.  Recently, the Company has seen an uptick of inquiries from the traditional TICC powerhouses themselves, many of whom are looking to decrease their fixed costs or expand their effective service footprint without hiring additional in-house compliance professionals.  Traditional TICC companies typically compete through volume pricing schemes and global network, both of which rely on scale.  These parties have reached out with to explore the possibility of outsourcing their own compliance and certification services – performed on behalf of THEIR customers – by using HAP’s platform.  This development presents a new growth opportunity for the Company to pursue.

HAP’s Founders
Businesses often take on the nature of their leadership team.  In this case, HAP reflects the personalities, experiences, and attributes of its multi-disciplinary co-founders, Andre Raghu, Chief Executive Officer, and Akshay Vazirani, Chief Product Officer.  Andre and Akshay are both accomplished TICC industry professionals who bring distinct, complementary skill sets to the Company.

Andre, formerly President of Global Sustainability Services – Consumer Goods and Member of the Executive Council at London-based Intertek Group plc, is recognized as a subject matter expert and authority on non-financial risk and business-driven sustainability (e.g., recently voted #12 in 2020’s Corporate Social Responsibility Influence Leaders Top 100 list).  Accordingly, he brings an uncommon perspective regarding the right and wrong ways to provide international trade assurance services, and has been instrumental to the design and development of HAP’s asset-light infrastructure.  Andre also brings established relationships with global industry connections, which have allowed HAP to scale its global network quickly.

Complementing Andre’s TICC background, Akshay brings completely different skills to HAP.  As a successful tech entrepreneur, Akshay brings a technology-first approach to solving business issues.  Akshay’s 20 years of cloud and B2B platform product experience provides in depth knowledge of supply-chain-centric real-time collaboration, and hands-on experience building large-scale cloud-based services.  His experience has been instrumental to developing the Company’s unique IT systems and capabilities.  Before co-founding HAP, Akshay founded a successful private ecommerce software company with operations, offices, and data centers across four continents with $700 million revenue in customer transactions under management.  His computer programming and software development skills, combined with Andre’s asset-light service delivery vision, allowed Akshay and his team to build out HAP’s industry-redefining, AI-driven data analytics platform.

Together, Andre and Akshay have overseen HAP’s development from a white-board concept to the rapidly growing player it is today.  They continue to lead and scale the Company through its current phase of global expansion, development of new service capabilities, and evolving service delivery model.

Despite all of their success to date, their determination to continue the Company’s growth has never been stronger.  On this topic, Andre commented, “We’re humble enough to acknowledge how far we’ve come, while maintaining a big-picture view that recognizes we’re not done disrupting the industry architype.  We still have work to do.  We’re not satisfied yet, and probably never will be.”

HAP’s Continuous Improvement
HAP recently announced its first major product, HAP Vision.  HAP Vision represents a giant leap forward in onsite audit technology.  As companies move their global supply chains from “responsible” to “accountable”, HAP has developed advanced technology to ensure ethical supply chain and sustainability standards are maintained from origin to delivery.  In its first generation, HAP Vision uses a combination of cameras, sensors, video, computer vision techniques, and deep learning to identify real-time occupational health and safety risks at manufacturing, raw material procurement, and construction sites across every link of the supply chain.  HAP Vision allows a company to move from risk identification to corrective action in near real time.

To prove its reliability, HAP Vision has been alpha tested in 10 countries since 2019.

Conclusion
As a provider of investment banking advisory services to testing, inspection, certification, and compliance companies, Livingstone benefits from “behind the scenes” access to business owners and leaders in the space.  This access provides me with greater insight and appreciation for the industry disruption and innovation taking place with HAP – because I know firsthand that it is unique.

HAP doesn’t just break the standard compliance business model mold, it redefines it.  HAP offers its clients a unique alternative to traditional service providers to address their corporate assurance needs and streamline their compliance requirements.  Through its tech-enabled platform, HAP has solved governance, transparency, and accountability issues that have prevented previous attempts by large TICC competitors to improve their service delivery model.  Most large industry competitors evolved from a fixed-asset laboratory model that defined their own beginnings.  Conversely, HAP was founded to be nimble, scalable, and global.

As the Company’s market share grows, others in the industry will take notice of HAP’s unmatched value proposition, which results from thinking differently about client service and building a digital engine to enable the founders’ service delivery vision.  Time will tell whether HAP continues to outmaneuver its competitors.  In the meantime, the Company will continue to do exactly what its platform was custom built to do: provide HAP’s customers with a reliable, on-demand, global stable of qualified professionals ready to accurately and cost effectively assess risks and evaluate field conditions on their behalf.