Time-Driven Activity-Based Costing at Voray Custom Case Solution & Analysis

Evidence Brief: Time-Driven Activity-Based Costing at Voray

1. Financial Metrics

2. Operational Facts

• The business model relies on human-led curation of professional networks and events.
• Primary activities include member vetting, matching, event planning, and follow-up.
• Matching involves a three-step process: identification, double-opt-in outreach, and introduction.
• The company transitioned from traditional ABC to TDABC to reduce administrative burden on staff.

3. Stakeholder Positions

• David Bloom: CEO seeking a scalable path to profitability and clear unit economics.
• Robert Kaplan: Advisor advocating for TDABC to identify unused capacity and unprofitable segments.
• The Operations Team: Concerned about the time required to log activities versus performing core work.

4. Information Gaps

• Specific churn rates for members after the first three introductions.
• Variation in matching time across different industry verticals.
• Long-term customer lifetime value versus the current cost to serve.

Strategic Analysis

1. Core Strategic Question

• Can Voray scale its human-centric curation model without its operational costs growing linearly with revenue?
• How should TDABC data inform the transition from a generalized networking tool to a high-margin professional service?

2. Structural Analysis

Value Chain Analysis: The primary value lies in the curation step. However, the TDABC data shows that curation is the most expensive activity. The current model treats all matches as equal in cost, but the data reveals a high variance in time spent per match. The bottleneck is the manual outreach process which currently consumes 50 percent of the operations team capacity.

3. Strategic Options

• Option 1: Premium Tiering. Implement a tiered pricing model where the number of curated matches per month is capped. High-touch curation is reserved for a premium membership level. This aligns price with the high cost of capacity revealed by TDABC.
• Option 2: Algorithmic Assistance. Use TDABC findings to identify which parts of the matching process can be automated. If outreach takes 10 minutes and matching takes 20, automating the outreach sequence reduces the cost per match by 33 percent.
• Option 3: Corporate Managed Services. Shift focus from individual memberships to enterprise accounts. This allows for bulk capacity planning and higher predictability in resource allocation.

4. Preliminary Recommendation

Voray should pursue Option 1 and 2 simultaneously. The TDABC data proves that the current flat-fee model is unsustainable for high-demand users. Implementing a premium tier ensures that the most resource-intensive users pay for the capacity they consume. Automation of the outreach phase is the only way to decouple headcount growth from revenue growth.

Implementation Roadmap

1. Critical Path

• Month 1: Finalize the Capacity Cost Rate (CCR) for all functional roles within the operations team.
• Month 2: Integrate time-tracking light-touch tools into the workflow to automate TDABC data collection.
• Month 3: Identify the bottom 20 percent of unprofitable members based on cost-to-serve data.
• Month 4: Launch the new pricing structure and automated outreach pilot.

2. Key Constraints

• Staff Adoption: Employees may resist time-tracking if they perceive it as micromanagement rather than capacity planning.
• Quality Degradation: Automation of outreach must maintain the personalized feel that defines the brand.

3. Risk-Adjusted Implementation Strategy

The transition will occur in phases. Phase one focuses on visibility. No pricing changes will happen until 90 days of TDABC data are collected. This ensures that the new price points are anchored in actual cost data rather than estimates. If automation reduces the quality of matches, the company will revert to manual outreach for the premium tier only, preserving the brand while fixing the margins for the mid-tier.

Executive Review and BLUF

1. BLUF

Voray must immediately pivot its pricing and operational model. TDABC data confirms the current model is a subsidy for high-volume users. The company should implement a tiered pricing structure that reflects the cost of capacity and automate the outreach process. Profitability depends on reducing the 30-minute total match time by at least 40 percent through technology. Without this, scaling will only accelerate capital depletion.

2. Dangerous Assumption

The analysis assumes that the 20-minute matching time is static. If the network grows in complexity, the time required to find a high-quality match may increase non-linearly, neutralizing the gains from outreach automation.

3. Unaddressed Risks

• Market Rejection: Members may view the shift to automated outreach as a loss of the personal touch that justifies the membership fee. Probability: Medium. Consequence: High.
• Data Integrity: TDABC relies on accurate time estimates. If staff under-report time to appear more efficient, the resulting cost data will lead to under-priced services. Probability: High. Consequence: Medium.

4. Unconsidered Alternative

The team did not consider a pure marketplace model where the matching cost is shifted to the members. By allowing members to bid for introductions, Voray could eliminate the curation cost entirely for certain segments, moving to a self-service model for the low-margin general population.

5. Verdict

APPROVED FOR LEADERSHIP REVIEW