Early stage start-ups are a heady mix of frantic activities. Struggling with a lean team, nearly no money, high risks and great dreams, we try to find ways to figure out if we are on the right track.
There is enough written out there about metrics of growth in terms of customer acquisitions, marketing, sales, burn rate etc. Many of us do a decent job of tracking these. But in all the medley, we overlook some common operational wastes.
A start-up's operations require a certain team synergy and mindset to be ingrained. Day to day operations at an early stage are in the realm of gut feel and borderline emotional. So it is quite hard to be objective about metrics on operations, when everything is quite ad hoc.
But here is an attempt to list out 5 operational wastes that might get fingers burned, if we don't pay attention to them.
Time spent on "non-productive"work: Most start-ups have a Lean team. That means founders will be forced to spend time doing things that are not their core area of strength. This is perfectly good for things such as sales, and customer relationships. These add amazing value to the business and in our understanding of the market.
But there are some things that I'd like to call "donkey's work" :). These are things that just need to get done, and they don't really need a special expertise/ strategic oversight. I strongly believe that founders need to step away doing everything themselves. They need to delegate tasks that are (even) moderately repetitive, and non-strategic in nature. This is first step to thinking of operating in scale.
One argument founders might make is that we save costs by not hiring someone for these tasks. But, what about the opportunity costs for the founders spending time doing non-critical, "donkey's work"? If we cant delegate non-strategic, repetitive tasks, and cannot get into a mode of overseeing and getting things done by others, aren’t we setting the business up for failure at scale?
It is probably a good idea to start paying attention to the amount of time founders/ key team members spend on work that doesn't bring a direct tangible value to the business. Create a plan to delegate or do away with those tasks. Even if your tech team is building features that don't bring in extra moolah, you need to start critically evaluating why. Eliminate waste.
Dilemma of Hiring: That brings us to the value of hiring. Hiring (and firing) come with huge operational costs, and affect revenues and morale. Many of us fret and fume over how to hire, who to hire, how much to pay.
In my opinion, start-ups need to hire only when all existing resource and capacity is exhausted or when there is a pressing need for a skill set that doesn't exist today. We usually dupe ourselves into hiring someone because they may not be available later, or because they're a good person to have on board, or thinking we may need such a person when we scale. We get desperate much before we need to.
It is hard, but be ruthless in pushing your team to contribute to their extreme limits :) Don't hire redundant skills unless your current team has been 100% utilized. And then push them some more :)
I know it is gut-wrenching to think about "timesheets" in a startup, and no, I am not suggesting that we setup timesheets to understand utilization. But it is important to assess this whenever there is a hiring need.
To hire for a skill-set that doesn't exist, it helps to chart out outcome metrics. "We expect that in 3 - 6 months this person would bring in x leads, y amount in sales, or z speed/ stability to the product". If there are no specifics on this, don't hire. Delay hiring until you are sure about these outcomes. Eliminate waste.
Networking: Everyone knows the importance of networking, but we really don't think of how to measure it. While networking may not have a direct, tangible impact on a start-up's operations, it could easily fall into the "non-productive" work category.
For many people networking is a natural talent. They move easily with people, they know to tell the difference between a casual conversation and a valuable conversation. They know which rabbit holes to go down, and which ones to steer away from. But most of us struggle.
We network because we know it is important. We sign up for start-up events. We work at coffee shops because we may meet "important" people. But this is all just a shot in the dark. They could just drain energy and time, and result in nothing at all.
It is important to do some homework before networking. The network we are trying to build must relate to the outcomes we have in mind. "Meet 10 people in 3 months" is not the right metric. Are those 10 people related to our line of business ? or are they likely to invest? Would they be able to connect us to other people? Would they bring us leads or customer referrals? If not, decline. Don't network for the sake of it. Don't attend conferences, especially the start-up ones, unless you are selling to start-ups. They can be a sheer waste of time.
Networking, like marketing, may not get us immediate results. And it works in mysterious ways. We need to keep evaluating which one of our contacts is continuing conversations. Test how they engage with us on social networks. Let go of the time, energy and money drainers. Eliminate waste.
Time spent on "decision making": We love the idea of a democratically run company where everyone's opinion is valued. We love the idea of teams getting together and deciding on everything from where to order coffee to who to hire. It is also true that most of this is an eye-wash. :\
It is important for founders to understand and own upto the influence we have on strategy. If the team is spending an hour everyday discussing where to head for lunch, there is a problem. If the team is spending 5 days to think about their decision to hire someone, then we have a serious problem. If it takes 5 rounds of interviews to hire an intern, well your start-up needs a miracle. Every minute lost in decision making matters. It also affects the image of the founder(s).
That does not mean you should'nt seek inputs. You should. Just be smart about it. Some decisions deserve a 3 hour face to face meeting. Some decisions don't. Some decisions need only data input from others. And not every decision needs everyone's inputs/ opinion. Acknolwedge that. Eliminate waste.
As a founder, let's not be apologetic about being the decision maker. Check where decisions are getting stuck. Is it because you are unable to gather data from your team? Is there a communication overhead ? Is it because everyone has an opinion on everything and you are afraid of upsetting your team ?
Negative effects of Culture: A start-up's culture is not about going out for drinks every evening. It is not about work timings or flexibility or having a cool workplace or bringing pets.
IMO there are only 2 things that matter to an early stage start-up - growth (revenue/ impact), and taking bold decisions quickly. How you arrive at these 2 should determine your culture. If you struggle to take decisions at this stage, it could mean your culture is killing you. If everyone in your company doesn't share the same idea of growth, then you could have a culture problem. How your team reacts to the loss of a customer/ employee or a customer's complaint, can tell you where your culture is headed.
If your team is focussed on growth, takes bold decisions quickly, then your culture will organically evolve around these core tenets. If not, your culture will be just about coolness, freedom and luxury. Eliminate waste.
Of course, in some cases, we will take a conscious hit on growth/ impact. This is the positive side of culture. For instance, turning down a customer who made lewd passes at an employee, is a great positive culture to ingrain. Going out of the way to hire a person from an different background is a great positive culture to build. But doing that for the sake of coolness isn't going to cultivate a better culture. It could actually hurt a start-up's growth.
I'd like to know what your experience has taught you. How do you eliminate operational waste? Do share your thoughts and comments.