11.12.12 by Dov
Filling out a young company’s management team is often one of the most difficult tasks we face as board members. In my opinion, that’s doubly so on the sales and marketing side.
3.22.12 by Dov
The question periodically comes up (as it did here today) whether it’s more important to have great people or great processes. It’s an important question, because the answer dramatically affects how you should be building your business. And while it certainly varies across companies based on industry and other factors, I think there are some basic points that are helpful to consider.
Startup or publicly traded? The most important factor in determining which way to lean is the size of your company. At one end – a raw startup – it’s all about people. You need to be completely flexible, so processes will only get in your way. And that’s assuming you could even figure out what your process should look like – an uncertain proposition at best. It’s absolutely vital that you have the best possible team and that every member of your small team be a highly capable “A player”. On the other hand, if you’re a massive corporation with thousands (or tens or hundreds of thousands) of employees, it’s just not realistic to think that every member of your, now-enormous team will be an A player. But operational, regulatory, public relations, and other demands make it important that those employees perform like A players. And that’s where high-quality processes come in. Your A players can design the processes to make your B players behave like A players (on average).
Level of customer interaction. Another factor to assess when you’re considering the level of process to put in place is how much your organization (or a subset of it that you’re considering) is how much direct interaction there is between your employees and your customers. The more interaction, the more important people become. There are an enormous variety of “hiccups” that can and will occur in all aspects of every business. When those are purely internal, it tends to be less important that your process handle them well – and in many cases, it will even be better to just miss out on some opportunity or incur some unnecessary cost in order to keep the process intact for the long run. But when you’re interacting with your customers, more flexibility is demanded. We all HATE being told by a customer service representative they’re not allowed to do something even though it’s obviously the right thing to do. And it’s even worse for a startup interacting with their customers – none of whom can you afford to lose.
Level of risk tolerance. In essence, when you decide whether to “processize” something your company is doing, you are essentially making a trade-off between risk and return. A process, when properly designed and implemented, reduces the range of outputs you will get for a given set of inputs. That is, it decreases risk. At the same time, however, by reducing or eliminating the extreme cases, it reduces the ability to capture out of the ordinary benefits (revenue, profits, etc.) in favor of reducing the likelihood of getting worse than average results. If your company is at a point where it needs to grow rapidly to succeed (e.g. because you need to reach profitability before running out of cash), that may not be a tradeoff you can afford. If you instead need to be more predictable in your outcomes (e.g. because you need to report to a board of institutional investors), you can instead build that reduced upside into your projections and then build processes to ensure you hit your numbers.
The wonderful world of early-stage. The companies we work with at Allos tend to be right at the cusp of starting to move from people-focused to process-focused. They usually have a great team that’s made a lot of progress, but are starting to find it difficult to manage their growth without building some process (particularly around how they manage their sales pipelines and their customer implementations). As they’ve grown, a smaller fraction of the overall organization is directly interacting with customers (when there’s only the co-founders, it was likely 100%, so it can only go down). And taking on a multimillion dollar investment injects both the ability and the desire to improve the predictability of the company’s performance.
Finding the balance is never easy, but it’s critical to building a successful company. How have you managed it at your company? Share your stories in the comments!
2.22.12 by Dov
While I certainly don’t condone plagiarism, they say that adults learn best by copying others. So, with that in mind, Jeff Ready of Scale Computing brings you, The Copy-Paste Financial Plan.
10.21.11 by Dov
Scale Computing CEO Jeff Ready quoted in this article with some helpful advice for job hunters: Should you include volunteer work on a resume? – Fortune Management.
9.16.11 by Dov
7.14.11 by Dov
Just a quick note to point entrepreneurs to some helpful tips from Slingshot SEO on writing more effective press releases. We see this issue all the time within our portfolio – some great event occurs, the company drafts a release, and it goes nowhere. PR is by far the most cost-effective driver of sales, but only if you get some, and this is some practical advice on increasing your odds.
7.13.11 by Dov
There are numerous books, articles, and theories about how startup companies are able to defeat entrenched, heavily capitalized competitors. But I’m starting to think that in many cases it just comes down to not being stupid. There’s something about bureaucracy that makes otherwise intelligent people do stupid things. I thought I’d share a wonderful example with you that came in my inbox today.
So, I use Chase’s online bill pay service periodically. Today, I received an email from them:
Dear Chase Online Banking Customer,
In March, we made a change to the way your bill payments through Chase Online Bill PaySM are funded. At that time, we changed our practice so that if you entered a payment after the 8pm ET Cutoff Time, on a weekend or on a holiday that was scheduled to be sent the next business day, we did not debit the payment from your Pay From account until the Send On date.
Based on the customer feedback we’ve received since that time, we’re returning to the process we used before our change in March.
Beginning July 17, 2011, we will withdraw funds from your Pay From account immediately for payments scheduled to be sent on the next business day that are entered after the 8pm ET Cutoff Time, on a weekend or on a holiday.
Please note that we will continue to withdraw funds from your account on the Send On date for future-dated or repeating payments, as well as payments scheduled before the Cutoff Time.
We value you as a Chase customer. Please call us at 1-877-CHASEPC (1-877-242-7372) if you have any questions.
Patricia O. Baker
Senior Vice President
Chase Executive Office
Really? Customers contacted them to complain that they’d stopped taking money out of their accounts a day before they executed the transaction? Perhaps they’re worried about that Chase’s legal troubles may put their savings at risk and want to do their part to ensure that the bank survives by encouraging Chase to use the extra 12 hours of float (on what are mostly non-interest bearing accounts in any case).
I’m pretty sure that this is not an email that would be sent by an SVP (or any other employee) at a successful startup company. If for no other reason than a successful startup wouldn’t be likely to randomly give up a good source of profit (that customers probably don’t even notice or care about) in the first place.
I wrote Patricia an email back asking her specifically what customers were so concerned about that forced them to switch back. Will let you know what she says when she writes back. Yeah – like that’s going to happen.
Update (7/14/11): I’ve now received Chase’s response to my query, so I figured I’d share it to close the loop. Here’s the actual message I sent:
Just out of curiosity, are you implying that customers actually wrote in to say please withdraw funds from my account a day earlier?
I understand why this is great for Chase (and it probably doesn’t impact customers much, given interest rates and the relatively small amounts I’d imagine most bill pays are for), but it struck me as surprising that customer feedback would actually request you revert.
Would love to hear what response you got, if anyone there is willing to share.
And here’s what I got back:
Thank you for contacting Chase.
We appreciate your interest in exploring other services of Chase.
Chase listens to customers feedback to create lifelong engaged relationship by being a trusted provider of financial services. Our services are always in adherence with our business principle. We aspire to be the best, execute superbly and build a great and winning culture.
We value you as a customer and wish for your experience with Chase to be one of satisfaction and ease. We hope that we have provided you excellent service today.
If you require further assistance, please e-mail us via the Secure Message Center or contact Chase By Phone at 1-800-935-9935.
I rest my case.
6.21.11 by Dov
Who thinks this is useful?
From my perspective, I think people have gone overboard with QR codes. I actually saw a billboard over the interstate the other day with a QR code and a message to the effect of “drive safely, use this QR code instead of typing in the URL”. Seriously? Like pulling out my phone, running the QR code app and getting it to focus on a billboard while driving (let’s say) 55 miles an hour is safer than typing a URL (not that I’m recommending that) or even just trying to remember it for later?
New media is great and all, but some common sense would make it go a lot further.
6.14.11 by Dov
John and I had the opportunity to attend the kickoff event for Ohio’s 10x competition yesterday in Columbus. 10 great teams of entrepreneurs will spend the next 80 days working to advance their businesses, with the help of a collection of entrepreneur and investor mentors.
The event was started with a keynote by Mark Kvamme, a partner at Sequoia Capital and the “Director of Job Creation” for the State of Ohio. In it, Mark highlighted eight key attributes of successful startups. Not that every successful startup has all eight, but the more the better. You’ll see the list isn’t too different from what many others have said and written, but we thought it was succinctly put and worth reprinting (along with my commentary on what each one means):
He also said Sequoia believes that having a really big market is absolutely critical – and that lack of a great market is a non-starter. I think the implication was that it wasn’t on the list because it’s in a category all its own.
There’s two of these I’d like to expand on here: frugality and data.
If you, as an entrepreneur, want to make a lot of money at the end of the day, frugality is the key. Your goal should be to raise as little capital as possible (and thus suffer as little dilution as possible) while still having enough to reach the next value-creating milestone that will let you raise more capital at a (hopefully significantly) higher price. That means you need a complete focus on what those milestones are and developing and executing the Minimum Viable Plan to reach each one.
What’s a “Minimum Viable Plan”? Well, I just made it up, so I’m not completely sure. And maybe it should be called the Minimum Viability Plan, because it’s that, too – see what you think after you hear what it is.
In any case, similar to the reasons Eric Ries advocates for the creation of minimum viable products as part of the “lean startup” philosophy, the Minimum Viable Plan is the the plan that allows you to reach the next milestone (or – nearly as valuable – determine that you can’t reach it) for the least amount of time and capital possible. And that’s the essence of Kvamme’s “frugality”. Frugality for your company might mean spending $100 in the next month or it might mean spending $1 million. But in every case, it’s about only spending on things that are on the critical path of the Minimum Viable Plan. That’s probably worth another blog post at some point. Stay tuned.
So now you probably see why data is so important. Data is what lets you know if you’ve hit your milestone or, at least, are trending in the right direction. You need to be able to quantify the attributes that will make your business successful and then measure until it hurts. Darmesh Shah has a great post of a talk he gave at the Business of Software conference last fall. In it, you’ll see a some great examples of using data to manage your business and your path to success. You’ll also see a lot of discussion of making happy customers and thinking about the outcomes for your customers of using your products. If you think about it, what he’s really talking about is being a painkiller – understanding your customer’s pain and then solving it.
What do you think? Which of Mark’s 8 points do you think is the most important? What did he forget that you’d add to your own list?
You are currently browsing the archives for the Company Operations category.