Design Your Organization To Scale Profitably: Operations Perspective
Updated: Sep 28, 2020
The strategy to scale profitably needs to be designed at the core of the organization. Some of the concepts discussed in the first part of the series on business perspective were clarity, universality & core strength. The concepts around people perspective were lead, don't micromanage, hire right & collaborate. The next perspective is around operational execution.
There are certain aspects to keep in mind when preparing your operations to execute for scaling: Proactive, Independent and Cash.
PROACTIVE NOT REACTIVE
Scaling effectively means anticipating demand proactively and not reacting to it after the fact. Imagine you have done all the hard work to acquire new customers and then to struggle to fulfil demand is hara-kiri. And yet, this is something one finds more often than not. Fancy launches are followed by crash & burn. The opposite is also true, of overestimating the demand.
However, if the planning has been done effectively then it will move in tandem. By its very nature, good scaling plans have inbuilt modularity & feedback mechanisms. It is about alignment.
INDEPENDENT OF THE INDIVIDUAL
Scaling happens when you become a cog; the system must work without high dependence on any particular individual. Smart people are needed to run the operations but the system must run independent of who runs it. It is not fancy to say, I have become a cog, ego gets in the way. But look at all successful scaled operations, the profitable part is running independent of the individual’s personality.
It isn’t abdication of responsibility, the ‘lead’ principle stated earlier clearly enumerates the expected role. It is about putting down standardized repeatable processes with proper delegation & responsibility structure.
CASH STACK & CASH FLOW
There is now a greater understanding of the need to actively manage your cash flow. Media is filled with horror stories on cash running out & momentum being brought to an abrupt halt. So the need for planning cash flows & tracking this as a significant metric cannot be overemphasized.
However, as important as cash flow is the need to manage your cash stack. Don’t spend it if it is not business critical. This needs business discipline & planning. Remember to manage both cash flow & cash stack by design & not by default.