On Operations and Scale – A Key Driving Force

Making a company scale is vital. For hardware product companies (offering physical goods), this is especially key when technology is still in its early stages of adoption. Scaling early provides a solid competitive anchor in the markets they serve, making it harder for follow-on competition to achieve similar scale or size. Most research and case-studies have overlooked a very important piece of the scaling puzzle – scaling operations effectively and rapidly – both the Demand and Supply-side.

The author derives ideas and inspiration from an example of scale available to us in abundance – that of us, Humans, and attempts to answer the following question –

Why is it that some companies can achieve scale and grow, while others in the same or similar industry with promising products cannot?

Utilizing experiential evidence of scale from directly working with a company that scaled significantly in a short period, and utilizing direct and indirect knowledge from other companies, including past experiences, the author arrives at, what could be fairly counter-intuitive answers.

One specific capability in particular stands us in good stead.

What is this capability? How to develop & utilize this capability?

This article could give you some fresh ideas as you plan to scale in the new year (2019).

To Scale is Human – Evidence from the long arc of Pre-history

Travelling back into the mists of time, an alien would have wondered, looking at us – the Human species, whether we could even make it past a few millennia.

The Homo Sapiens were not the best equipped, the strongest, of great size or anything spectacular to have survived, let alone thrive on Planet Earth.

There were many competing “human like” species (Hominins), some stronger, many better adapted for the conditions they were living in (Neandertals in Europe, Denisovans in Asia, among others).

Somehow, we survived and they did not. Somehow, we were able to not only overtake the other Hominins on their home turf, but we went from strength to strength until, ours was the only surviving human-like species left.

Today, we dominate the planet, and have changed the geography of the planet, not just the history. When it comes to scale among living beings, there is no better example than us – Humans (1,6).

How did this come about? Many things appear to have happened along the way, corroborated by scientists. One in particular stands out – we gathered beneficial mutations – physical, cognitive and social – along the way.

While there are different views on how it came about –

the single most beneficial “mutation” that the H. sapiens evolved was the propensity for active collaboration with totally unrelated individuals.

This singular ability of ‘being able to engage with others in complex, social activities towards joint goals’ – scientists conclude – is one of the key reasons the modern human (H. sapiens) survived, outlasting other hominins (2,3).

Kolo-painting-Tanzania-rock-art-sm
Picture: Pre-historic Art – Kolo Painting (Tanzania) https://northerncircuitadventure.co.tz/kolo-painting/

So, how is this related to the operating success of the modern-day enterprise.

Using experiential evidence from a company going through critical phases of its development life-cycle, in a young market-space, we would like to share how this ability of being ‘peerless collaborators’ is a critical capability that separates the best run companies from the also rans.

Scaling rapidly: An enterprise Operations journey

 

Here’s a quick backdrop. It had been a good 7+ years since we started working with this hardware-products company. There’s simplicity in anonymity, so we’ll stick with aliases. Let’s call this company RapidR.

RapidR had planned and exceeded their wildest plans for growing the organization. Their operations had scaled from – customers in roughly ~2 countries to customers in well over 25, within 5 years since we tracked it. Shipments of their electronics gear, had gone through the roof– roughly 30X in about 7+ years. They were indeed one of the brightest spots of scaling in their industry and in the region, they are based out of.

Why is it that RapidR scaled and grew while others, in the same or similar industry with promising products did not?

Great products, great team, winning sales and marketing execution – these are well known and understood.

What is quite striking is the way RapidR operated – its Supply Chain and Supply Operations, the interfaces with Sales Ops and other teams and with its manufacturing and channel partners.

Let’s dive into one key thing that RapidR did differently compared to other peers. Realize the hazard of extrapolating from few data points, so this may help. This account is based on findings from our direct work and indirect research of at least 15 companies across 2 segments – Hi-tech electronics and Consumer electronics hardware companies, over a period of over 12+ years.

 

A key “mutation” – Learning Deliberate, Deep and Smart Collaboration

 

One of the key reasons why the modern humans survived and eventually thrived is, they figured out how to really collaborate deliberately.

 

Humans, along their evolutionary journey (1, 2, 3) gathered enough beneficial mutations –cognitively and socially, to become “peerless collaborators”.

 

When food sources were plentiful and competition limited, ‘each individual for themselves’ approach to foraging (getting food via hunting, gathering etc.) worked.

 

When competition from other species emerged and then intensified, “active collaboration”, where individuals formed joint goals for hunting and gathering – became a pre-requisite for survival (roughly 400,000 to 150,000 years ago).

 

Only those who were competent collaborators were selected for “collaborative foraging” – therefore reinforcing these traits. Others, incompetent or ineffective at collaborating, dropped off the evolutionary ladder.

 

Collaborating with an enterprise scaling significantly – Making ‘Handshakes across walls’ work

 

Establish a Common Goal deliberately – When we met the Operations leadership at RapidR over 8 years ago, we got an open and fair forum to share our ideas, the problem-set (or opportunities) we addressed, and our solution.

 

With this open, collaborative approach, it became clear to us collectively that RapidR needed to collaborate smarter with their Manufacturing partners – the Contract Manufacturers – to improve predictability of their inbound supply.

 

Tossing spreadsheets back and forth with numbers indicating what to build by when, was time-consuming and causing a lot of strain, as they scaled the number of products, volumes, sales geographies and added more network nodes (new CMs etc.).

 

Spreadsheet-exchange was the standard practice before our interactions started.

 

There were several reasons why the ‘spreadsheet exchange’ process to “coordinate” with CMs could not work, and would impede their ability to scale:

 

  • No obligation on part of the CM to respond in a timely or accurate manner
  • Spreadsheets got ‘out of synch’ within days of the start of the exchange
  • No ability to trace what changed and why; Each party had its own version of “waterfalls”; Unproductive, even contentious, supply reviews resulted
  • Manufacturing Lead-times could not be measured in any objective way

 

With the spreadsheet process, more time and effort was spent debating and fixing data, than in solving 2 key issues:

 

  1. What’s the potential demand-supply mismatch?
  2. How should product company prepare for mismatches (shortages or excess)?

 

One more goal was apparent from the beginning – RapidR was keen on scaling without hiring more people in the Ops team. This became our “guiding principle” as we designed and deployed the system.

 

RapidR faced formidable competition from very large players with purchasing power that was orders of magnitude greater. A Cloud-native solution supporting a lean process, which was not resource-intensive to implement became a key advantage for RapidR.

 

Symbiotic Roles with a ‘structure’ to communicate needs – Roles were clear from the outset. RapidR Ops team had the business knowledge, understanding of their supply chain and value network and how they wanted to evolve it (add or change manufacturing partners – CMs/ODM, single or multi-sourcing). We had the system (“Tool”) which would be setup, then extended and modified to meet the key business needs and help RapidR scale.

 

Once the initial goal was defined, and a simple commercial relationship worked out (between RapidR and us), deciding the specifics of the solution got the creative process moving swiftly. The product company (RapidR) relayed their specific business need utilizing a simple tool we provided, and we focused on how to configure or modify the system, such as:

 

“Only Allie should be able to edit the ‘Build schedule’”

We converted these into needs, such as:

“Allie’s role has Read-Write abilities on the Build schedule, CM has Read-only ability”, etc.

 

Row by row, page by page, the solution went through a rapid design cycle, with principal decision makers involved, and within a quick cycle of revisions and testing, the system was ready for a ‘final tryout’ and usage in production.

 

Step function jump in system capability, Common language, enabling Trust

Working jointly the overarching goal of ‘predictable supply’ was translated into meaningful sub-goals for the system solution, using a “language” which minimized ambiguity (6).

 

Including ideas and inputs from both the product company and the system provider in this ‘common language’ ensured that the demand-supply picture between RapidR (the product company), and its supplier (a CM), was clear to understand, simple and quick to get to, and that RapidR would always get advance warnings of potential supply shortages – a sub-goal.

Hillary-Norgay-and-Team-1959-Everest-climb-NYT-sm
Picture: Hillary and fellow climbers, on Mount Everest climb (1953); first credited ascent (New York Times)

Once defined, the solution was refined collaboratively, enhanced and implemented with each collaborating party providing the best of their capabilities and not being shy to point out “issues” wherever they lay.

 

We, the system provider, were encouraged to provide inputs on ‘business processes’ (what analysis, plan and execution elements each collaborating party should see and update: how and why). Similarly, the business users were free to critique the system (including, but not limited to ‘usability’). This avoided ‘groupthink’ which can cause the best projects to fail.

 

Using a radically open, collaborative approach, RapidR was able to get the system off the ground quickly, morph and iterate as the supply network evolved, and even get feedback from CMs which was incorporated (“a different, better way to engage with suppliers”), to make it a robust platform for collaborating with their supply network.

 

Thus, each party (RapidR- the product company and its CMs) enriched the system’s capabilities by utilizing it, quickly providing improvement feedback and adding ‘experiential data’ to the system (for example – “need to push-out commits to X because of Y”). This allowed the parties to collaborate deliberately, speedily and intelligently.

 

With a system provider (us), playing the role of the ‘collaboration intermediary’, it became easier for the CM/ODM to trust the ‘collaboration system’.

 

From Step jumps to Leaps in performance (Supply predictability) – Once implemented, each party (RapidR and its CM/ODM) could see where they needed to improve (plans/changes, commits/changes, shipments/commits etc.) – not just the data and data quality that they are sharing via the system.

 

In fact, RapidR made it a system for speedy onboarding of its new manufacturing partners.

 

The system has allowed RapidR to make significant changes in its supplier network (multi-sourcing, switching manufacturing facilities, switching from one CM to another, etc.) smoothly and seamlessly without any unplanned impact on the predictability of supply.

 

RapidR, which had its sights set on scaling it operations significantly, went from 1 key CM to several manufacturing partners (upwards of 7) and never lost a beat when it came to demand-supply alignment thanks to this unique, open, creative approach to supply collaboration. And scale it did indeed.

 

Survival of the Fittest … Collaborator

 

RapidR has not only scaled its operations significantly since we started working with them 7+years ago, but also navigated significant transformative events and yet gone from strength to strength, layering more critical operating capability in the system – the MozartCC system from Zyom.

 

We are grateful and proud to have been their system collaborator in this dizzying climb, a collaboration that goes on. Only a few key learnings are captured in this note and we look forward to your comments. However, we would be remiss if we didn’t state this key realization in the context of the evolution of enterprises –

 

Its indeed – Survival of those that are the fittest collaborators – within and outside their walls.

(Thanks to John Duvenage for editing support)


REFERENCES:

  1. Why did Home Sapiens alone survive to the Modern Era? Kate Wong, Scientific American, September 2018
  2. How we learned to put our fate in one another’s hands; Michael Tomasello, Scientific American, September 2018
  3. The Most Invasive Species of All; Curtis Marean, Scientific American, August 2015
  4. Project implementation notes from Zyom Inc. (2009 – 2018); Copyright materials. Provide suitable reference to this Blog and attribute to Zyom
  5. What explains the rise of humans – Yuval Noah Harari; TEDGlobalLondon, June 2015
    http://bit.ly/TED2015YuvalHarari
  6. What makes language distinctly Human? Christine Kenneally, Scientific American, September 2018
  7. Inspiration for Sub-title “To Scale is Human” derived from title of book by Daniel Pink “To Sell Is Human”

Author: Rakesh Sharma

President and Founder of Zyom, Inc. Zyom is committed to making Companies and their Value Networks Demand Responsive, while maintaining the tricky balance with Profitability

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