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Organizational Design

10 Best Business Operations Practices for Startups

This article was originally published on LinkedIn

Starting a business and hiring your first few employees can seem daunting. Without having a solid foundation, your efforts at managing finances, human resources, marketing, office locations, clients and stakeholders, can quickly become overwhelming. This may compromise a business’ chances of success.

However, following these proven strategies that ensure smooth operations’ practices will position your company for success.

1. Define Who You Are

Have a clear, well-construed message to your growing team, your current and potential clients, and to yourself. What makes your product or service unique? What do you offer that your competitors do not? What does your company want to be when it grows up? Answering these questions will help you understand your competitive advantage and will aid you in securing and retaining top talent. People want to work for leaders with vision, and if you can’t sell the business ideas to your potential employees, how are you going to fare with your clients?

2. Build a Strong Foundation

Clearly define all processes and departments, even if you don’t yet have staff to fill all of the roles. The most fundamental departments every startup should have are Administration, Marketing & Sales, Human Resources, and Accounting & Finance. These will become your sustainable foundation, allowing your company to scale up and maintain its manageability. You do not need to wait for a team to build your departments. I once set up these four basic departments with independent protocols and defined guidelines, despite having a team of just one!

3. Pick the Right Players

The biggest asset you will ever have in any startup is your people, so you must choose your team strategically. This is easier said than done, especially as you try to balance hiring enough people to provide the services that will keep your business afloat with onboarding the profit generators and the support staff that manage the actual business. It can be difficult to retain your star players when your company is growing and you don’t yet have much to offer in perks and benefits. Your clear vision of where you want your company to be in the future can inspire your employees to make them want to be a part of something bigger. Together, you can achieve the results you have envisioned.

4. Manage Your Team Expectations

Having determined your vision of the company’s future and established a sustainable foundation, you need to manage your team’s expectations. Doing so is an ongoing project that requires a clear line of internal communication explaining where the company is, where you want it to go, and how everyone’s contributions will help the company get there. Transparency is paramount, lest you risk losing valuable resources if they feel trust has been broken.

5. Keep Records of Everything

Document all of your processes and archive every document, email, memo, and receipt. Since cloud storage is incredibly affordable these days, take full advantage of it and maintain impeccable records. Pay special attention to your bookkeeping; your accountant will thank you later. The better you keep track of your records, the better your business analytics will be.

6. Manage Your Cash Flow Wisely

Bookkeeping should be a priority, both for the sake of record-keeping as well as a gateway for evaluating your company’s health. Watch your business spending and audit often. Although you cannot fully control the stability of your business income stream, you do have a much bigger control on its spending. Of course, an idea that becomes a business must be fueled by passion. Just don’t forget that actually running a business means you will also need a steady positive cash flow.

7. Automate Your Finances

There are plenty of options for every industry and company size, so there is no need to waste time manually creating invoices, chasing late payments, or processing payroll. Find a solution that works for your business model and remember that the small financial commitment you are dedicating for these services will actually yield anther commodity you might not have enough of: time.

8. Know Your Audience

In a competitive market, it is not enough to simply have a good product. You must also excel in customer service. Great customer service is first and foremost a combination of good communication and adaptability; every client is different and you must be able to meet their unique demands and speak their language while maintaining your company’s standards of quality.

9. Serve Quality

When you make products people want to buy, marketing is secondary. If your product quality leaves much to be desired, no amount of marketing will salvage it. Mistakes happen, and whether you sell a product or a service, addressing mistakes by thoroughly analyzing what went wrong and working to amend it will yield results and improve quality. Your team can use mistakes, and the efforts to correct them, as learning opportunities to fuel growth.

10. Invest in Your Company’s Future

Oftentimes, it becomes tempting to cash in on profits, rather than reinvest in your company growth. You must resist this urge in favor of your company’s future. Take a cue from successful companies like Amazon, whose revenue keeps rising while net profit stays incredibly low. While not every company is going to be the next Amazon, the lesson is the same. Invest in your own growth and plan for the future.


Nurturing an Innovation and Self-Disruption Culture in Large Organizations

How large organizations can drive change in the face of disruptive competition.

The 21st century has introduced a new generation of competition. Capitalism in the 19th and 20th centuries was largely a matter of ‘bigger is better’. From the early days of the Industrial Revolution through to the 1980s, there was a common set of themes that defined business success: economies of scale, division of labor, quality through minimizing process variance, conglomeration, vertical integration, and so on.

The Information Age brought new capabilities that enabled small business to thrive, unleashing the potential of entrepreneurs everywhere to challenge mature industries and long established business models. Financial services, professional services, transportation, media, advertising, retail are all under threat from non-traditional competitors and disruptive start-ups.

Many large organizations struggle with how to respond and get ahead of these changes.

Why have we failed to make major change happen?

Let’s look at disruptive change from the perspective of a large company that is starting to see small startups entering various parts of their industry: none are having a major impact today, but it is unsettling nonetheless. And with daily business conversations centering around ‘digital, cloud, mobile, social, big data’, and people in meetings talking about the Ubers and Airbnbs of the world, CEOs are on edge, trying to understand and assess the risks and opportunities.

Innovation threats

Creating disruption from within is about more than launching a new initiative with a catchy name or creating an investment fund. It can’t happen without teaching your people how to think and behave more like entrepreneurs, risk takers, and innovators. Making people in all parts of your organization accountable for:

  • voicing new ideas;
  • taking chances;
  • challenging norms (and senior management); and
  • moving things forward in a sometimes ambiguous environment.

Without vocal, repeated and demonstrable support for these behaviors, sustained innovation will not happen.

An organisation’s people are the drivers of innovation and disruption. Executives need to nurture this environment, not try to control and direct. The ideas that will drive the long term success of a company do not come from steering committees. People that live and breathe the business, the customers day in and day out, the intricacies of the products and services, the good, the bad and the ugly of the company, are the ones who will lead the way.

But it’s not as if organizations don’t already have the strong and talented management to recognize and take action to address these issues. So why isn’t it working?

Innovation vs. stagnation: Why do large, well-managed, successful organizations struggle when faced with disruptive change?

Solid research points to at least part of the answer: “Good management was the most powerful reason why leading companies failed to stay atop of their industries.”

The Innovator's Dilemma
‘The Innovator’s Dilemma’ – Clayton M. Christensen

Wait, what? Here’s why:

  • Large firms with good management can fail for the exact same reasons they succeed:
    • listening to customers;
    • investing aggressively in technology, process and operational capabilities that their largest customers need;
    • adding new features and services to their product suite;
      carefully studying market trends; and
    • systematically allocating investment capital to innovations that promise the best returns.
  • The research has shown that the principles of good management are only situationally appropriate. Situations involving sustaining versus disruptive technologies require different management approaches.
  • With disruptive change, there are times when it is right not to listen to customers, right to invest in developing products that deliver lower margins and aggressively pursue smaller markets.

Naturally, this cuts against the grain of most organizations’ strategy, management norms, structures, processes and cultures. So getting from here to there is a major challenge.

How to get there: things you can do now

A common trap is following traditional approaches: striking up a project team, creating a committee or having ‘regular meetings’. Forget it. If these activities haven’t worked in the past, even for more standard efforts, why would they work for your most challenging and disruptive priorities?

Try new tactics. Test and learn. Fail fast and try again.

Innovation - Customer Manifesto

Be ready for the ups and downs of the journey and keep moving despite them. When in doubt, remember this quote from Winston Churchill: “If you’re going through hell, keep going.”

Here are some new strategies and tactics to consider:

  • Look outside your organization for wisdom and inspiration. Join groups, meetups, and mailing lists on topics that inspire you. (Example, ‘The Customer Development [Manifesto]’ has a lot of statements that can challenge your assumptions).
  • Question and reconsider preconceived notions and assumptions of how change can happen in your organization.
  • Keep in mind, if it doesn’t feel different or uncomfortable, you probably aren’t changing anything.
  • Focus on execution of fundamentals and build a sense of urgency into everything you do.
  • Adopt a startup mindset and culture. Keep things small and focused. Aggressively narrow scope and timelines.
  • Don’t just throw money at things. Be frugal and invest in stages, spending only on what is critical and with milestones tied to progress. Quality of money matters: too much dilutes focus, too little implies lack of commitment and saps energy and speed. Think like an angel or VC.
  • Build your ‘Goldilocks’ team. Is there a team, department, function or group that can propel you to an early success? It should be small enough that clear objectives and outcomes can be defined, while big enough that the result will be significant and measurable.
  • Find smaller opportunities that can get to success quickly. Ones that demonstrate to others that change is possible, taking risks is rewarding, and innovative use of new technologies is happening.
  • Emulate the characteristics of entrepreneurs and startups (probably the same strengths that powered your own company’s early success).

Exercise ways to get fresh perspectives

Just like you would train to run a marathon or study to learn a new language, opening up to new ways of thinking takes effort. Find and study one example of a way to get a fresh perspective and practice trying to gain a new point of view.

Here is one to try: a video that talks about how seeing the entire Earth from Space can change your whole perspective.

Perseverance is most important

There are many traits considered instrumental to business success: customer-centric organizations, singular focus on product and service quality, streamlined delivery, collaborative work, transparency, hunger for results. Above all is persistence. Perseverance. The belief in yourself and your vision. The trail is well worn, with others leaving signposts and markers, which are the wisdom and tactics to help us succeed.

Here are some inspiring success stories that endured repeated failures:

  • WD-40 literally stands for “Water Displacement – 40th Attempt”.
  • James Dyson created 5,127 failed prototypes over 15 year before his first Dyson vacuum cleaner model was proven successful.
  • Angry Birds was Rovio’s 52nd attempt over 8 years.
  • Nine months after launch, Pinterest had “catastrophically small numbers”. The site only had 10,000 users and very few of them were active on a daily basis.
  • Response from Dustin Moskovitz, Facebook co-founder, when asked how he felt about Facebook’s overnight success: “If by ‘overnight success’ you mean staying up and coding all night, every night for six years straight, then it felt quite tiring and stressful.” Facebook was launched as Facemash in 2003 and it took almost 9 years to grow Facebook for an IPO.
  • Starbucks began in 1971 and took 16 years before it started to expand beyond Seattle.
  • OpenTable, the online restaurant reservations site, began in 1998, went public 11 years later in 2009 with a market cap of $626M and in 2014 was sold to Priceline for $2.6B.
  • LinkedIn began in 2002 and launched a year later in 2003. Profitability was achieved 3 years after launch in 2006, it became a publicly traded company in 2011 and was purchased by Microsoft in 2016 for $26.2B.

While there’s no one recipe for success in every business situation, learning how to adapt your mindset and organizational culture to digital innovation and transformation only increase your likelihood of success.

Change Management Organizational Design Team

Meet Chris Becker, NetEffect CEO

Chris Becker is an experienced consultant and entrepreneur with a background in international consulting, managing new business startups and driving large impactful corporate change initiatives. As the CEO of NetEffect, his focus is on digital transformation. This includes identifying opportunities for companies to change the way they do business by leveraging the power of web, mobile, and other emerging technologies.

We caught up with Chris to learn how he works with both large corporations through to small technology startups to analyze, discover and apply innovative ways to leverage technology to improve performance, team interaction, quality of outputs and speed of action. Connect with Chris on LinkedIn here.

NetEffect helps large organizations think and act more like startups. What experience has given you the skills and insights to provide these types of services?

Early on, my focus was in organization design and change management. This has proven to be a solid foundation of concepts and tools when looking at how to help an organization be nimble, while still being mindful of how to effect change in organizations with thousands of people, a range of products and services, competing priorities and functions, and complex business processes.

While we talk a lot about technology, most of the challenges arise in the use of that technology to enable business process and to equip people with new ways of working. Anyone can get the technology perfect, and still fail on execution due to lack of attention to large organization dynamics and the changes affecting people. Even a well-conceived strategy can be lost in the minefield of execution.

Organizational priorities, the complexity of work, evaluating and positioning talent, and organization design all need to align with technology innovation and disruption. The result requires a more holistic effort, but the payoff is form and function coming together to create sustainable business value and advantage.

This approach has provided a solid starting point to enable our technology team to build compelling experiences and solutions. NetEffect can be described as a powerful blending of consulting, digital agency and product development capabilities.

Culture quote Peter Drucker NetEffect

Specifically, what kind of companies have you worked with and where do you provide support?

We have a broad team with experience in a range of geographies, industries and organization types. Organization design and change management was an early focus and has now become a part of almost everything we do. Since 1995, this has included the financial services (e.g. VanCity and Coast Capital credit unions in British Columbia, Goldman Sachs, Sun Life Financial), energy (e.g. EnCana), automotive (e.g. Nissan) as well as professional services, NGOs and retail (e.g. Canadian Tire, Hudson’s Bay).

Our focus now is on large scale change in complex organizations with a particular concentration in financial and professional services. Complexity is not just size. It can be driven by geographic coverage, product range, brand equity and innovation and organizational models. Organizational models for example, have expanded greatly over the past 20 years:

  • More collegial and partnering networks for organizations
  • Independent contractors and agents versus traditional captive employees
  • Loose affiliations between complementary companies
  • Joint ventures and strategic alliances
  • Complex vendor/sub-contractor relationships and more.

At NetEffect, we are utilizing these new working models to adapt and learn, and equip us with more versatile ways to work so we can bring these types of models to our clients. This can greatly increase client focus on core capabilities while building in expertise and speed through these other models. Greater flexibility to engage external expertise and capabilities help bring fresh perspectives to large organizations that often rely on their own internal functions and teams which can often result in them losing sight of the dynamics in the marketplace. The emergence of ‘Software as a Service’ is an example of alternative models for leveraging best in breed applications and technology. Change must be a continuous improvement process of self-examination and growth that can often be painful.

Recognizing how interconnected strategy is with execution helps ensure the real business need is always kept front and center when working on the necessarily deep technology efforts. Too often, technology is left with abdicated authority to make a change which inevitably leads to lost value and failed efforts. With the rise of nimbler, technology-enabled competitors, large organizations do not have time to repeat mistakes and restart efforts over and over.

Change quote Jack Welch NetEffect

We’ve had the chance to work with clients from the point where the strategy is defined but requires articulation to drive it down to meaningful words, phrases and themes that are going to matter to the people on the ground. These often expand to projects or programs that are designed to rally people within the organization to a common cause and move quickly. Having a clear starting point at this stage can make all the difference when moving to designing, building and implementing a solution – be it a new product, new ways to interact with the market, or innovative ways of working.

When you then combine strong technical and operational capabilities, including partnerships with best-in-breed software, you have a powerful combination to provide strategic execution capabilities to large organizations struggling to keep pace with new, smaller competitors that have a greater impact on industries over time.

What prompted your transition from a consultant to an entrepreneur?

Sooner or later you have to practice what you preach and eat your own dog food! Consulting from an early age was a great chance to see a wide range of organizations in action. Eventually my words sounded hollow without the sense of ownership and weight of responsibility that comes with accountability for outcomes.

So, around the mid- 2000s, I worked with a small team on a social media startup. As CEO, I led a team building a ‘User Generated Content’ Software-as-a-Service (SaaS) platform. We worked with media companies, large brands, and agencies to leverage, monetize and engage consumers in user-generated content. We successfully sold that business in 2015.

What followed was a powerful and somewhat unique perspective, combining complex organization consulting with the scrappy world of bootstrap startups. This is the spirit around which we’ve built NetEffect.

So the transition was gradual and I’d say it’s now a less of a transition and more a combination.

Consulting is embarking on a discovery process of getting to know and understand a business’s issues, and coming up with ways to solve those issues in new and innovative ways. From that perspective, consulting provides a wealth of ideas to help entrepreneurs figure out ‘what problem they are solving’. So in many ways, consulting and entrepreneurship are tightly interwoven.