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September 5, 2004
Applying Operations Theory to Early-Stage Ventures (Part I)
Topic: 3) Ventures
Early-stage ventures frequently have dynamic and demanding environments. Aside from the technical aspects of corporate governance and executive management, a key question for operating managers in a venture is who is going to do what by when (the 3Ws).

While this goal-driven perspective is important, I also find it useful to draw analogies and apply operations concepts such as those illustrated in the popular business novel by Eliyahu M. Goldratt and Jeff Cox, "The Goal". In that book, the reader is essentially introduced to having to increase the output of a manufacturing plant, a foreign environment to most readers. One concept introduced in the book to solve the problem is to try to figure out where the bottleneck is and to alleviate the bottleneck, e.g., by increasing processing capacity at the point of the bottleneck, to increase throughput.

I find the bottleneck concept to very important for early-stage ventures, especially since there may be little margin for error in the venture and since response times are so critical. Sometimes the bottleneck is sales prospecting or lead generation. Other times, it has to do with insufficient marketing collateral or capital. Managers in early-stage companies need to look at problems using multiple frameworks and methods so that they can not only remove bottlenecks but also recognize them. I suggest that using principles of operations can also help as even experienced managers in early-stage ventures will find themselves in new, foreign environments like the main character in "The Goal".

Unfortunately, removing a bottleneck can create a bottleneck in another area (shifting bottlenecks). If companies didn't have enough things to worry about! Well, we'll save that for Part II.

Steve Shu, Managing Director, S4 Management Group

Posted by sshu-s4 (c) S4 Management Group LLC at 11:17 PM CDT
Updated: September 6, 2004 7:35 AM CDT
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