0911 Vce Ccet Presentation

Operations Startup

Jim TaylorValue Creation Enterprises, LLC

www.valuece.com505-466-4247

Center for Commercialization & Entrepreneurial TrainingNovember 19, 2009

Jim Taylor Background

Worked “Both Sides of the Street”23 years Fortune 10 (Conoco Inc.)

Operations, Trading, New Product Commercialization

General Manager of “Weird Stuff”

7 years Fortune 1,000,000 (startups)Composite materials, heat exchangers,

microturbines, concentrated solar power

Wilson Heat Exchanger™

MCO™ Concrete

Forming Products

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

Stage Gate® Product Development Process

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

®Stage Gate is a registered trademark of Product Development Institute Inc.

Winning at New Products, 3rd Edition, Robert G. Cooper, 2001

Product Development and Management Association (www.pdma.org)

How Do I Get From the “Garage” to the Market?

You have only three resources:

TimeSet by Competition

MoneySet by Investors

PeopleSet by your ability to attract and hire

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

Focus on Two Aspects

Staffing and OrganizationSteps to Commercialization/Launch

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

“One Riot/One Ranger” Does NOT apply!

Customers’ Expectations Must Be Met or Exceeded

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You Can’t Do It Alone

Honest Self AssessmentOffset your weaknesses

Functional BackgroundStyle of thoughtCustomer Industry

Experience

“Just Say No” to Yes Men

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

Who should you hire and when?

Product DevelopmentEngineeringFinance/FundingAdministrationManufacturing

Business DevelopmentMarketingSalesDistributionTech ServiceCustomer Service

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

Match Skills to Needs(and try not to mix them up!)

Example: Business Development vs. Sales

By definition, startups are riskyNeed a fit for the “startup

culture”Stereotypes are made to be

broken.“Recent grads work hard and

cheap, but they don’t know much.”

“Older workers are inflexible and need big company perqs.”

20 30 40 50 60 70

Assumed Appetite for Employment Risk

Age

←Lo

w

Hig

h→

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Cultural Fit with a Startup

Not too soonIncreases fixed costsMismatch of skills and

needs at that time

Not too lateLead time for hiringLead time for training &

effectiveness

Example: Staffing too Soon

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When to Hire

BenefitsCan conserve cashCan be faster than

hiringCan reduce time to

effectivenessBest if used in “non-

core” activities

ConcernsQualityPublic face of the

company?Less controlUnclear metricsLoss of experience

when done

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www.valuece.com

What about outsourcing/contractors?

Various StructuresHierarchicalMatrixFree Form

Span of ControlTitlesStructure not critical,

but role clarity is Customer responsive

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

Organization Structure

R (Responsible)Does the work (may be multiple)

A (Accountable)Only one person

C (Consult)Involved with the process (may

be multiple)

I (Inform)Told of the decision after the

fact (may be multiple)

Example:

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Clarity of Roles: “RACI”

Task/Decision: Choose a contract manufacturer by January 30

R Joe, Gene, Sarah

A Jim

C Dave

I Ben, Susan, Frank

Summary: Startup Organization

• People are a key resource• Fill Gaps• Match skills to needs• Be careful with timing• Be flexible on structure but firm on roles

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

We have something good. Let’s start selling!!! We’ll be rich!!!

Wait a minute…ProductValueManufacturingCertificationsPricingSupportMarketing and Sales

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

Operations Startup/Product Launch

Resist the urge to rush to market

Voice of CustomerConstant update

Alpha TestingStay close to home

Beta TestingMultiple times

You listen to the customer, but do you hear them??

What if your baby is ugly?

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

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Product

Value: The Customer’s and Yours

Customer’s Value

Versus Do NothingVersus “In-kind”

CompetitionVersus “Not-in-kind”

CompetitionQuantify it

There is ALWAYS competition!

Your ValueDirect CostsTotal CostsCosts versus QuantityCosts over TimeMarket size and

penetration rateIs the financial potential

still attractive?©Value Creation Enterprises, LLC

Entrepreneurial Passion with Operational Disciplinewww.valuece.com

At a given price…

ManufacturingBoth Early Stage and Long Term

In-house for all or some?InvestmentStaffingTime

Outsource/Toll Process?AvailabilityLocationCostQuality

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

Know what applies and where

Lead time and costIn-house coordination

required

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Certifications

Pricing Strategy and Systems

Choose your pricing strategye.g. Premium, Penetration, Value-Based, etc.

Product FamiliesStandard Price?

Price Exception Request System

Terms and ConditionsWarranties

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Technical SupportIn-house?Contracted?Field ServiceField OfficesResponse Time

Customer SupportTelephone?24 X 7?Web Based?Invoice QuestionsResponse Time

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Technical and Customer Support

Meet or exceed customers’ expectations after the sale

DirectWarehousingLocationsShippingInvestment/Lease and

Staff

DistributorsAvailabilityLocationsImportance of your

product to themQualityCost

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

Distribution

MarketingHow do your potential

customers know you exist?

MessageMediaTrade ShowsCost and Staff

SalesIn-house sales staffTechnical CapabilityAgentsContractCompensationManagement

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

Marketing and Sales

Project Planning Software

Strongly suggest using a system (e.g. MS Project)Tie people to activities

Avoids “145% of Jim is committed in June”

Puts all three resources in one place (Time, Money and People)

Everything takes longer and costs more than you think!

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

Example Product Launch Plan

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

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Summary: Operations Start Up

Try not to rush to marketPlan for time, money and

people to set up systemsAvoid “predictable” errors

after the launch Use a project management

system if possible

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com

Thank You

Jim TaylorValue Creation Enterprises, LLC

Entrepreneurial Passion with Operational Discipline505-466-4247

jctaylor@valuece.comwww.valuece.com

©Value Creation Enterprises, LLCEntrepreneurial Passion with Operational Discipline

www.valuece.com