Archive for Start-ups

Dear CEO – You Need Operations Help

Image result for image of hikingThe feeling is like climbing up a hill only to realize that the much bigger mountain is up ahead of the rise you just climbed.  You thought that all was well. The engineering team has working prototypes. Sure, they were made in the lab with machined parts and tape and glue, but they work. Customers are anxious to get their hands on units. Investors want to see the numbers. There is pressure to show revenue and to talk through the path to profitability. Reality hits. The questions start to pour in:

  • Who will build in volume? Do we start in China? Can we start locally and move later? Should we build in-house?
  • How much will it cost? Really? That much? Why didn’t I know about those adders?
  • How do they know what to build? Why isn’t our spreadsheet good enough?
  • How do we get our mechanical parts for much less? Tooling cycle times are how long?
  • What are the processes we should use to keep labor costs in check? Oh, we are not designed for automation?
  • How do we ship this product? Will our box withstand global shipment? How do we know?
  • Should we differentiate for different geographies? How many assemblies will that be? How do we structure? What about documentation?
  • Who will service our customers? Can we handle the volume of calls in-house?
  • Where do we hold our inventory? Who will fulfill? Who will export? What are the cost implications?

If these questions are coming up, you should have hired operations expertise already. If they haven’t yet come up, then act now. Ideally, the operations problems are solved in parallel with the design and both sides are influenced by the other. If done in serial there will be some rework. What are the options for a CEO?

  1. Hire a full time operations expert. In order to have the right breath of expertise the hire needs to be hands on and at a high enough level to have experienced all of the key elements of product launch. If this person is your first ops hire it will be a challenge to attract the right person who will remain the right person as you scale. This alternative might be the most expensive but the benefit is that you have a team player on board who is part of the company story and will provide continuity.
  2. Hire a consultant. Bring in someone(s) who has exactly what you need at exactly the right time. If you partner with the right consulting group you will be able to tap into a breadth of experiences and levels and can dial up and down the resources as needed. Ideally there should be a lead person who has the depth and breadth of experience. Bringing in experts will save you more money than you spend. Consider this an investment and an accelerator to volume.
  3. Hire a buyer and manufacturing engineer who have the experience and willingness to wear many hats. Supplement with your own operations leadership or with leadership from your VP of Finance or Engineering. The leadership can’t be taken lightly and you must honestly assess those skills. Don’t kid yourself. Launching a product into a supply chain is complicated and requires time and experience or costly mistakes can be made. You can delay hiring a VP or Director of Operations only if another senior leader has the time, experience and interest to lead. Or you can hire a consultant to act in this interim role.

Warning! Blatant promotion coming:  You should hire me as an operations consultant. I’ve worked in and with many start-up companies. I’ve seen costly mistakes made because the operations tasks were overlooked. I know what to look for and avoid. I would much rather help you avoid than help you fix and clean-up. I am a doer. I like owning things and delivering to the bottom line. I am a firm believer in understanding enough about the problem to ask the right questions. And I can smell discontinuities. I know how to proceed with gnarly tasks because I’ve had the experiences and possess the intuition to make this work instinctual. I know others in the field and can bring in the right person at the right time to solve the problem most effectively. Yes, you should hire me or someone like me if you have started to notice that there is a mountain of work ahead and you don’t have on good hiking shoes!

I don’t spend my time pontificating about high-concept things; I spend my time solving engineering and manufacturing problems.       Elon Musk

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OpsTrak Consulting      925-437-4125

 

The Gordian Knot of Start-ups

gordian+knotThe Legend: The Phrygians needed a king. An oracle decreed that the next man to enter the city driving an ox-cart should become their king. A farmer named Gordias shows up on an ox-cart and got the job. Out of gratitude, Gordias’ son Midas dedicated the ox-cart to Zeus and tied it to a post with an intricate knot. An oracle again prophesied that the one to untie the knot would become king of Asia. Alex showed up and attempted to untie the Gordian knot. When he could not untie it, he sliced it in half with his sword. Apparently that was good enough and Alexander the Great went on to rule Asia.

The Gordian Knot of Start-ups: Every start-up faces at least one unsolvable problem. Every leadership team worth its start-up salt knows that these problems, no matter how insurmountable they seem, have solutions if approached with the right mindset and attitude. Sometimes the solution is to slice the problem in half. In any case the approach needs to include out of the box thinking and acting.

Roadblocks seems inevitable in a new company. These can come in the form of schedule slips, cost overages, performance issues, customer delays and more. With a start-up company there is little room for error and the problems can feel insurmountable. This is the test of leadership. While there is no simple approach, here are some ways to slice through your Gordian Knot.

  • Redefine the problem: See the situation with deep clarity and really understand the limitations presented to you. In some cases a solution or work-around will come up with a calm and studied approach. The key to this work is to not panic and react but to let the problem unfold. Gather the facts. Clarify the obvious alternatives. Dig deeper. This added perception is very valuable and often is overlooked in our haste to resolve. For example, if there is a slip in the schedule due to a delay in supply perhaps there is a way to substitute in another part or delay the addition of that part to the end of the manufacturing process. Maybe a partial ship of the late supply would keep the project on track.
  • Trade-off: Often times you can have it all but not at the same time. If a project is in jeopardy due to functionality or cost perhaps there is a way to trade-off one for the other. Can you spend on a component or transportation mode that puts you back on schedule? Or, can you push a piece of functionality out in time and keep on track with the release? Prioritize and then respond with a trade-off that keeps your values and company goals on track.
  • Lead with confidence: Often an optimistic approach is just what is needed to blast through obstacles. This starts at the top. Even if there are what appear to be insurmountable problems, a great leader will dig deep and project confidence in the outcome. This shouldn’t be an arrogant or dictatorial response but one that reaches into past history and reflects on similar times and good outcomes. There is a time for realism but as you approach a big issue the first approach should be positive and should engender optimism about the future.
  • Lead with humility: Humility isn’t a sign of weakness. Knowing what you know and what you don’t know is a sign of inner strength. If you are open to the ideas of others and realize that the collective wisdom of peers and subordinates often results in a better answer, you will often find a path through what appears to be an impossible situation. If you have hired well and there are people in the organization who are not like you, there is a good chance that their perspective will be different and could help with a solution.
  • Redefine success: There is a point where a problem requires a new definition of success. Alexander the Great decided the successful “untangling” of the knot was a slice with his sword. His success wasn’t what others expected but it was success none the less. In a start-up company this is often called a “pivot”. When the product being developed simply can not get you where you need to go it is time to redefine the company’s success. Perhaps the change will drive a new design or a new market approach or even a new product family altogether. But success can be redefined and the right kind of leadership can rally the troops to this newly defined battle.

Gordian’s story drives us to think about the impossible problem. It should also drive us to think about creative, out of the box solutions and the idea that bold problem solving defines leaders.

“Sometimes I’ve believed as many as six impossible things before breakfast.” Lewis Carroll

Hardware Is The New Killer App

lunarmodulediagramI built a model of the Lunar Module when I was 12. I still remember how building it made me want to climb inside the real one and land on the moon. I was channeling Neil Armstrong and was certain that being an astronaut was my calling. Years later I graduated from Neil’s University, Purdue. I was not bound for space but I was bound for a career in making things. Taking great ideas and transforming them into a real shipping product is a pleasure that, for me, far surpassed bits and bytes or blurbs and spiel.

I’m in love with making things. Even here in Silicon Valley, the home of “dot-com”, there are big and small companies designing and building hardware products to sell to other businesses and to consumers. HW start-ups are the new “killer apps”. Funding for HW start-up companies has taken off over the last five years. Granted the number was low to start with but with this enthusiasm for hardware product companies, we are putting the Silicon back in Silicon Valley.  HW accelerators like Hax Accelerator and Highway 1 give these start-ups a home and help with the challenges of funding, building, importing and distributing products.  Kickstarter campaigns and companies like Bolt have given life to companies that otherwise would have languished waiting for friends and family to help with funding. Companies like Box Clever and MindTribe help these companies with the design itself. Companies like Dragon Innovation and OpsTrak Consulting help companies productize and launch into the market.

Building a hardware company is more complex than a SW only company but shouldn’t be feared. In fact ramping up a HW product is a blast and I highly recommend the ride.  Below are some of the key aspects to consider when building a HW company:

  • Connected: While I’m focusing on HW companies, no HW is independent of firmware, software and/or user interface. As a matter of fact the reason for HW’s resurgence is all about the internet of things. Everything is connected these days. We have moved from connecting on our computers to being connected in our cars, our homes, our clothing and in almost every industrial device. Bring in expertise or contract with the experts to be sure your HW product connects.
  • Concurrent: Small company or large, there is value to designing for manufacturing and the supply chain. Often referred to as DFM, the idea is to think about the manufacturing processes while you are designing the product. Sometimes the best way to get that perspective is to bring people in with the expertise. An easy partnership is with a contract manufacturer (CM) who is lined up to build your product. It is in their best interest to help you design your product so that it can easily be molded, assembled, fabricated, tested, labeled and shipped. If you don’t have a CM in mind yet or if you can’t get their attention due to your volume or company size, you can get the expertise from consultants or companies who have decades of this very type of experience. Bring your expert in before the design is locked in. Hold a design review and take into account the time it will take to make modifications to the design to make it more build-able. Don’t wait until you are on a critical path to release and then consider the ease of building the product.
  • Cost: Cost consideration often goes hand in hand with DFM although they are slightly different ideas. When designing a product you likely have a cost target in mind at which you will make enough money when selling your product to propel your company to success. But if you are off in your estimate by a factor of two or even off 20%, that can be a company showstopper. It is possible to iterate a design to get to a targeted cost but each change in the product costs money and the installed base needs to be considered. Ideally you know what your design will cost and you have taken into consideration the material, processes, labor and OH required to build and ship. If you have some margin in your plan you can survive a decision to quick-turn a PCBA or expedite components as you begin your ramp. Consider your cost of goods sold (COGS) budget. Get real quotes. Estimate labor time and cost. Don’t forget SG&A, material mark-up and profit from the manufacturers. Finally, if there are internal resources assigned to ramping the product their costs should be assigned as well. It is best to have a margin of safety in your model as you start so that the first product out the door can cost more without breaking your business model. That gives you some wiggle room and those costs can be whittled down later as you ramp.
  • Cash: One of the challenges to building a company that ships a product is that you have to invest in inventory, labor, space and sometimes machines to build the product. If you choose to build in-house you will need use your cash to set up a manufacturing process complete with quality and inventory control. You will likely need an MRP system to manage material and control inventory and ship orders. If your demand has its ups and downs you will want to add temporary labor and will need to train prior to the up cycles. With today’s infrastructure both in the US and in Asia, there is no need to develop a manufacturing process in-house. It is possible to entirely outsource your product build, distribution and even return and service process. Outsourcing isn’t free from costs and challenges. A clearly worded Manufacturing Services Agreement (MSA) and a solid relationship with executive management is the first step in solidifying your success. Staying involved in the process is the second step. Be there during builds and participate in the development of the assembly and test processes. The CM partner might be the expert in manufacturing but the product knowledge is in the OEM’s court.
  • Collaboration: This last attribute is wise advice for any kind of company but especially if you are a hardware company. The strength of your company is rooted in the brilliance of your design of course but the other factors that add to longevity, resilience and profitability are the supply chain, distribution channels, customer service capabilities, first customer’s adoption and marketing of your successes. All of these require relationship management. Even larger companies need to partner. A smaller company can be made by its success in partnering. Sometimes the product you are shipping needs to play in an environment that isn’t in your control. System integrators, plant managers, final customers need to be trained to use your product successfully. In the consumer market you are dependent on distribution and visibility of your product to the end customer. Creating a network of partners is a key element to success.

As children, we enjoy making things. Watch a five-year old with clay or legos.  Many who are makers inherently like to cook or sew or build furniture or design products. We like to fix things and build things. This same joy can be found in a company that builds product. I highly recommend it.

We don’t value craftsmanship anymore! All we value is ruthless efficiency, and I say we deny our own humanity that way! Without appreciation for grace and beauty, there’s no pleasure in creating things and no pleasure in having them! Our lives are made drearier, rather than richer! How can a person take pride in his work when skill and care are considered luxuries! We’re not machines! We have a human need for craftsmanship!
― Bill Watterson, Calvin and Hobbes author

Starting….again

controlaltdel2I know more than I did before. Hire a handyman. Embrace the cloud. Check the plumbing before leasing an old building. Focus on information flow and control. Smart people come in all forms, ages, and job descriptions. Lots of stuff is free or cheap if you look for it. Small is beautiful.

This learning has taken place because I’ve reset my career by leaving a big company and embracing the unknown. It is a rush and I recommend it.

I’ve been working with Grabit, Inc. for about a year. If you know me you would not be surprised that this is where I’ve landed.  Grabit is a start-up company in Silicon Valley that is building a product. Yes, it is true. We are not an app company looking for followers and advertisers. Grabit, Inc. is designing, building and shipping a panel gripper for use in industrial automation. We have set out to revolutionize the multi-billion dollar material handling market with electroadhesion technology. Electroadhesion enables completely new solutions in robotic parts handling, parts fixturing, warehouse logistics and conveying systems. It is a flexible, low energy technology that enables new applications. We are selling to companies that build product and move product.  We are not about bits or bytes or marketing schemes. We build products that help companies build and move product. I love the customers. I love the product. I love the notion of making something that helps make on-shore manufacturing more viable. In short, Grabit is a game-changing product company selling to manufacturers. “What is not to like”, says the Ops Girl!

I am the VP of Operations. I am responsible for facilities, desktop support, IT strategy, application strategy, manufacturing, logistics, customer service and program management.  When I say responsible I mean soup to nuts responsible. There is no one else. I decide what to order, create the PO, scan it, attach it and email it. I pick the supplier, negotiate the deal, follow through to make sure it ships, call if it doesn’t. I reset the NAS, order the desktops, climb up to the attic to re-cable when necessary. And tomorrow is another day.  I’m sure other things will be added to my plate. Ladies and gentlemen, it is a blast.

Why would I go from having my own administrator managing my calendar, jet-setting around the world while leading a global team of hundreds to leading a team of 2 in a company of twenty-five where I have to make my own flight reservations? There are a plethora of reasons and here are a few:

  1. I create my destiny.
  2. I love my co-workers.
  3. Culture is forming before my eyes.
  4. The learning curve is steep.
  5. I am part of the team building the company strategy.
  6. I enjoy each day.
  7. I have huge respect for those with whom I work…all of them.
  8. We make stuff.
  9. We have impromptu meetings and solve problems fast.
  10. We laugh a lot.

If you haven’t worked for a small company, I would highly recommend it. If you haven’t started over recently, I would highly recommend it. If you haven’t freaked out trying to figure something new out recently, go find something to tackle. There is something youthful and invigorating about starting something from the beginning.

 “Do one thing every day that scares you.”       Eleanor Roosevelt

Start a Business Face First

Previews - Winter Olympics Day -2

Ride face first down a slippery track at uncomfortably high speeds. If you make it down successfully, do it again. Fast. Scary. No, not the skeleton luge. I’m talking about starting a company.

OK, perhaps this comparison is a bit far-fetched.  The sport’s first organized competition took place in the late 1800’s in Switzerland. People have been starting enterprises since civilization began. Back in Switzerland riders raced down the frozen road and the winner received a bottle of champagne. If you win with a company you can afford champagne for life. When you race down the chute in your skeleton sled, the path is cleared for you. You get to practice out of the public eye. You are protected with a helmet and a cool, slick suit. When you start a company, obstacles are thrown in your path by the competition. Everyone is watching. Cool, slick suits are frowned upon. It is, however, a good idea to wear a helmet.

I am not an expert at starting companies. But I have a story to tell. I am working in a start-up company now called Grabit, Inc. and have been on a steep learning curve. And I’ve lived in Silicon Valley for most of my adult life. Here, one can easily observe that starting a company takes guts, perseverance and a willingness to plunge without all of the information. Oh, and it is good to have a brilliant idea.

Summing up some advice based on my early experiences and observations:

  1. Learn fast. There isn’t time to study all of the options. Thank goodness for the internet. Learn from others. Gather information quickly. Make decisions fast based on what you can learn fast. Recently, I’ve had to make a call on a Product Life cycle Management (PDM) system for my new company. This decision could have taken months and could have been complicated. Instead, we relied on recommendations, best practices and low entry cost. If the decision is not a good one it can be undone and we can go on quickly. If it is the right decision we will be well on our way.
  2. Pick the right team. Synergy is your goal. The group that is put together should be greater than the sum of the parts. The skills are important but the ability to work together is more important. At Grabit we have formed a team that works together well. Egos are in check and everyone pitches in.
  3. Consider culture and pace. In the first few months of a company the culture and pace is established. Will the office be casual or formal? Will meetings start on time? What is acceptable dress code? Will people work on the weekends? Is work done in the evenings or on weekends? How does the group celebrate together? The imprint made at the beginning is hard to change. Purposefully driving values and norms will give you what you want in the longer term. We are “pot-lucking” monthly before our lunchtime staff meeting. This breaking of bread brings people together to share something personal. It is building community.
  4. Don’t spend too much money. Don’t overdo the stuff. Grabit’s used furniture isn’t elegant but it is perfectly functional. Shop for deals. Pay as you go for services to keep the risk down. Set an example as leaders in a new company. Fly coach and keep the frill factor low. It is all about cash. Start with careful investment, grow the value and options will open for later stages.
  5. Spend enough money. There is a time when it does makes sense to spend money and that is when it will accelerate your time to volume (TTV) or greatly lower your risk.  The decision can be made by calculating net present value (NPV) but the calculation is an estimate so can be jiggered to give you the answer you are looking for. Use you gut to balance cheap with reasonable. At Grabit we are trying multiple materials paths simultaneously in order to optimize the product while minimizing the time.
  6. Don’t confuse a brilliant idea with a product to sell. Designing something isn’t equivalent to building something and building one isn’t the same is as manufacturing in volume. Launching a product involves creating a controlled, documented design, picking parts and suppliers, developing a process, controlling costs and then marketing to, selling to and satisfying customers. Back to point #2, the team dynamic is critical. It takes a cross-functional team to ship a product. The CEO of Grabit understands this need and has brought in a cross-functional team to drive functional threads simultaneously. I am working on the supply chain design now so that we will ramp efficiently later.
  7. Eschew obfuscation. Or in other words, keep it simple. The most successful companies focus on a few things and knock them out of the park. Grabit’s technology can be used in multiple ways. We are focusing on a narrow set of applications in order to thoroughly solve those problems before moving to a broader set. It is tempting to answer all inquiries but deciding what NOT to do is as important as deciding what we WILL do.
  8. Enjoy the ride. Given that you will work hard to start a business it should be enjoyed. Find the joy in creating something that wasn’t there before. Make your mark. Stick your face out front and sail down the track.

Lizzy Yarnold of Great Britain won the gold medal during the women’s skeleton at the 2014 Sochi Winter Olympics.  She trained hard and competed well. Like Lizzy, if you are fortunate enough to be part of a start-up team, face into the challenge and enjoy the ride.

Leap and the net will appear         Zen Saying