How to set up your company to succeed. For founders and managers.

1. Operations Systems
for Startups
Dean Haritos
dean.haritos@soluti8n.com
@deanharitos1

2. CEO
VC
COO
CEO
1991
2003
1
2
23
34
49
53
CUMULATIVE #
of COMPANIES
I’m an operations guy
mentor
director
electrical
engineer 1995
1997
1999
2009
2014
2016
CEO 2020

3. What is Operations?
How a company organizes and delivers work

4. And we’re talking about Operations Systems …
Systems define a process
1. Purpose
2. Inputs
3. Process steps
4. Outputs
5. Quality metrics
Once an operations system is
well-defined, all work going
through that system results in the
same quality of output.
It becomes predictable and does
not need to be revisited.

5. Motivation
Startups fail for
all kinds of reasons
______
Ignoring operations
should not be one of them

6. PROGRESS
T I M E
Timing: When today’s talk applies
Don’t worry about operations.
Invent your thing.
Time to ramp up.
Focus on operations or fail.

7. PROGRESS
T I M E
IDEAL REALITY
Motivation

8. PROGRESS
T I M E
WASTE
PREDICT + PLAN
NOTICE + RECOVER
Deliberately or not,
systems develop

9. PROGRESS
T I M E
Would you start writing software without defining the architecture?
Be deliberate about your systems
The way you set up your company is the way it will run

10. Breakout Exercise
Choose a department or practice
from the right, and define a simple,
useful process as follows:
1. Purpose
2. Inputs
3. Process steps
4. Outputs
5. Quality metrics
Practices
Internal communications
Meetings
Knowledge management
Departments
Product development Marketing
Sales Manufacturing
Customer Support Quality
Finance People

11. Operations Guy Principles
• Treat everyone like a customer
• Build systems before teams
• Manage by exception
• Solve every problem once only
• Use trim tabs

12. Treat Everyone like a Customer
• Intention matters
• Operations Systems should not bend employees to the CEO’s will
• Your job is to solve problems and create opportunities
• For the company
• For the people who work there
• Treat internal customers and external customers the same
• Create value, not bureaucracy
• Aim for lightweight systems that accomplish your goals (trim tabs)
• Banish the term “change management” from your vocabulary
• A new Operations System should be like a highly desirable product
• It should be welcomed – not dreaded! – by the recipients
• How you sell the system is as important as the system itself
• Listening to your customer is the most important part of sales
As an aside… many startups originate from Operations Systems

13. Operations Guy Principles
• Treat everyone like a customer
• Build systems before teams
• Manage by exception
• Solve every problem once only
• Use trim tabs

14. Build the Operations System First
• Respect people
• Don’t hire people to run an inefficient process
• If you hire teams before creating systems…
• You’re going to need to get rid of people
• You can’t treat them like customers
The right system:human ratio

15. Build Intelligent Operations Systems
• Be capital efficient
• Automate everything possible
• Develop tools to invoke human GPUs exactly when needed
• Then hire exactly who you need
• Practice continuous learning and improvement
• Define and conduct experiments
• Improve the system to reduce headcount needs to scale
• Plan for one initial cycle and one improvement cycle
• Then just tweak if and as needed
Plan
Predict
ExecuteLearn
Improve
2x

16. Define how Work gets Done
• Templates
• Project planning
• Work management

17. Define Processes via Fill-in-the-Blank Templates
• Fill out the same information every time
the process runs
• Familiar, trusted format reduces team
overhead in evaluating data
• Continuously improving the template
upgrades every future instantiation
Excerpt from NPI Process Template

18. Project Planning and Work Management
Waterfall is necessary for hardware
… but you should also use agile tools (JIRA)
Gantt Chart
Kanban

19. Measure what Matters
• SaaS Metrics
• Software Operations Metrics

20. SaaS Metrics

21. Software Operations Metrics
Development
• Leadtime
• Cycle time
• Sprint velocity
• Open/close rates
Production
• Mean time between
failures
• Mean time to recover
• Application crash rate
Security
• Endpoint incidents
• Mean time to repair
Source: https://techbeacon.com/app-dev-testing/9-metrics-can-make-difference-todays-software-development-teams

22. Define what Work to Do
• Plan of Record
• Product Roadmap
• Key Enablers and Platforms

23. Italics
Blue
Green
Red
= Projected
= Done
= Win
= Loss/miss
K
E
Y
2020 Thematic Goal:
Launch Product to Market
2 Quarters Ago Last Quarter This Quarter Next Quarter 2 Quarters Ahead
Milestones
Month 1 Prototype available Pilot available Receive UL certification
Month 2 Pass internal testing
Month 3 Alpha customer buy-off Receive UL certification
OKRs
Objective
Raise money to finance our
new life-changing product
Raise enough money to filet
our competition
Key Result 1 Pre-money = $2M ß 0.6
Key Result 2 Raise = $750k ß 0.7
Key Result 3 Sales up 10% ß 0.9
Customers
Trellis, Gumbo, YKX, Bilge,
Karp
Trellis, YKX, TunaTech, ZipCo,
Funny.com
20 new customers
75 repeat customers
4 lost customers
30 new customers
80 repeat customers
5 lost customers
40 new customers
90 repeat customers
6 lost customers
Headcount (EOQ) 3 3 vs. target of 4 5 6
Cash (EOQ) $720k $480k $390k $360k
Burn Rate (avg/month) $80k $80k $30k $10k
Cash Cliff End 4Q20 Mid 3Q21 3Q23
Funding
Raised $500k on $1.2M pre
from angels: ShortArms,
SmallHands, ShallowPockets
-
Raise $1M debt financing from
ShortArms, BigHands,
DeepPockets
< Company Name - Confidential >
Best Practices:
Choose milestones you expect to hit with 70%
confidence.
Choose key results you expect to hit with 50%
confidence.
Score past key results 0-1;
0.6-0.7 is your target.
Miscellany:
EOQ = end of quarter
Cash Cliff is the month you run out of cash
BHAG definition
Learn about OKRs and how Google uses them
Plan of Record

24. Product and Enabler Roadmap

25. … and then you can Hire
• Right skill sets
• Right cultural fit
• Right number of people

26. Operations Guy Principles
• Treat everyone like a customer
• Build systems before teams
• Manage by exception
• Solve every problem once only
• Use trim tabs

27. Manage by Exception
• Set up red / yellow / green indicators
• A moment spent talking about something on track is probably wasted
• Pay attention to what’s not working
• Trust but verify
• Don’t let your system lie to you
• You still have to look under the hood (“Management by Walking Around”)
• If you have a hole in the system, and you blindly trust the system, you’re dead
• Hold serious reviews of key features, milestones, etc.

28. Operations Guy Principles
• Treat everyone like a customer
• Build systems before teams
• Manage by exception
• Solve every problem once only
• Use trim tabs

29. Problems Happen
• Problems will arise
• Count on it, don’t dread finding them
• Every problem discovered is an opportunity to improve the company
• How you treat the situation is a cultural issue
• Nobody wakes up and says, “I’m going to intentionally screw up today”
• My approach is to defuse the tense emotional charge with a joke:
• “OK, let’s go to step 1 in a crisis situation: assign blame”
• “Oh crap, everybody panic!”
… and then to identify the root cause and prevent even a single recurrence

30. People Management
• If you uncover an employee performance problem, address it
• Startups do not have time to keep the wrong person in any role
• Your HR process should take over from there; not today’s topic
• Bottom line: solve the problem completely

31. Operations Guy Principles
• Treat everyone like a customer
• Build systems before teams
• Manage by exception
• Solve every problem once only
• Use trim tabs

32. Trim Tabs in Business
Study existing dynamics
Find inflection point
Apply minimal pressure for desired outcome
Benefits
Stabilize the system in new position
Eliminate effort to maintain control
Neutral Position Light Tug at
1
1
Use Trim Tabs

33. Trim Tab: Building Manufacturing Engineering at Finisar
Inflection
Dynamics Stability
No Effort
Fiber optics industry weak in manufacturing
Disk drive industry imploding
Volume manufacturing impossible to teach
Strong engineers can learn optics
Hire very best disk drive engineers
Create fiber optics course
Endless supply of engineers
Core expertise in volume manufacturing
Finisar Mfg Engineering on par with R&D
Disk drive engineers excited to learn new field
People recruit their colleagues to join
Pressure

34. Thank You
dean.haritos@soluti8n.com
@deanharitos1

35. Possible Additional Topics

36. Effective meetings
• Have drama
• Fit within an architecture of magnifying glasses and meetings
• Death by Meeting (recommend reading all Lencioni books)
• Examples:
Glass boards vs. white boards
Throw away all the two-ended markers

37. Airing of Grievances
• This should be the one all-hands meeting that nobody is allowed to miss
• Participate in person if at all possible (I used to not let anyone call into the meeting because it changes the energy dynamic in the room)
• Celebrate wins
• Bring up and analyze losses
• Explore / communicate company changes and get buy-in
• Airing of Grievances
• The name makes it fun and reduces barriers to speaking up
• Field random questions and complaints
• Keep it lighthearted
• Focus on understanding the grievance (in here is assessing validity, but it will come out naturally from the whole team if the meeting is working properly…
“who else is having this problem?” “what do we all think about this?”…) and thinking about what the solution might be
• Eliminates FUD (major drag on productivity)

38. Operations Project in JIRA / Suggestion Box
• Unfrustrated employees are more productive
Concept of “fire and forget it” – offloading the frustration into JIRA and
knowing it will get addressed removes the problem from human RAM so the
person can focus on his/her job
Can always go back and visit to see how the solution is coming along, and be
part of the solution if desired
• % mind share on what they were hired to do approaches 100%