Ops-tech vs tech-ops: Unfolding the growth decisions for a startup
Tuesday July 25, 2017,
6 min Read
‘It may be possible to scale a product with a problem-solving approach but it will be challenging to scale a business with just a problem-solving approach.’
Ops-tech, or tech-ops, is a phrase I have coined over the years across different settings. I have been an entrepreneur in a traditional manufacturing setting and in a modern fintech setting (at Affordplan). I have also been a part of a corporate setting at Deutsche Bank and a startup setting at Taxiforsure. I have seen businesses grow at a steady pace, at an astronomical pace and even die over a period of time.
Categorising the problems and growth patterns of fast-growing businesses in a systematic way seems, at first glance, a hopeless task. These businesses vary widely in size and capacity for growth. They are characterised by differing organisational structures, different technologies and varied management styles.
Yet on closer scrutiny, it becomes apparent that these startups experience common problems arising at similar stages in their development. Additionally, there are certain commonalities that I have observed in high-growth settings. High-growth businesses understand the intersection of technology and operations and are able to leverage this intersection extensively through a product-led mindset. They understand the evolution from an ops-tech business to a tech-ops business as they progress through their respective life cycles.
The entrepreneurial journey is an evolution that demands an evolving mindset – from ops-tech to tech-ops.
Let’s look at some of the key decision-making aspects in the early stages of a business and try to map the two approaches.
Decision making 1: Existence aka jugaad
Bringing a new product to market is fraught with unknowns, uncertainties, and frequently unknowable risks. This nascent stage of business is the most undefined stage and hence a jugaad-led approach is deployed in this case. The main focus is to make quick fixes to drive the product-market validation and early adoption with the first set of customers.
For any business that has some legs on the ground such as our current business, Affordplan, this is the stage when the inclination is heavier on the front end/customer-facing product. And while there is lots of noise and confusion at this stage of the business, you are technically doing a product market fit by answering the key questions:
- Can we get enough customers, deliver our products, and provide services well enough to become a viable business?
- Can we expand from that one key customer or pilot production process to a much broader sales base?
What we take away from this stage before we move on to the next is the product market fit. There is very little internal coherence and little focus on the holistic business entity. It’s mostly a problem-solving environment that is somewhat manual in nature and people matter more than processes. Perfecting the product for scale and building the product to ensure a great customer experience are typically assumed to be lower on the priority list.
Decision making 2: Scaling of a fractured product
After an initial validation in this existence or jugaad stage, we reach a point where we raise some capital and the expectation is to start building a business. However, instead of taking a step back and realising that there is a difference between “building” a business and “scaling” a business, we assume these to be the same things and jump right into scaling the business.
The statement that goes around the startup office is “we need the numbers”. So what do we usually do? We hire more people on the ground. The numbers of customers is growing but so are customer fulfillment and other business issues. To solve the growing problems around managing scale across the organisation, the easiest way seems to be to hire more people. More people will mean fewer issues across different functions. However, what most companies realise over a course of time is that throwing people at the problem does not solve the problem. The organisation moves into layers of hierarchy and now it takes a lot more effort to “move things”. At this point, growing the business and scaling the same may seem like a Herculean mission.
Let’s take a step back at this point and analyse what has happened. It was naturally easy to incline the entire business towards what we were doing in the first stage. Hence, we start to scale with a fundamentally non-scalable approach.
What we don’t realise is that while most functions in the company are process-oriented, growth is often a problem-solving function. It may be possible to scale a product with a problem-solving approach but it will be challenging to scale a business with just a problem-solving approach.
We continue with a profuse manual use of Excel sheets even when we have the capability to automate at least the more process-oriented function(s). So fundamentally, when we should be thinking more tech-ops, we continue to lean towards ops-tech. We are unable to find the right balance or the coherence between the internal and the external side of the business.
To build and scale effectively, the business has to evolve over time from an ops-tech setting to a tech-ops setting. A product mindset is needed to connect the company intelligently and prepare it for scale. It is the true application of the commonly used phrase “technology as an enabler”. Tech-Ops is where you take a product approach to bring about sharp internal and external coherence across the business. This coherence results in harnessing deeper intelligence and insights from each touch point with the end customer, which in turn results in a better customer experience and conversion. The connected and coordinated business is then able to scale in a process-oriented manner than in a problem-solving mode.
There are many examples of how companies have exemplified this evolution. Apple is a technology company but its operational excellence is seen when it launches its new products globally at the same time; Amazon is in the retail space with hundreds of warehouses but is almost perceived as a technology company. These companies have been able to strike the right balance between ops-tech and tech-ops over a period of time to create significant value.
By no means am I inferring that only ops-tech or only tech-ops cannot work and/or cannot scale. However, the right leverage and transition between the two can create far higher value for a business.
In my experience, what undeniably works is product-based thinking. You ask a simple question: How can technology bring my business together – internally and externally? What I have learnt over the years is that product-led thinking and technology enablement is a mindset that is not just confined to the customer-facing environment. Certainly, you need to perfect your product and your customer experience. There are no two ways about it. But the ethos of this should span the entire business.
The product mindset needs to percolate the fabric of the entity to achieve a truly scalable and an efficient business model.