Factory v/s Test Lab

Every startup begins like a test lab where a product is designed and re-designed 100s of times. After the initial research and speculation (if you are one of the top 5% startups) you arrive at a process to create and deliver value to the customer, at a profit. The next logical step is of course to replicate that 'working model' as many times as the market allows. With time the processes will undergo fine tuning and occasional major adjustments but the underlying objective is to replicate on a mass scale. For me - that's a "factory situation" for a startup

At the cusp of a "factory situation", a startup often goes through its first major expansion. If you are in that situation - do yourself a favor and hire a few people who are willing to trade their skill/working hours in return of a more or less fixed payout (even if the payout is a combination of profit sharing/stock options/cash component) ... and ... avoid hiring too many "creative visionaries", unless they are absolutely needed. Let me elaborate. 

The only way to know if your business model is really as good as you think it is - is to test it in the market on a mass scale. If you deviate from that objective and go back to redesigning your offering- you will not know how good/bad that model really was. You will slip back into a 'test lab' mode instead of a factory mode. It is always tempting to do that because you want the product to be perfect. None of the billion dollar companies made a perfect product as they went into the market. They made sure they moved out of the test lab mode whereas most of their competitors spent too much time in redesigning their offerings. 


Sure, it needs strong leadership to 'make and sell' on a mass scale but if you have come this far - you are can back yourself to make it to the next level. You can do without a co-CEO at this stage but you won't be able to make it without the people who can put their head down and do-as-directed without caring about the "big picture". They will empower your decisions without doubting them. 

However if you happen to get drawn into hiring that 'top manager you always admired'- you may end up losing your direction (and probably a chunk of ownership). Don't do it, unless you really need a partner to share the decision making in the near future. As the old saying goes - "too many cooks..." It just doesn't make sense to get another master chef in the kitchen when all you need to do is cook as per the recipe and start serving your dishes to the customers. Don't go back to adding more salt or spice to make the dish 'even better'. The customer might just walk out. 

Why the name "factory"?
Under usual circumstances- most employees in a factory are micro-skilled and have do-as-the-manual-says kind of work ethics. Their focus is on daily operations and it is not important to know the company's strategic objectives or their IPO plans. Its a written deal between the them and the business owners - we take the stability, you take the risk (and the reward).

1 comment:

  1. For a product to see light of the day , it undergoes many stages, conceptual stage, Development,Production, Exploitation. Each of these stages have many sub-stages viz,design, design verification, trial, design control, prototype, qualification level test/trial, user level trial, acceptance level test/ trial and so many before we come to exploitation. Hereafter we get user feedback to improve on the product as well as its test standards. At times if required a re-look may have to be given to the design. The basic aim is to meet user expectation because customer/ user is always supreme.
    I will mail you few slides of one of my presentation on test and evaluation separately, coz in facebook it cant be pasted.

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