Operations in Detail

Venturing into the business world without a thorough understanding of operational needs is akin to setting sail in uncharted waters without a map. The ‘Operations in Detail’ step is crucial in preventing this scenario, ensuring you don’t hamstring your company in its early days. This phase involves dissecting the Business Model Canvas to meticulously outline the specifics of operational components—key activities, key resources, and key partners—regardless of your industry. It’s about outlining the specifics—be it staffing, technology needs, or partner selection—with the foresight to avoid the chaos of underplanning. It’s about making informed decisions and avoiding the all-too-common pitfalls of underpreparedness and having to, later, constantly put out fires due to inadequate resource planning. Remember the 5Ps of operations—proper planning prevents poor performance. This step isn’t about delving into the costs; it’s about identifying options and outlining primary and secondary options for each component of operations. Once operations are fully formulated, a subsequent step will address the financial implications, allowing for a more focused and detailed cost analysis.

Dissecting Key Activities

1. Identifying Key Activities: Review the Key Activities you’ve identified on your Business Model Canvas. These are crucial tasks your business must undertake to deliver its value proposition effectively.
2. Evaluating Execution Strategies: For each Key Activity, consider different execution strategies. This could include in-house development, outsourcing, partnerships, or a hybrid approach.
3. Assessing Resource Requirements: Determine the resources needed for each activity. This involves evaluating skills, technology, and materials necessary for execution.
4. Aligning with Business Goals: Ensure that the way you plan to carry out each Key Activity aligns with your overall business goals and value proposition.

Example from Starbucks’ Business Model Canvas:

Key Activity: Coffee Sourcing and Roasting

• Starbucks might dissect this activity by evaluating direct sourcing from coffee farms versus using suppliers. They would consider factors like quality control, cost, and ethical practices.
• For roasting, they might assess the feasibility of in-house roasting facilities versus outsourcing. This decision would hinge on factors like quality consistency, control over the process, and cost implications.
• In each case, Starbucks would align these decisions with their commitment to quality and ethical sourcing, key aspects of their brand identity.

Specific Resource Identification for Key Activities:

For Your Business Model:

1. Detailing Key Resources: You should have already listed your Key Resources in the Business Model Canvas, but now it’s time to specify. This means identifying not just ‘technology’ but the exact software platforms needed, not just ‘personnel’ but the specific roles and skill sets required.
2. Company and Platform Selection: Investigate and list potential companies, platforms, or individuals that fit these needs. For example, if you need a CRM system, specify whether Salesforce or HubSpot is more aligned with your business needs.

Example from Starbucks’ Business Model Canvas:

• Coffee Sourcing: Instead of simply listing ‘coffee suppliers,’ Starbucks would identify specific ethical coffee farms or cooperatives, like those certified by Fair Trade.
• Coffee Roasting: Rather than just noting ‘roasting equipment,’ Starbucks would specify particular models of roasters or even technology for quality control, like Agtron coffee analyzers.

Acquiring Key Resources and Understanding Key Partners:

For Your Business Model:

1. Strategies for Acquiring Key Resources: Based on your detailed list of Key Resources, it’s time to determine how to acquire them. This includes decisions on whether to hire staff, purchase equipment, lease facilities, or form partnerships.
2. Evaluating Options: Assess each option for its feasibility, cost-effectiveness, and alignment with your business strategy. Consider long-term implications and flexibility.

Example – Starbucks’ Coffee Supply Chain:

• Building Relationships: Starbucks might assess the feasibility of developing direct relationships with coffee growers versus working through established suppliers.
• Evaluating Partnerships: They would consider the reliability, ethical practices, and quality assurance of potential partners in their supply chain.
• Decision-Making: Decisions here would involve whether to directly invest in coffee farms, establish long-term contracts, or work with global coffee suppliers.

Analyzing and Selecting Key Partners

1. Criteria for Partner Selection: Develop a set of criteria based on your business’s unique needs. This may include their track record, financial stability, market reputation, technological capabilities, and alignment with your business’s ethical and sustainability goals.
2. Due Diligence and Research: Conduct thorough due diligence on potential partners. This involves researching their business practices, evaluating past collaborations, and understanding their supply chain and operational methodologies.
3. Negotiation and Agreement: Approach negotiations with a clear understanding of what you want from the partnership. Be prepared to discuss terms, expectations, and the nature of the relationship, whether it’s a long-term contract, joint venture, or a more flexible arrangement.
4. Compatibility and Collaboration: Assess the cultural and operational fit. It’s important that partners can work together seamlessly, share information effectively, and have compatible corporate cultures.
5. Risk Assessment: Consider the risks involved with each potential partner, including supply chain disruptions, reputational risks, and potential conflicts of interest.
6. Review and Adaptation: Once partners are selected, continually review and adapt these relationships. Stay attuned to changes in the market or in your partner’s business that might affect the partnership.

In the context of Starbucks’ “Coffee Supply Chain,” their approach would involve identifying suppliers who meet their stringent criteria for quality and ethical practices. They would engage in detailed evaluations of potential suppliers’ farming practices, labor policies, and environmental impact. Negotiations would focus on long-term sustainability and reliability, ensuring a consistent supply of high-quality coffee beans. Starbucks would also regularly review these relationships to ensure ongoing alignment with their corporate values and market demands.

Operational Decision-Making

In operational decision-making, the focus should be on making choices that directly support your value proposition and satisfy customer needs. This requires a careful balance of Key Activities, Resources, and Partners, ensuring they align not only with your business goals but also with what you’ve learned about your customers.

1. Constant Evaluation Against Value Proposition: Each operational decision should be measured against how well it supports and delivers your unique value proposition. This helps maintain a consistent and focused approach to your business operations.
2. Incorporating Pre-Vision Interview Insights: Use insights from Pre-Vision Interviews to guide your operational choices. The information gathered about customer needs and the jobs they are trying to accomplish should influence how you structure your operations.
3. Other Operational Considerations:
   • Flexibility: Be ready to adapt your operations based on changing customer needs or market conditions.
   • Scalability: Plan operations in a way that they can grow and evolve with your business.
   • Efficiency: Strive for efficient use of resources to maximize productivity and minimize waste.

By integrating these considerations into your operational planning, you ensure that your business plan is not only well-aligned internally but also externally with your customers’ expectations and needs.

Next Step

As you conclude the ‘Operations in Detail’ phase, remember the essential role this step plays in the success of your business. By meticulously dissecting and operationalizing each component identified in the Business Model Canvas, you have laid a solid foundation for your operational strategy. This phase ensures that you’re not just envisioning a business but are thoroughly prepared to bring it to life, with a clear understanding of the activities, resources, and partners needed. The decisions made here are crucial in setting your venture on the path to success, enabling you to move forward with confidence to the next step – outlining the startup and operating costs. This next phase, detailed in ‘Startup and Operating Costs’, will build upon the operational groundwork you’ve established, focusing on the financial aspects of your plan.