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How do you Teach Operations Management in One Day

To 38 Divergent Entrepreneurs without Wasting Their Time

Shridhar Lolla, PhD

First Draft

Needs Editing

With this article, we move further into Operations.

Key words: Entrepreneurship, Sustainable Growth, Operations, Operations

Management, Operation Excellence, Business Excellence, Execution, Business

Transformation, Change Management, Business Model Innovation, Leadership, Supply

Chain, Distribution, Theory of Constraints, Lean, System Thinking, Focusing

Mechanism, Management Technique, TQM, Distribution, Productivity, Process

improvement, Goldman Sachs, 10k Women Entrepreneurship Development Program.

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March 1st, 2012

Professor Ranganathan (Prof Ranga), called me a month back and briefed about this

interesting inclusive initiative : Goldman Sachs 10K Women Entrepreneurship

Development Program. Now into its second year, the program is world's premier program

for providing holistic management perspective to women entrepreneurs.

He asked me if I would like to be the Resource Person for Operations Management and

conduct a one day session for the 2nd Batch of Women Entrepreneurs.

I told him that I am not a teacher and I do not conduct classes. But he said that the

objective of the session is to give an enhanced perspective to entrepreneurs about

management of their business. He said that he does not expect me to deliver a lecture and

talk all about Operations Management as taught in MBA schools; instead, if I could find

a way to engage the team in the operational issues of their businesses and at the same

time cover an overview of Operation Management, it will help them in obtaining

something of immediate use and also something that they get prepared for the future

growth.

I agreed to him and said that I may not be delivering the whole lot of traditional model of

operations, but a useful and actionable one. Prof Ranga himself came from a career in

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Operations and worked for leading companies in India. Later on, he gave me a brief on

the content of the program, which was helpful.

The 2nd Batch of Women Entrepreneurs enrolled in Bangalore region, comprised a class

of 38 entrepreneurs, from as many varied domains; food, garments, ice-creams, herbal

products, electronics, electrical, software development, construction, engineering, online

sales, stockists, chocolates, education, floriculture, gift, media, training, bakery, beauty

parlor, farming etc. Their businesses varied from a size of single entrepreneur to over 60

full time employees, with a revenue of a few Lacs of Rupees to a few Crores of Rupees.

The age of the organizations too varies over wide range.

I have been now handholding entrepreneurs and promoters for almost a decade, but thus

far it has been mostly one to one interaction with one enterprise at a time. Managing 38

entrepreneurs at a moment was a big challenge, especially in a discipline of "Operations"

that forms crux of entrepreneurial behavior.

Fundamentally, as I learnt from my own entrepreneurial experience and by handholding

others, a new and small self-owned business is highly resource constrained. And

therefore an entrepreneur is most of the time in operating mode. You would talk quite a

bit about business idea, strategy much before you really take a plunge. After wards, you

are driven to building your organization brick by brick through 'learning by doing'. You

actually do not get much time to sit separately, review your strategy and update your

business plan. For resource (expertise, time and money) and your own managerial

bandwidth being limited, you tend to grapple with numerous disruptions that come on the

way to your progress. You are often 24x7 person. You are full of actions every day; and

every moment is something you and your team need to do. This is the native operational

characteristics. And that is why, entrepreneurs are most of the time in operational mode.

What do I do and how do I manage expectations of such a diversity of audience on a

subject that they live and breathe. Of course, I myself do not have an academic degree in

operations but needed to put my arms around the overall scope of operation management

while retaining the freshness that comes from my ongoing research in operation

excellence.

I had a month and I did the needed preparation and it only added to my experience of

working in operations. But the issue of diversity of audience still remained. I thought that

if I pick what is taught in books and MBA schools under traditional pedagogy or for that

matter I cover their syllabus, it will be too generalistic ( and the consequence of the

entrepreneurs never excusing me for wasting their time) and hardly anybody would be

able to relate with their business. On the other hand, if I pick up a few case-studies, it will

be difficult for them to build workable concepts.

I also knew that normally in programs like this, (and as in MDP programs), Faculty

members would normally give a framework or a set of instructions, and would ask the

participants to use them when they get back to work. However, I knew from my

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experience that asking entrepreneurs to read and write, while they are busy firefighting in

their business, is a sin. For that matter, to anybody in operations.

I reflected upon this. Soon a thought occurred to me if I could blend the two, theory that

covers enough scope of Operations Management and the practice that the entrepreneurs

are doing. I thought of co-creating the one day session with them. Subsequently, I

prepared my presentation by referring some pedagogical content and books. When I went

through it, I did not like it a bit. It looked like I was going to teach undergraduate

students. I slept over the slides for a few days.

Operations is one of those things, that everybody does but very few people are able to

define unambiguously in actionable terms. Most of the people though, would be able to

describe the content well. No, I am not joking. If you get a chance and if you are

following the professional network groups in say Linked IN, like…. Operational

Excellence, Operations Management in Practice, Production Planning etc. , you would

see in each group, occasionally somebody asking… what is operations?, what is exactly

operations?, what is operation management?, what is operation excellence?… what

constitute operations?… And then you find a number of members pounding on to

answer the fundamental question. The answers would range from trivial to profound one,

theoretical to practical one, novice to expert levels. But seldom any agreement takes

place on what is operations in actionable terms.

A vast majority of people when asked about Operations would relate it to manufacturing

organizations as if the whole world is busy in manufacturing things. Even literature on

Operations, talks very little about other areas of value creation than manufacturing.

Further a strong viewpoint is that Operations is about managing people and cost. And as

you would notice, people who are responsible for operations are more busy cutting and

saving cost than achieving what is the objective of the business. Some of the books that I

picked up at the IIMB library, I dumped them immediately for the very reason that they

were not clear about the objective of operations and how it is integrated to the Business

strategy. Almost every alternate book either talks about cost saving or in a more

sophisticated way about quality that reduces cost. I have not often found a discipline so

poorly taught and propagated.

My confusion was getting compounded. First, how do I handle more than one

entrepreneur at one time; second, how do I handle and engage entrepreneurs from

diversified businesses the whole day; and third, what do I tell them operations is about

when they are anyway engaged into it, day in and day out. And the whole world is

confused about what is Operations. I also realized that if the session is less than

actionable then it would not go well.

First thing first. What I did was, I took a practical angle and wanted to bring in actions

into the class room and did not want to leave anything for entrepreneurs to work after the

class or when they go back to work. I decided to link operations to their business and

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make sure that they have described their operations and got a few self generated thoughts,

by the time the session finishes.

I prepared just a few fresh slides. Almost each slide would have a brief animated question

at the bottom "For Entrepreneurs", which they would need to answer with respect to their

business, impromptu. A sufficient condition for getting the answer from the entrepreneurs

was to make the session 'data free' and avoid the need for them to refer their office

documents.

So as I would go on making the presentation, each entrepreneur would essentially

reproduce the content of my presentation but written specifically for their venture. And I

expected that I would pick up entrepreneurs randomly and ask them their answers and a

few entrepreneurs would in turn ask me for clarification. The discussion between us

would then reinforce the concept I offer, and force the entrepreneurs to apply the

concepts into their business, then and there.

When I started putting these questions on the slides, I myself felt amazed because it

brought a lot of clarity to myself on what I needed to speak. It looked good. In fact, then

it occurred to me that by doing so, I was solving the problem of handling the group as

well as the diversity.

Regarding where do I start talking about operations, I thought of starting with what they

learnt in their previous session. The brief I was given was to Cover both Business

Excellence and Operation Excellence. So I at least had Business Excellence as the

starting point.

So I prepared my initial slides on defining business excellence. For this, I mentioned that

every business has an objective, and on an ongoing basis, it must move closer to its

objective. In order to reach closer to its objective, it must set measurable goals that

increase with time and it must find a sustainable way to achieve these goals year on year.

I also mentioned that for a company to be sustainable it must grow faster than the

changes, variability and noise in the system. In financial terms, its revenues must grow

faster than its Costs. The Revenues will grow faster than Costs (or margins faster than

operating expenses), if and only if, more and more clients come to the business. More and

more clients will come to them and their sales will increase if and only if, they have a

decisive edge over their competitors.

This decisive edge, can only be built by a process of ongoing improvement if their

organization fulfills at least one significant need of customers in a large enough market

segment, like no other significant competitor does. This process of ongoing improvement

leads to business excellence.

There were a few questions under the "For Entrepreneurs :" phrase. Entrepreneurs would

be expected to write why did they start their business and hence, their objective in two

three words. Then measureable goals.. then customer segment… then their unique value

proposition…

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Then I intended to ask them what did they learn in business strategy and then help them

in identifying role of operations in making business strategy work. It was very easy to say

that the role of operations is to deliver product or services as per business strategy under

terms and boundaries conditions agreed there.

But then, I must tell them that a business strategy drives other strategies including

operation strategies. And I prepared a slide on "Operation Strategy' which is the options

made by the operation team in product design, capacity, process, technology and supply

chain, to support the Business Strategy.

The next slide described Operations Management, whose role is to design and run a

system that delivers things or service within the design and boundary conditions stated in

Operation Strategy. Of course, there was a "For Entrepreneur :" question, to describe

their design constraints and boundary conditions. I expected, such a description to

actually, significantly improve their outlook and clarify the field of influence of

Operations.

I then prepared a few slides showing graphics on the content of operation management

that is there in almost all the books. I had to though tweak it a bit and cut down the

content from being overwhelming.

And then, I added a few slides on components of Operation Management that included

process, supply chain (inbound, in house and outbound), planning and control, quality

management, maintenance management etc. at each slide there were "For Entrepreneurs

:" questions.

By this time I expected each entrepreneur to have fully described content of their

operations. They were also to reflect on the design decisions they took in terms of

capacity, layout and location.

What remained then was, how these components of Operations work together and how

they are operated on day to day basis. For it is the integration and interactions between

the components that create a huge variability, incoherence and dilemma on day to day

basis.

Here, I brought is Business Model as a tool that translates Operations Strategy into a

logical linkage between the major building blocks of the organization, and gives a clear

visualization of the flow of value or money.

At this moment, only part of the model that is relevant to Operations, as defined

traditionally, would be exposed to the entrepreneurs; and they would be asked to fill

attributes of their business model into the building blocks. I expected a good debate here.

since describing business model reverses the traditional thinking process of

entrepreneurs. Entrepreneurs are often used to thinking inside out, however the Business

Model description (as proposed by Alex Osterwalder and his over 470 co-creators of the

book 'the Business Model Generation), as it should be thought in opposite direction, that

is from market backward towards the supply chain.

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Once the business model is built, it becomes very easy to emphasize the role of

operations. The emphasis here is that on day to day basis, it is the role of operations to

improve flow of value cycle (creation, delivery, capture and invest). And this cycle must

be faster and faster, and thicker and thicker with time. And thus, improving Flow of value

creation and delivery, becomes prime objective of operations in order to build a

sustainable organization.

I have found that when entrepreneurs are exposed to this concept, they realize the overall

impact of operations and its responsibilities. They also figure out how operations

integrates different elements of business. And they immediately realize that the flow can

actually get throttled at many places and on day to day basis the issues they face are the

ones that throttle this flow.

When entrepreneurs fill in different building blocks of the business model Canvas, they

go through the experience of mapping their thinking onto the paper. When they do it,

they see the integrated and big picture view, which they can share with their colleagues,

which was earlier difficult to for the lack of an intuitive tool. More importantly, they start

identifying the misalignment between different blocks, which they could not see, when it

was only in their mind.

This would be an exhilarating experience for them and then I would tell them that

business model innovation is today considered the most potent competitive weapon. And

give a few examples.

The stage would then be set for launching deeper into their day to day 24x7 tussles in

operations. Here I would be presenting the 4 laws of operations, as propounded by Eli

Goldratt in his article "Standing on the shoulders of the giants".

Here, I would spend some time to explain and handhold the entrepreneurs in thinking

about the way they manage their work on day to day basis and how they can solve their

conflicts by setting up a system that helps them in not only managing but improving the

operation on an ongoing basis.

The focus would be to tell them that at all time, operations must be worried about

effectiveness and efficiency, but in right direction and right place, at right time. I guess a

lot of emotions pouring out here, as traditional practices would get questioned.

I would mention about different best practices and methodologies like TQM, Lean and

Six Sigma that organizations have used. But I would also tell them when they are

successful and when they are not.

The first three laws of operations, help the organization in setting their direction right,

improving their effectiveness, aligning the functions, removing local optima, reducing

inventory and reducing cost all together.

The fourth law says that managers and entrepreneurs have limited time, however, the

flow of value (work orders) is disrupted in several many varied ways. It is physically not

possible for the entrepreneurs to spend their time on all these issues. However, they get

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emotionally attached and tend to dive into too many things and try to juggle between this

(24x7). This reduces their own efficiency dramatically.

Reduction in their efficiency means delay in decision making and delay in decision

making means delay in actions in operations.

Additionally, organizations is like a chain, and at a moment, the weakest link determines

strength and limits growth of the organization. Hence, I would expose the fundamental of

bottleneck management as a way to get quick improvement in performance (capacity,

throughput, lead time), with minimum cost and effort. I would in fact provide a

generalized Focusing mechanism (Theory of Constraints) for the entrepreneurs to allow

them to realize that operations is not about firefighting but a systematic way of running

and improving performance of the business…… This would be the final slide and

summary would follow thus…

…. In order to build a sustainable business (excellence) entrepreneurs and their teams

must use a focusing mechanism to find the weakest links in their operations on an

ongoing basis and employ the relevant improvement techniques to strengthen these links;

all these, without exhausting too much of their limited resources and without taking too

much of risk. By doing so cost issues will automatically be taken care of…

…. As I prepared the slides, I also rehearsed them.

I reached the training center in time. As I entered the class, entrepreneurs were still taking

their seats and Prof Ranga was jokingly complaining to the ladies, "I am very

disappointed, I send emails and some of you do not respond at all. I wanted a feedback

from you on last session. What happened?"

I heard amongst the noise, "We have a lot of firefighting to do in our office, who gets

time to read all emails and reply…. "

I knew what she was saying… entrepreneurship is all about actions, and operations too is

all about actions…. Asking entrepreneurs to read and write on something that is not

related to the sales order they are chasing to deliver NOW, may be futile and …..sinful.

I took it from there … and flashed my slides.

The preparation seemed to have worked well.

Here is the link for summary slides presented during the daylong session.

Clet:02-12

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