Silent Growth Killer

Operational debt occurs when today's decisions make it harder to make the right choices later. This can result from decisions becoming expensive, time-consuming, or risky. Avoiding these pitfalls is crucial for scaling your business efficiently.

Band-Aids are one of the most expensive things a company does, operationally. Here are some common Band-Aid solutions we commonly encounter:

• Handling Customer Support Tickets

  • Common Bandaid Solution: Only throw more bodies at the problem. Hire more customer support staff to manage the surge in tickets.

  • Potentially Better Solution: Implement an ticketing system that can scale with demand, prioritize tickets efficiently, and improve long-term efficiency

• Managing Client Relationships

  • Common Bandaid Solution: Using  spreadsheets or a basic, CRM software that meets current needs

  • Potentially Better Solution: Implement Salesforce or a similarly robust CRM that can handle future complexities like marketing automation, ensuring you don't have to switch systems later.

• Server Capacity Issues

  • Common Bandaid Solution: Adding more on-premise servers to meet current demand.

  • Potentially Better Solution: Invest in cloud infrastructure upgrades, providing scalable and flexible capacity that aligns with long-term goals.·      

• Tracking Project Efficiency

  • Common Bandaid Solution: Using spreadsheets or ad-hoc methods to track projects.

  • Potentially Better Solution: Integrate project management software like Monday, Asana, or Trello, ensuring better tracking and scalability as the business grows.      

• Reviewing Client Contracts

  • Common Bandaid Solution: Manually reviewing contracts, which can become a bottleneck as volume increases.

  • Potentially Better Solution: Implement an automated contract review system to ensure efficiency and scalability.

Making decisions based only on what you need now can lead to massive amounts of operational debt as you solve your current problems.

Examples of how these situations and Band-Aid solutions can create operational debt:

• Increased Support Team Size: What if the customer inquiries surge is a one-time thing?

• CRM: Does that software handle the complex marketing automation we plan to implement in 12 months?

• Server Capacity: What if we are transitioning to cloud infrastructure when our new platform goes live?

• Contract Review Process: Does that process scale efficiently as our contract volume increases?

Operational debt can show up in decisions such as team expansion, software used, or processes employed.

Avoiding Operational Debt

Here are some questions we ask when working with a company to minimize operational debt from day-to-day decisions:

1. Is it a real need?

Often, what's being requested isn’t even a necessity. When the requester isn’t the builder or buyer, outlandish requests for non-essential items can arise. Ensure the need is genuine before committing resources.

2. Is it a temporary need?

Perhaps you're temporarily flush with inventory that's slow to move, leading to a request for additional support staff or systems. For example, hiring extra customer support staff for a seasonal surge without planning for their full utilization year-round is a costly mistake. Consider temporary solutions like outsourcing or short-term contracts.

3. Will this scale?

The solutions you implement need to grow with your business. Will your solution break as you increase volume by 10x or 100x? If you expect a tenfold increase in customer inquiries, a system requiring manual approval for all support tickets will not scale. It will quickly create bottlenecks and delay responses. Always think about whether your solution will work at significantly higher volumes.

4. How long will this solution last?

If a solution is only viable for two years, consider whether it's worth implementing now. Otherwise, you might need to endure the current pain a bit longer while planning for a more sustainable solution. Investing time, money, and training in short-term solutions can overwhelm your operations and lead to constant changes and retraining, which can exhaust your team.

5. How interchangeable is this?

Sometimes the ideal solution is too expensive or time-consuming to implement now. In such cases, consider how easy it will be to switch later. Can you easily export data and import it into a new system? Can you repurpose or resell equipment? Is this process a smaller part of a bigger process you'll need later? Ensure your current steps make future steps easier, not harder.

6. What are the resources required to implement?

Evaluate the time, cost, and energy needed to implement a solution. Does it make sense given the current pain you're experiencing? Choosing resource-intensive solutions that need to be undone a year later can burden your team. However, sometimes a quick and easy fix is worthwhile to address immediate needs.

7. What resources will be required to maintain this?

Maintenance is often overlooked. Be it software, equipment, or processes, ensure you understand the upkeep required. Your solution should not create more problems down the line.

8. Does this get us towards our 10-Year Vision?

The biggest question of all: Does this decision align with your long-term vision? Always aim for choices that bring you closer to your ultimate goals. If deviations are necessary, minimize their impact on your long-term plan.

Wrapping It Up

Operational debt accumulates from hasty decisions without considering long-term consequences. By following these questions, you can improve your ability to make informed choices that minimize operational debt and steer your company towards sustainable growth.