Behind the Ops Episode 22 === Intro: You are listening to Behind the Ops presented by Tulip. Madi: Natan, one thing that I know about you, I wanna make sure that you know this about yourself. Is that okay? You love benchmarks. Natan: Okay. That's true. Can I say something? Madi: Yes. Natan: I also know this about you. Madi: Oh. Natan: You love benchmarks too. Madi: I do love benchmarks and terrorizing my team with like how we're performing against numbers is, uh, is definitely a, a cultural, a cultural... Natan: I think a lot of people love benchmark. Probably not a lot of people who would admit that. We are open about our love to benchmarks. Madi: So why don't you share with our listeners where you look for source-wise for benchmarks and why you think the sources you look for are important. Natan: Um, everywhere. Obviously the internet is a great source of good and bad benchmarks. Madi: Yeah. Natan: But, uh, I, I just think we live in an information era. It's like it's all out there, so many sources and it depends what you need, you know? I also think it's not just about the source of the data. Typically like to get to the benchmark that you want, depending what you wanna benchmark, whether it's building this part of the business, or understanding bomb of a product or what, whatever it is. It's typically a combination of sources. So the methodology of how to come up with a benchmark and how people thinking about it is equally important, you know? Madi: So both a combination of approach to the calculation. Natan: Yeah. Madi: And then... Natan: Totally. Madi: You know, just referencing like the way we often work about benchmarks, how peers are doing it. So that's like some anecdotes, like references to like data sets of similar companies with similar approaches. Natan: Yeah. Madi: And then to your point, like the information era, everything's on the internet, seeing how other people have approached it and the numbers that they're publishing. Natan: Yeah. Yeah. Though, still often it's the case that you have unreliable noisy data and like you're trying to tease a benchmark for something very, very specific. I'm sure you encountered it in your line of work, cuz it's not everything out there, especially if you're looking for very, very specific things. The work we do to enable what our customers are doing, they're building operations, whether formally or not, they're driving some sort of lean approach, meaning, again, I don't know a lot of companies that would tell, you know what, let's design an organization that will put like departments, like separated by walls. Like I don't, I don't, don't see whether they adopted lean or not, you know? Or let's not think about just-in-time inventory. And so obviously, and the reason you do that is obviously continuous improvement and whatnot, but I think it's not just an operational thing, it's a mindset that came from operations to almost any line of business. You know, you can't improve what you can't measure, right? So you need to measure. And so how do you know that what you measure like means anything? If you don't compare it to some baseline, usually you start with no baseline. Madi: I think that's the interesting piece. So, you know, oftentimes when I'm hearing or seeing things on social about lean, I think it slips into like the cultural approach. But when we talk about it, you often bring up the like quantitative side cuz they're really related. Natan: Yeah. Madi: Like the cultural approach is rooted in a deep understanding of how to those approaches can be quantified and drive real results for the business. And there's also just like a lot of complex math there, right? Natan: Yes, there is complex math and uh, can tell you in the early days of Tulip, I bought this book, which I really recommend. I guess we can include the link later. Madi: Yeah, we'll include the link. Natan: It's called Lean Math, Figuring to to Improve by uh, Mark Hamel and Michael O'Connor, and I think it's like 400 dense pages of every formula you wanted to know and never wanted to see in Lean Manufacturing, like from statistical process control, o.e., things like that. Madi: Mm-hmm. Natan: And when I look at this book in a sec, it's basically like the Bible of, uh, the math of operations, which ironically in operation, you know, Manufacturing, all these places we roam, it's like kept by very few people and they know this stuff and they're the operational excellence people and they know how to measure and all that kind of stuff. But when you think about it outside of operations and like where we do our work as so classic knowledge workers building software, doing, you know, marketing programs, whatever it is we're doing, all that math and knowledge is like packaged into the software platform we're using. Madi: Mm-hmm. Natan: When you need the benchmark or to think about like how to build some pipeline for what you're doing, like you have Marketo and this and that and they would like build it into their... Madi: I will say, and this is an alert to all the marketing tech vendors out there. Natan: Yeah. Madi: To do better. That there's a lot of the calculation work that is still happening in Excel in digital marketing. Natan: I know, and let's, let's talk about that point in a second, but relative to what's happening in operations, it's like sticks and stones. Of course there's great tools out there and the more specific you get and this and that, but like it can't be that all the things need to happen in Excel in operations. Madi: No, I think, and I think that's a good point to carry through. When we're talking about this, like really complex math, the ways that people are approaching lean and doing continuous improvement, there are, you know, some exceptions out there, but a lot of it is still happening across like a stitch of different tools. Natan: Yeah. Madi: Sometimes paper. There's a lot of manual data entry, all this work to get to the place where you want to do like more meaningful work and analysis. So there's like a foundational groundwork to get to the meaningful work and then to be able to implement the policy. And I think that, you know, we're still struggling with that in other industries, but with the level of complexity and the amount of, like you said, 400 pages of equations definitely don't need 400 pages of equations for marketing metrics. I can tell you that right now. There's ways to, to better serve folks, knowing the, the complexity of of their domains. Natan: Yeah, and there's nothing wrong with Excel. Spreadsheets are wonderful. I love spreadsheets like the bain of my existence, spreadsheets. The problem is like if you're trying to run a business with spreadsheets, things break. You can use it as a tool, you know, as a scratch, as a way to kind of push information back and forth. But if you're trying to run a business on spreadsheet, it only goes so far. Madi: I wanna push this a little bit. So we were talking about benchmarks, we're talking about the complexity of like, calculating all of these equations to get to the number to compare to a benchmark. Natan: Yeah. Madi: And earlier you and I were talking about like sources for us getting things to reference the numbers that we put together where that, that's me and Excel with Marketo and Salesforce data or... Natan: Yeah. Madi: You running the business across all these things and I feel like there's a ton of, there's marketing communities we have access to like different reports that either vendors or companies are doing on like what, what other companies are doing for benchmarks. And then you can like talk to people and get that information. And I feel like it is seemingly a lot harder for manufacturers who are doing this work to access that of peer institutions. Natan: Yeah. Madi: And to make those comparisons, cross company cross plan even. Natan: Yeah, I think you're right. And one of the key reasons for that is that Manufacturing is so heterogeneous. So even if you're in the same industry making a similar product, think about a car or a network appliance, whatever. They're similar, but they're different enough. And it could be the process by which they're being made. The material inventory management system is different than this operation compared to that operation, like so many parameters. So open-ended that it's really tough to find good comparisons. Madi: Mm-hmm. Natan: So that's like one point. And then companies just don't like sharing this kind of stuff. Madi: Right. Reasonable though, in a lot of instances. Natan: Yeah, of course, of course it's reasonable and there's IP and trade secrets and all that kind of stuff. But like, I think it's a challenge to kind of, uh, evolve best practices. So like we can, we can talk about like for our domain come from software engineering and system design, things like that. And so, we can find good organizational benchmarks, you know, like to all sorts of things like what's, uh, the right ratio of, uh, QA people to amount of engineers or what kind of performance you can expect from this type of database or that type of database. But these are like operational benchmarks that assuming that you have some parameters locked down, like the stage of a company, size of a company, stuff like that. Madi: Mm-hmm. Natan: You can derive. And they're heuristics in nature and you can directionally rely on them. Madi: Yeah. Directional insight. Natan: Yeah. But like when you benchmark a database technology, you run code, you get a report, so you, it's very regular. Madi: Mm-hmm. Natan: And I can give you a benchmark, say like, I want to build a system that is 10 x better than that. So now, you know, but uh, what's the benchmark to get to some reasonable takt time? Well, tell me what's your industry and your product and which sub assembly you're doing. And I'll tell you that. And the way you get it is you get to the black belt. Who did that in three previous companies that worked for the right consultancy that came in? And that's just like, what, what is that inefficiency? Madi: Yeah. It's really hard to get access to that. Natan: Yeah. Madi: That information. It's almost like it's level two of information in a lot of ways. Like... Natan: Yeah. Madi: Level one is regular access to your own information and being able to benchmark your performance against yourself. Natan: Yeah. Madi: To know if you're getting better or worse from where you've been before. Natan: Yeah. Madi: That is like a good transition to the, the second topic I wanted to bring up today, which is like 80% of Manufacturing companies have under 20 people or something like that. Like a lot of Manufacturing is a smaller or medium size enterprise. And a lot of the complexity that we were talking about earlier or even the tools to be able to do that level of complexity seem out of reach for a lot of those manufacturers in such a way where it's like they're destined to live in paper and not be able to do it. Natan: Yeah. Uh, add to that it could be out of reach and sometimes unnecessary, like just to kind of provocate her a little bit. Madi: Yeah. Natan: Cuz like people are pretty smart. Madi: Yeah. Natan: And uh, when they're on top of their business and they're running like a 20 person shop, you know what? Maybe sometimes like a clipboard and one spreadsheet is enough and, but that's okay. The problem is like when, what happens when they wanna start growing it? By the way, I'm not saying that 20 person shops and businesses should not try to get very technical and technological, and I always have this like, uh, well, sometimes I have wars on LinkedIn where, you know, people say, well, that's only good for enterprise, or that's only good for mid-market. And it's like, this is so silly. I mean, technology is so accessible. And such a wide spectrum of tools and like you can go find tools for any kind of business in any size. I don't think we should spend time talking about like why doing stuff digitally is like fundamentally better for all the reasons that are kind of obvious, like for running a business in the day and age we live in. I mean, for the sake of argument, like... Madi: Mm-hmm. Natan: Do you think like a a 20 person shop should use Google to advertise? Is that even a question nowadays? Madi: I think, and this is to your point earlier about spreadsheets, right? Like there is an end goal. Natan: Yeah. Madi: You know, and the resources you have available and that could be your people, the amount you have to spend in tools, your like time to learn your familiarity with those tools, and ultimately like for any business, like the outcomes you're trying to achieve, all of the stuff in the middle, matters right? So if you can get to the end point, and that's through like for you, a combination of spreadsheets and people you have, or like you said, it's a 20 person shop and one person really knows just how things work and can improve on that like held knowledge baseline, they're not gonna hire a lot more or grow very much more. That could be a working system for them. And so that could be like the same thing for ads too. Like if you have extra budget, you wanna grow, you can afford the average cost per click, maybe it does make sense to advertise on Google. Natan: Yeah, but I'll try to make the point more clear. I think businesses, even small ones with 20 people, and I see it in Cambridge where I live, like it's small shops come up and like if they don't go and get a Google profile, they may not spend like continuously on ad and run campaigns the way we think about it, but they're giving some money to Google and Google sells to them and otherwise they don't exist. Madi: Mm-hmm. Natan: So my point is like there are some technologies that doesn't matter what the size of their business you have to adopt. Madi: I see what you're saying. Natan: Like electronic banking, like is another example and so on. But as it comes to operations, it's like it depends, you know, honestly, it also depends on your people and the type of your business. You know, it's enough that you have like one person who is very savvy and that can impact that business. And honestly that we say citizen developer, but I, I don't know, maybe there's another buzzword, we need to coin here. It's like, what is the call? It's like the IT savvy person, but they're not the formal IT person. So sometimes they call them the nerd, you know? But I don't know. That's, that's not a very nice thing to say, but you know, I've been called that quite a few times. Madi: But to like say back the point that I think you're making with the different types of businesses, there's a certain point where not adapting the way you work becomes really limiting towards even existing as a business. Natan: Yeah. You become less competitive. Madi: If everyone uses Apple Pay and credit cards to buy and you're the one coffee shop that only accepts cash and you don't have, uh, Instagram or whatever, then yeah, maybe you never get discovered. And it's not just maintenance, but you start to lose. Natan: Yeah. Madi: And so bringing that back here, I think to your point, there's like ways to get to an outcome. But yeah, at some point not adapting new ways means you're limiting yourself. Natan: I have like a very funny example is that I actually cut my hair in this barber in Cambridge, Charlie, for years, and it's a cash operation and it still is. But then Covid happened. So obviously Charlie doesn't have a website and doesn't have anything and all that kind of stuff. And you know what happened in Covid? There were all these restrictions. So they had to put in like a thing to get appointments and you know, so they can clean and send all the things to kind of keep it safe and operate and also plan their life. So of course there's many ways to get a calendar and an appointment thing going for a barbershop. And they did that. And now Covid is over. They're not going back. Madi: Yeah. Natan: That's it. And like I, I used to just walk in and that's the experience I actually like because as you know, I'm an amazing planner always sometime and, uh, especially when it comes to that stuff. So I loved walking in, just walking in, but now I have to go and have to like set an appointment. Otherwise I won't see Charlie, you know, and that's what digital technology did to us. Madi: I think that's the, just to kind of conclude for our Manufacturing listeners, it's 2023. Does every small manufacturer, the majority of manufacturers, need to abandon their paper today? Probably not. However, with work evolving and changing, and it's like grow or die in a lot of different ways. Natan: Yep. Madi: Not just your processes, but new generation of people that you're gonna be hiring to keep your business. Natan: Totally. Madi: Then at some point, everyone figures it out and figuring it out is probably not gonna be a limitation by paper. Natan: Yeah. You, you make a very good point that I think we should double down on the generational change in the workforce. They're not just born with the internet. They were born with smartphones. And I guess the next one is gonna be born with the apple glasses or something. Madi: No, let's not say that yet. I re I reject it. I reject it. Natan: You, Maddie, we're all getting old. Okay. That's just the way of world. And, um, for those people born with a smartphone, like you show them the clipboard and even if they want to go work for the 20 person shop or the mid-market company with a billion dollar in revenue or go to work for GE and you show them a clipboard and then go like, what is that? And why should my work life look like that when I'm TikToking and soon chat GPTing my way to everything I do? I don't think that's gonna go very well. It's already not going very well. That's part of the reason we don't have enough people in operations is people want to do work in, uh, different environments. Madi: Agreed. Well, kudos to all the young people who are gonna be coming in and helping drive that evolution of work. Natan: Yeah, we need you. Madi: And I guess I'll see you next time. Natan: Yes. I will be here and I'm gonna make a note on a Post-it to remember to come on time and, uh, take a picture with my smartphone and slack it to my calendar. Madi: Okay. Natan: The future of work. Outro: Behind the Ops is brought to you by Tulip. Connect the people, machines, devices, and systems used in your production and logistics processes with our frontline operations platform. Visit Tulip.co to learn more. This show is produced by Gaby Elanbeck, and edited by Thom Obarksi. If you enjoyed listening, support the show by leaving us a quick rating or review. It really helps. If you have feedback for this or any of our other episodes, you can reach us at behindtheops@tulip.co.