Venture Framework

The primary objective of a company is the time from order to collecting cash while removing any non-value adding tasks to deliver the order.

Taiichi Ohno

Introduction

Before a company is ever started and ever delivers a single thing to the customer it must setup this framework. The framework is not something that you do once and forget but something that evolves with the business. Over time as the framework is applied, as Ohno said the venture should be to deliver the value as fast as possible while “removing any non-value adding tasks.”

This framework is based on the principles of 7 Powers (#aff), Amazon’s Working Backwards, and Koch Industries’ Virtuous Cycles, and the Business Model Canvas. It constitutes the following pieces:

  • Press Release
  • Public FAQ
  • Private FAQ
  • Flywheel
  • Plans
  • Single-Threaded Team
  • 7 Powers
  • Finances & KPIs

Press Release

Every company should start as a press release. A press release is a mission statement written from a customer standpoint. It forces the problem to be explained and addresses thegoal of the mission from the point of view of the Customer First. We use this to then solve the rest of the problems of delivering to the customer, but a press release defines the first step of why the customer needs this and why we are doing the product or service.

[Title]
[Product and who the customer is]
[City, State]–[Intended Launch Date] ****– [Intro paragraph]
[Problem]
[Solution]
[Quote by leader in your company]
[How the product/service works]
[Quote by a customer of the product/service]
To learn more, go to [URL].

Public FAQ

Flywheel

Chart

Description automatically generated

The Flywheel is the Customer Acquisition, Value, Cash cycle.

The Flywheel is a spiral that goes from Customer Acquisition, to Value, to Cash. Every iteration it grows meaning more customer acquisition, more value and more cash.

The objective of opsZero is to generate free cash flow and its secondary objective is to increase the rate of generating that free cash flow. We use this free cash flow to then invest further in the company and other opportunities that accelerate our mission.

The Flywheel can be described as the following equations:

Cash Generated:

Rate of Change in Cash:

i = Each additional customer

V = Cash generated from delivering value to our customer

v = Cost of generating that value

a = Cost of acquiring customers

The whole goal of the Flywheel is to ensure a smooth process of managing and getting tasks done while reducing impediments. To accomplish this we have a process that is a combination of Scrum and Kanban to prioritize and accomplish tasks as fast as possible.

The flywheel is the cycle of customer acquisition, value, to cash optimizing the Comparative Advantage of the company. The goal is to reduce any non-value adding activities to delivering the order while using metrics and KPIs to figure out how to optimize the speed of delivery. The way this is done is through the strategy defined by the 7 Powers. The goal is to setup the fewest moving pieces in the Flywheel that optimized the 7 Powers

Plans

Setup the Quarterly, Monthly, Weekly plans so that there is always constant improvement.

Single-Threaded Team

Every business needs an optimal set of people that fit with its comparative advantage. This team should each have the capabilities to execute the strategy and flywheel and are completely focused on this task.

7 Powers

Counter Positioning

A company can be good at two of the following:

  • Sales
  • Marketing
  • Value Delivery
  • Value Creation
  • Finance

A business should optimize around two of these principles. Optimizing around too many other variables results in extreme complexity and not actually fulfilling any role well.

Counter positioning needs to look at the competitors in the market and figure out which variables they are not addressing and focus around them to see if we can make it profitable.

Comparative Advantage

This is labeled as Cornered Resource with 7 Powers, but I label it as Comparitive Advantage. The reson for the change is we are not building from scratch. We are taking the Comparative Advantage that we have, possibly skills within another business and using that to advance. So we are never starting from a position of strictly Cornered Resource we have.

Strengths

List the top three strengths / cornered resources that you have. This is the top three things that you are world class in. This will be in comparison to your competitors. These are the things that you will focus on.

Weaknesses

The number of weaknesses a company can have is relatively endless so just list the ones compared to your competitors. These are things that if they need to be done should be outsourced, otherwise they should not be done at all.

Network Effect

Scale Economics

Switching Cost

Branding

Process

Finances & KPIs

Spreadsheet time! A company is a temporary organization that is made to extract value. All entities have a timeframe when they exist and a timeframe when they should be sold or folded.

  • Check P&L
  • Examine growth trajectory.

Partners

Figure out people to partner with. Work with them to get the task done together.

Competitors

Figure out who the competitors are and how what they are doing fulfills what you are trying to achieve. Then figure out what features could be competitive advantage for you as well. Should do this every so often.