Minimum Viable Volume

The history of industrialization is a history of finding scale. Automation of processes so that capital investment in machinery could lead to increased productivity that would, in turn, deliver a return on the capital investment through cheaper to produce, better quality, higher volume goods.

The “build it for the exit” model of digital business has often been to not worry about making a return on the products or services generated by a business because the money is made after enough of a buzz and a customer base has been created is through seeking the business – either to shareholders in an IPO or to another company as an acquisition. This model often confuses more traditional businesses that try to ape tech startups without an exit strategy. Just making your service available through digital channels doesn’t make you money and doesn’t make things cheaper.

To make money or savings you need scale. To do more through bringing in new customers, and/or by using fewer people. Without scale, digital channels connecting your customers to your products or services simply add cost.

Moreover, you can’t just “bung a website” on services if those services aren’t sufficiently systemised at the backend. Processes that rely on spreadsheets and email don’t play out well if you expose them to the internet for customers. As Don Tapscott put it, “In the age of the Internet everyone is naked. And if you’re going to be naked, you better get buff.”

And so, to make a service digitally accessible it needs to be systematically managed in systems. And if you are going to put processes into systems, you need to find scale unless you’re happy to just increase your costs. There might be other things driving systemising processes like regulatory compliance. But you also need to keep in mind that sticking things into structured systems means you then need to maintain them because assuming that the world won’t change and therefore your processes will need to be updated by expensive computery people (rather than just getting doing people to change what they do) is naïve in the extreme.

This brings me to my point. For any particular process or activity in an organisation, there must be a minimum viable volume of activity before which the idea of systemising a process simply doesn’t make economic sense.

If I’m only ever going to do something once, there is little point in building that thing into a system. Just get people to do this one-off thing.

But what about if you do it once a year? Or once a month? Or daily? Or daily for every customer?

Of course, the answer is “it depends”. It depends on the volume of activity and the complexity of that activity. It depends on compliance concerns and available skills. It depends on the value the service offers to customers. And other factors no doubt too.

Would starting that analysis by trying to work out a minimum viable volume for systemising a process help? Asking the question “how much do we need to be doing to make this worth taking out of spreadsheets?”, and from that then deciding whether to proceed based on whether you have, or can plan to drive, that volume?

Delivering services to customers through digital channels needs different methods of evaluation. The old days of “It’ll be cheaper” for IT implementation are well gone. The questions that are asked need to change. Maybe “What’s the minimum viable volume?” will be helpful?