The Turbine Viewpoint
Managing the business means managing your finances.
Forget TikTok; business efficiency is in right now.
As macroeconomic headwinds push companies of all shapes and sizes across all verticals to think lean, we’re hearing the importance of not growth-at-any-costs but efficient growth, even if that means slowing down.
Figuring out efficiency is an exercise of understanding the business levers of growth and deciding which tradeoffs to make around investments. Are you focused on profitability or just being EBITDA-positive? Where do you allocate your resources? Do you spend more on Instagram or Google? Do you spend on a brand campaign or a demand gen campaign? Do you go to the conference or not?
These are strategic decisions rooted in how the company plans to grow, but these are fundamental decisions around allocating your limited resources- people, time, and, significantly, dollars. Companies treat managing the business as something separate from managing their finances, but the two are actually one and the same.
Managing your inventory well means managing your finances well.
Being efficient with your inventory means being efficient with your resources. If your company sells widgets on your Shopify store, inventory is the largest and most significant check you write. Making your most considerable expense 1% more efficient has a bigger business impact than making just any area of the business 1% more efficient. Put differently, managing your inventory well means managing your finances well.
Physical inventory is a complicating factor that makes inventory management even more difficult, expensive, and complicated than managing other parts of the company. Excess inventory is locked up resources, but not enough is lost sales. Striking this balance can be costly, but not finding that sweet spot is even more expensive.
These pains are true of the actual inventory and the number of widgets on the shelf. But it’s also true of the systems that manage the inventory. If your system says you have 20 and you have 200 (or vice versa), something is going wrong, and you’re losing sales or money.
Silos, lack of feedback loops, and too many systems to manage
One of the worst feelings at any company is the question of where to find a piece of information. Is the particular Kanban board you need in Trello, Asana, Airtable, or GitHub? Is the information about onboarding a new customer in Confluence, a Google Doc, the Notion space, or a PDF of unknown origin in someone’s email inbox?
As companies grow and scale, they bring on single-point software solutions across the Modern Ops Stack- one tool for procurement, another for inbound transportation, and on and on. As teams become more specialized, team boundaries tend to parallel software boundaries. All of these tools that the company has invested significant dollars into don’t talk to each other. Instead of syncing tools and data, we sync calendars and take up ten people’s time every week doing manually what should be done with automation and software. We can see this pattern over and over across companies of all kinds and tools of all sorts.
Google’s SRE Book defines toil as:
The kind of work tied to running a production service that tends to be manual, repetitive, automatable, tactical, devoid of enduring value, and that scales linearly as a service grows.
So many of our operational systems today force knowledge workers into toil, into manual updates of spreadsheets, of the pain of sending excel spreadsheets back and forth via email, or not knowing which system has the precise information you need.
Forecasting: You spent all this time building a custom forecasting model in a monster spreadsheet, but because all the inputs are manual, it never gets updated on a reasonable cadence, and team members don’t know whether the information in it is reliable. It never gets smarter or better because, in a couple of months, people won’t remember all the details of how it works. The data gaps and lack of feedback loops mean that the Head of FP&A is the only person who knows anything about the business forecast.
Resource allocation: Despite many companies spending 100K on dedicated planning software, planning happens in spreadsheets, and the process is disconnected from any of the systems people use. Someone from FP&A manually maintains the “Forecast vs. Actual” spreadsheet because that expensive software can’t get it right.
After the fact: Visibility isn’t a priority for the platforms, so the visibility you get is limited to end-of-month reconciliation done by your outsourced accounting team. Your different systems don’t talk to each other (or if they do, you never know how up-to-date information is). If you’re making real-time decisions, you need real-time information.
Exception-handling: Systems in place are brittle, so they can’t handle anything that doesn’t go according to plan. There’s no way to surface any exception handling. Where’s that shrug emoji?
SKU management: You sell in multiple places, so if you want to make a change, you must make that change in various places. Changes to the size of your packaging mean updating the product description on eight different platforms manually- and you have to manage the complexity of multiple shades, sizes, and styles, some of which might be substitutes and some of which might not.
From marketing plans to new SKU launches, eliminating toil can also help you run a more efficient business.
The Original Promise of ERPs
When ERPs- enterprise resource planning software- were first introduced, they made lofty promises to companies of automation, improvement, and a new brain. ERPs aimed to hold all of your business’s operational data. They were the brain of a company, with all the information you needed to run an efficient and effective operation in one place.
But somewhere between then and now, ERPs became synonymous with “glorified accounting system.” Users aren’t everyone in the company- they’re finance power users and a subset of people who feel doom and gloom when they boot up software that is difficult to navigate and even harder to get value from.
What if we challenged the fundamental premise? ERPs can and should be the business’s operating system. A marketing director who wants to know their budget should be able to do that in the ERP. An engineering manager who wants to know headcount plans, promotion funding, or anything related to operations for the year should do that in the ERP. The Director of Ops, who wants to know if their margins are getting better purchase order over purchase order, should do that in the ERP. What if we could align everyone in the company on the idea that all of our organization’s operations took place in one place? What if we never had to wonder which of the 14 SaaS apps someone uses daily is the right one for that information?
In the last 20 years, we’ve seen an explosion in the number of SaaS apps a company uses. Before being able to do their work, knowledge workers must figure out which application they need access to do the job. When various parts of the company use different tooling to do very similar work, we create unnecessary points of handoff and failure. When your ops team and accounting teams are looking at the same information- inventory moving from the supplier to the warehouse- in two different systems- inventory management software vs. accounting tools- we create the opportunity for there to be a disconnect: Ops thinks the inventory has landed and Accounting has no idea. Or vice versa.
The problem with tool sprawl is that each tool presents its own version of reality- its own source of truth. Even when systems talk together, they do so with the caveats of data lags, outdated syncs, and batch systems.
We can fundamentally change how companies and people work if we can challenge the fundamental premise of where that work can happen. What if we returned to the original promise of ERPs- of a single operating system for a company? With Turbine, the answer is yes.
At Turbine, we’re building financial technologies for companies that manage physical inventory with a vision of delivering on the original promise of a full operating system for companies.
Sound interesting?
Reach out at the link below, or shoot us an email at hello@helloturbine.com.
