Starting a new venture is never an easy task. It caries a myriad of doubts and millions of things that might go wrong. Resources allocation is one of them.
One of key questions is how to nourish this new body (a.k.a startup), growing it strong, lean and efficient. Risking limited funds and all your effort will not be wise and practical. Excessive amount of resources leads to “obesity” and a high cost of a final product. Whereas unsatisfactory quality, volume and bundle of resources lead to an organisational dystrophy. It is reflected in its incapability to offer a desired product or service.
Some of us are meat lovers, some are vegetarians, some are satisfied with the Mediterranean cuisine, but in all cases we all need a menu consisting of two-three courses giving us energy and strength. The difference between humans and organisations is that organisations are not driven by their tastes but form organisational anatomy viewpoint driven by their nature, organisational archetype, which defines a need for much longer menu than human.
Resources cannot be viewed separately and must be viewed as a whole, depending of an organisational archetype – producer, knowledge-dependent organisation, location-dependent organisation or donor-dependent organisation.
All of them need to be on a different diet which makes them efficient in executing their tasks.
Whilst thinking of resources as a food for an organisation, a balanced and healthy diet should be considered, while starvation or poor resource allocation may lead to an overall organisational weakness. Also the consumption of the wrong foods, i.e. resources, may cause organisational obesity. In this sense, remedies such as creativity and internalisation can always help in finding new ways to nourish an organisation and keep it healthy.
The first step in getting understanding about resources needed for start-up and or a new project is to ask a simple question – how do certain resource and resource combinations work towards an organisational goal? Focusing on a customer demand clarifies this menu into necessary resources and resources abusing venture’s funds.
Let’s take a producer as an example. We cannot imagine him without having tangible resources such as facilities, equipment and secure supply of raw materials at first hand.
However, any producer cannot function properly without solidly developed intangible resources such as know-how, reputation, contracts, skills, and so on. Tangible resources add value in their own way whether it is quality, efficiency or flexibility. This way, any organization differentiates itself from the rest.
Contrary to producers, a knowledge-dependent organisation such as a consultancy is directly dependent of intangible resources and not on facilities, location or any equipment, except computer and some stationary.
Unfortunately, we tend to forget about the main driver of excellence, organisational capability. It is created within a firm without the employment of additional resources, keeping the startup lean.
In simple terms, this is an imprinted talent or gift, which demands consistent managerial effort to advance it to an expert level. If done right, the company will succeed.
Organisational capabilities are generated from the inside of an organisation and are not easily replicated, reflecting the uniqueness of each firm. Everyone within any firm has talents in specific areas, and it is the manager’s role to exploit these talents in the most effective way.
Sadly, the importance of intangible resources and organisational capabilities are often neglected by managers. They believe giving them too much attention hinders the development. However, the practice showed that intangible assets drive the company performance more than the tangible ones.
This issue is particularly apparent in companies with a mentality to gain physical resources which can show nice figures on balance sheets. This approach tend to develop a company of any size into a “limited abilities” firm.
The bottom line? A competitive advantage of any firm is formed by a competitive business idea and a well-thought resources balance. Do it wrong, your company will hit the curb. Do it right, you might even see your company joining the Fortune 500 list. As the saying goes, you need to be right only once.