Why start-ups should care about operations early on

– Prof. Nishant Verma
IIM Bangalore

Supply chain design can be the edge that capital cannot buy for start-ups navigating complex markets.

Start-up conversations often gravitate toward funding rounds, product innovation, and customer acquisition. Rightly so, these are essential pieces of the puzzle. But amidst the high-decibel buzz around pitch decks and growth hacks, an equally critical lever tends to be overlooked: Operations and supply chain design. For many founders, the back-end isn’t glamorous. It is often perceived as something to figure out later, once product-market fit is secured and capital is in the bank. However, this deferment can be risky for a significant set of ventures, particularly those building hardware, clean-tech systems, or even hybrid physical-digital solutions. As several real-world cases have shown, operations aren’t merely about execution; they can shape the very trajectory of a venture’s strategy.

One of the hardest decisions for founders is when to build in-house capabilities versus when to rely on external partners. This make-or-buy dilemma isn’t just a cost issue; it impacts speed, quality, flexibility, and customer trust. At early stages, most start-ups understandably rely heavily on outsourcing. Building everything in-house is expensive and slows time-to-market. However, as ventures scale, the cost-benefit logic begins to shift. What was once efficient can become a bottleneck.

The founders who recognise this inflection point and act on it often find themselves better positioned to unlock new sources of value. They begin to ask:

• What are the components or systems most critical to our value proposition?
• Where are we overly dependent on vendors who don’t share our pace or standards?
• Which parts of our operation deserve more control, even if they cost more in the short run?

This operational introspection often reveals that not all costs are equal; some are unavoidable, but other costs can be rebalanced in ways that support both competitiveness and growth.

It’s important to state upfront: Not every start-up needs to obsess over operations. A bootstrapped SaaS tool, a digital content brand, or a pure-play marketplace platform may find that lean external partnerships are sufficient for long-term success. However, for start-ups offering tangible products or systems, especially those that combine hardware, software, and services, the ability to reimagine
operations can become a core differentiator. In such contexts, the boundary between product and
supply chain blurs. The design of a system isn’t just what’s visible to the user; it includes how it is
made, how quickly it can be delivered, and how reliably it performs across contexts. These aspects
are shaped not just by design decisions, but by sourcing, manufacturing, logistics, and vendor
management. In environments where margins are thin and customer expectations are rising,
operational decisions can determine whether a business scales or stalls.

Operations need not be seen as a drag on creativity or agility. In fact, they can enable innovation by removing constraints. Consider a startup that re-engineers its product modules so they no longer depend on a handful of expensive global vendors. Localising part of its supply chain or developing modular in-house components could reduce costs, speed up iteration, and offer new customisation options to clients. In some industries, this isn’t just nice to have, it’s essential. Such operational agility can be central to competitive advantage. The ability to deliver consistently, meet safety standards, and evolve with customer needs requires tight integration between strategy, product, and operations.

A common pitfall for some founders, especially those from business or design backgrounds, is to hand off operational matters too early. While building a capable team is critical, prematurely detaching from supply-side decisions can lead to misaligned priorities. This doesn’t mean founders need to become supply chain experts. However, a working knowledge of key operational levers- cost drivers, sourcing constraints, vendor risks, and margin contributors- can lead to better pricing, market selection, and product roadmap decisions. Moreover, it builds the credibility needed to engage with potential investors, policy stakeholders, or strategic partners who care not just about what is being built, but how it will scale.

As start-up ecosystems mature, there’s a growing need to move beyond hero narratives centred solely on vision and fundraising. The stories that deserve more attention are those where founders made hard trade-offs, redesigned how things are made or delivered, and restructured their organisations in response to scaling demands. Not because they were told to, but because the market demanded it, and their mission couldn’t be fulfilled without those choices. It’s time to appreciate that operations isn’t a back-office function; it’s a frontline lever for impact.

Source: Hindustan Times