Operations Excellence
8 concepts · ~25 min · Advanced
Scale your operations efficiently: plan capacity, make smart build vs buy decisions, eliminate waste, and automate everything that doesn't require human judgment.
What You'll Learn
- ✓Calculate your team's true productive capacity (hint: it's not team size × 40 hours)
- ✓Make build-vs-buy decisions using 3-year Total Cost of Ownership analysis
- ✓Apply lean principles to identify and eliminate the 7 types of operational waste
- ✓Calculate automation ROI and know when manual processes are actually better
- ✓Write OKRs that align team-level work with company-level strategy
Capacity Planning
Operations
💡 The Concept
Capacity planning is the process of determining how much work your team can handle and aligning resources to demand. The core calculation is: Available Capacity = Team Size × Working Hours × Productivity Factor (typically 0.6-0.8 after meetings, admin, and context-switching). A team of 5 engineers working 40h/week at 70% productivity has 140 productive hours/week, not 200. Companies that do capacity planning well ship 35% more features per engineering dollar by eliminating both overwork (burnout → turnover) and underutilization (idle teams → wasted salary).
⚠️ The Trap
The capacity trap is planning at 100% utilization. Organizations that load teams to 95-100% see throughput DECREASE by 20-30% because there's no buffer for bugs, urgent requests, sick days, or creative thinking. McKinsey's research shows optimal knowledge work utilization is 70-85% — above that, quality drops, bugs increase, and burnout skyrockets. Another trap: headcount-based planning. Adding 1 engineer doesn't add 1 engineer's worth of output — it adds 0.5-0.7 due to onboarding, mentoring overhead, and increased communication costs (Brooks's Law).
🎯 The Action
Calculate your team's true capacity: (Number of ICs × Weekly Hours × Productivity Factor) - Planned meetings - On-call hours = Actual Weekly Capacity. Track velocity (story points or tickets completed) over 4-week rolling average. If actual output is consistently below 70% of theoretical capacity, audit where time goes — most teams lose 30-40% to meetings, Slack, and context-switching. Set a 'capacity budget': 70% planned work, 15% unplanned/bugs, 15% tech debt and improvements.
Knowledge Check
Challenge coming soon for this concept.