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Operations is the glue that holds your company together. You have a lot of options on how to set it up, here are some of them.
When your team is small, it’s easy to have everything run smoothly. Working across functions is as easy as talking to another person and wrinkles can be ironed out in minutes. When you have one sales person and one marketer, fixing issues between sales and marketing can be done in one phone call.
As you scale, running smoothly gets harder and harder. There are more people on each team, each with less and less authority. As friction develops, the members of each team will lack the tools to fix it. Even worse, if they try to fix it you will end up with many different fixes to the same problem used by different people. Shadow processes develop and people begin to accept the friction as normal.
That friction is normal (see Scaling Fault Lines) but you have to address it. To do so, you’ll typically have a person or team whose job it is to address these issues. We call them Operations.
Operations is typically the least understood business function. Everyone knows what sales, marketing, and engineering do but what does the operations team do? They fill in the gaps between all of the other functions. The goal of operations is to make sure everything runs smoothly.
Many leaders start to drown in the operations of their company before they realize they need an operations team to help. It’s easy to tell yourself that you’ll work a bit harder, a few more hours, to handle the operations work. In reality, the earlier you add an operations team the more likely you are to grow faster.
When adding operations to your team, there are many different layers of your organization that you can do so. Here is a short list of the different levels that operations staff might have at your company:
Chief Operating Officer (COO). A member of the senior executive team, they typically own sales, marketing, and everything else that is not product & engineering (aka the operating part of the business). Most companies add a COO when they get to a fairly large scale, but it can depend on the business. Since all of the teams report to them, they have full control over operations.
VP of Operations. Also a member of the executive team, but they are a peer of the VP of Sales, VP of Marketing, etc. Instead of having direct ownership, they work alongside their peers to ensure everything is operating efficiently. I think of these people like the utility player of the leadership team, able to jump into any situation and help. Since they don’t have direct authority, they lead on a project basis or through collaboration and coordination.
Business Operations. These are members of your team that focus on operations and range from Directors all the way down to junior staff. There are many kinds, including Sales Operations, Marketing Operations and the newest flavor: Product Operations. No matter the title, or what team they are on, their job is to help everyone around them work more efficiently.
Chief of Staff. A chief of staff has no specific responsibility or authority, and typically works alongside an executive to help them with the operational parts of their job. Some companies have a Chief of Staff for every executive, others share one across the leadership team.
Executive Admin. Most admins are extremely organized, capable people that handle significant amounts of the operations of the companies where they work. Personally, I think these people are under-appreciated and under-utilized compared to the other groups on this list. In many cases your operations problems can be handled with a great EA!
There are great reasons to add operations staff at any of these levels, depending on your leadership style. Personally, I have always used the VP of Operations model since having a utility person on your executive team is a powerful tool in a high growth environment.
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Once you know what level of operations staff you want to add, you have a few options on how to integrate them into your organization overall. Here are a few:
Option 1: Separate Function
You can set up operations as its own function, alongside all of the others. They would typically work for a COO or VP of Operations, and have ownership of all the touch points between teams. For example, if both marketing and sales are using Salesforce as the system of record, the operations team might own the Salesforce administration to ensure everyone is working together well.
Option 2: Embedded
You can embed operations staff in each function. Common titles include Sales Operations, Business Operations and a newcomer: Product Operations. In each case, these operations people are part of the functional teams and work with their peer operations folks in other groups to get things done. For example, your sales team would be responsible for hiring and managing the sales operations people, while marketing hires and manages the marketing operations folks.
Option 3: Matrix
Matrix organizations try to get the best of both worlds by having operations staff as part of both a separate function AND embedded on teams. In practice, this almost never works as people end up having two bosses and two sets of goals that are constantly in tension. I recommend against ever using a matrix structure, except in very specific circumstances.
Which structure you choose depends on how you’ve set up your company and how well your teams work together. If inter-team coordination is great then embedding is a great option since it minimizes touch points. If inter-team coordination is poor then the separate function works well as you have someone in the middle to make things better. If you choose a matrix, well, you will deserve what you get.
Once you have your operations team set up, how do you measure their success? Unlike sales or marketing, the operations team doesn’t have a specific mandate other than to improve efficiency. As a result you cannot attach them to a single outcome to see how well they are doing.
What you can do is attach them to the major KPIs for the business. If your operations team is effective, you should be hitting or exceeding your overall goals! Put another way, the operations team should increase your chances of success and therefore improve all of your major KPIs.
There is one obvious problem with that, which is that it’s hard to have a control group. How do you know if you’re doing better with an operations team than without one?
All companies need operations teams to succeed, as businesses are made of people and people are messy. When you think about operations, think of them as the secret weapon that helps your company reach its full potential. In the end, we all want to be more efficient so isn’t it worth it to have people whose job it is to make sure that happens?