Pillars of Operational Success
Creating the foundation to help your business scale
There comes a time in all startups when you take a step back and say to yourself: “Well, this is a mess.” The way that things have been done so far just doesn’t work anymore. Not only do processes not scale, but it feels like exceptions are being made for everything. You fortunately have a good problem in that your business is seeing momentum, but now it’s time to pause and set the foundation for operational excellence. Operational excellence is the compass that navigates startups towards sustainable growth. Operational excellence doesn't merely involve fine-tuning the existing processes; it establishes a framework that augments performance, anchors revenue predictability, and leverages real-time insights. Its impact spans the business's present functioning and future scalability.
In my opinion, there are four pillars to operational excellence:
Processes
Tools and Automation
Training and Quality
Performance Management
There’s also a horizontal, flexibility, which powers the ability to constantly pivot and reiterate to improve your operational processes.
Let’s delve into each of these pillars.
Pillar 1: Processes - The Operational Backbone
Processes are the heart of operational excellence. They provide a roadmap to reach predetermined objectives while upholding high standards. Having clear processes is the differentiator between sustainable growth and chaotic, painful growth where everyone is overwhelmed. Not only do you need to spend the time thinking through your processes and where they can be improved, but you also need to spend time on ensuring that those processes are adhered to. This requires alignment amongst all leaders and a lot of repetition. The moment exceptions start to be made, you might as well get the shovel because that process is on its way to dying.
Another benefit of having strong processes is that those processes ensure the maintenance of data quality, which becomes more and more crucial as the business scales. High-quality data supports informed decision-making and strategic planning, which are critical to a startup's growth. Your processes should ensure that data remains accurate, consistent, and relevant.
As part of your processes, I recommend having frequent touch bases, such as Quarterly Business Reviews (QBRs) and weekly revenue meetings to ensure consistent alignment towards business goals. They facilitate information sharing, encourage problem-solving, and enhance team collaboration. Additionally, they allow you to ensure you’re heading in the right direction (ideally toward your goals!) and allow you to quickly spot any issues enabling you to pivot as quickly as possible.
Pillar 2: Tools - The Technological Bedrock
The lifeblood of any startup is the suite of tools it utilizes to manage its multifaceted operations. The right tools streamline workflows, bolster efficiency, and provide actionable insights. Those tools should also enable the automation your teams need to make their day to day far more efficient. This automation will be the key to scaling without dramatically increasing your burn or throwing your unit economics out of whack.
Some tools all startups should have in place as soon as possible are:
A Business Intelligence (BI) Tool: A BI tool is crucial in today's data-rich world. It sifts through a sea of data to unearth hidden patterns, trends, and insights, thereby enabling data-driven decisions.
A Customer Relationship Management (CRM) tool: There are many CRMs out there, but I personally feel that Salesforce, a CRM tool is the most flexible, adopting to any specific attributes of your business. It can revolutionize customer interaction and sales strategies, ensuring that no lead slips through the cracks.
A telephony solution: If your team is making calls, a telephony solution is a must. There is no reason why your team should be making calls using their phones. In order for your business to scale appropriately, you need to be able to have data around calls (inbound and outbound) and have 5 or 7 day a week coverage to allow you to push business forward regardless of whether someone is out that day or not.
An email automation tool: I’m often surprised by how many large startups still have their teams send manual emails. This is a massive time suck and it’s often the easiest place to dial in your unit economics. The less manual work your team needs to do, the less people you need to support a given function. Email automation tools can automate repetitive tasks while ensuring personalization and maintaining high engagement level all while supercharging your marketing efforts.
Pillar 3: Training and Quality - Ensuring Excellence
To deliver unparalleled quality consistently, startups must invest in thorough training and robust quality assurance (QA) mechanisms. Expecting processes to just work without putting in the effort to train someone on them and then keeping track of how well those processes are being executed or adhered to is as effective as just praying that things work out.
A well-articulated onboarding plan, facilitated by learning management systems platforms like Lessonly, paves the way for newcomers. It acclimatizes them to the company's culture and processes, empowering them to contribute effectively.
Additionally, having vertical-specific playbooks that serve as the go-to manuals for every department, outlining the standardized procedures and role expectations can ensure that everyone is up to date on best practices. This goes a long way to revving up your revenue. You are not reliant on the team figuring it out and in the process burning through valuable clients.
Quality assurance tools like Gong are the third piece of the puzzle. They provide a platform for continuous feedback and improvement, ensuring that the quality of the output is not compromised as the startup scales. There are many great QA tools out there. Spend the time to find the right one for your team. Yes, QA is time consuming, but not having QA in place is the same as setting a bunch of dollar bills on fire. Slowing down here will allow everyone in your company to move faster in the long run.
Pillar 4: Performance Management - Driving Motivation
Performance management is the pillar that ties everything together. It ensures that you have the most effective team in place and that everyone is clear on what is expected from them on a day to day basis. Most importantly, it ensures that everyone is invested in their day to day. They know how to help the company grow and how they can grow in turn. Effective performance management is a delicate balancing act of clear expectations, rewarding career paths, and motivating incentives.
All startups should aim to have performance expectation plans in place as soon as possible. They outline the benchmarks for success, providing employees a clear understanding of what is expected. Additionally, established career paths ensure that employees can visualize their growth within the organization, boosting their morale and dedication.
Companies with sales teams should have clear incentives like SPIFFs (Sales Performance Incentive Fund) and commission in place. Recognition can also play a crucial role in keeping the workforce motivated and engaged. They reward excellence, thus promoting a culture of high performance.
The Horizontal Pillar: Flexibility - The Game Changer
Interlacing these four vertical pillars is the horizontal pillar of flexibility. It's the ultimate survival tool for startups, empowering them to adapt to changing circumstances, seize new opportunities, and resolve unexpected challenges.
Flexibility encourages startups to remain agile, allowing them to modify or even overhaul their approach towards the other pillars in line with evolving market trends, customer demands, and business goals.
It’s about the journey
Operational excellence isn't a milestone to achieve; it's a journey of continuous improvement and optimization that equips startups for scalable growth. By honing these pillars, startups can optimize their operations, enhance their productivity, and be better poised for the rigors and opportunities associated with scaling up.
In the marathon of growth, operational excellence isn't just about running fast - it's about running smart. And the smart run begins with mastering these pillars.