A big idea — basically — counts for nothing. However, a guide to effective business operations can give you the tools to spread your wings and build the company you’ve been dreaming about.
Introduction: What Are Effective Business Operations?
It’s probably the most eye-opening revelation that any new entrepreneur encounters. We think we’ve got a killer idea. We believe that we’ve found a hole in the market that no one else has seen, or been able to fill. We’re sure that once we plug that gap — life will be easier and we’ll be rich beyond our wildest dreams.
We think we’ve done the hardest work by spotting the opportunity. Now, all we have to do is reap the rewards of our genius insight.
It doesn’t take long before the realization sets in that having the idea was the easy part. Building it — now that’s hard.
And growing it… that’s even harder.
Turning a flash of inspiration into a product that people will buy means taking all sorts of action. Some examples include: finding funding and recruiting staff; setting up a manufacturing line and figuring out a marketing strategy.
There’s plenty of punishment just waiting to be doled out for getting just one of them wrong.
Great ideas aren’t enough to build a successful business. Get the team, the production process, the marketing, the customer service or anything else wrong and the business will fail.
Every part of the business has to work together.
The Business Operations, Or “Biz Ops” Of A Company Are As Vital As The Quality Of The Product, Its Functionality And Its Price Points
The biz ops might not be the most exciting part of a business. They might not even be seen by the public. As an illustration, a movie can’t be made without people to build the sets and hold the camera. As well, shops won’t be filled without container ships stacked with the components and the crews to pilot them. No athlete will win their medals without trainers, medics and masseuses. In every part of the businesses paradigm, an idea can’t turn into an industry without the various operations built and working in tandem, to make the idea a reality.
The hard work is often unglamorous work. But it’s important — and will be very valuable work.
The elements that make up biz ops become golden opportunities. First, they show the path the business needs to take in order to grow to how it was envisioned. Each action taken by each department and staff member is the result of a decision taken by a manager. The choice of those actions, the allocation of resources and the direction that the company takes are all part of business operations.
Those different aspects of a business are opportunities to do something new. A biz ops team is capable of seeing new directions of growth for the company. They’ll ensure that the resources within the company are allocated in the most efficient way.
The biz ops team may only be you — as the founder. You may be the entrepreneur building the business alone. This team (you) will want to understand about recruitment, management techniques, and growth strategies.
You Will Learn How To Handle The Assets And Resources Of Your Company To Produce The Best Returns In This Guide To Effective Business Operations
Biz ops is a big topic, so we’re not going to be able to look at every aspect and pain point of it. We’ll get you started in a big way.
If you’re planning to build the next Amazon, then you’ll need to figure out warehousing, server banks, and delivery processes.
Amazon became good at the backroom stuff — the work involved in serving the web pages and finding the goods. Because Jeff Bezos had the biz ops know-how — he turned its opportunity into a massive operation. This guide can move your business forward at a great speed too.
Amazon Web Services and the server farms it built to deliver content, reported sales of $6.1 billion in Q2 2018 — a rise of 49 percent over the previous year. and more than 10 percent of the company’s total sales. Amazon is now as much a services company as it is a retail firm.
Biz ops are capable of producing those additional revenues.
There’s an opportunity for those revenues in companies whose size means that they work in a range of different fields. Most small businesses would just be happy and satisfied with operations that work, that are efficient, and that allows them to serve their customers in the best way possible.
We’ll Be Focusing On Three Aspects That Affect Every Business
Time management will always be key to effective https://www.calendar.com/schedule-a-productive-meeting/business operations. Every business, regardless of its size, age, or industry, has the same number of hours in each workday to get things done. A day equals a day wherever you are and whatever your company is doing.
Businesses can buy more time by adding more people.
Every time a company hires a new member of staff it adds another eight hours or so to that workday. The more output it can generate from those eight hours, the more productive the company will be and the more profits it will generate.
Time, then, is an asset for a company just like any other asset. Assets work the same way that a farmer has to squeeze as much output from his land as it can produce. Another example is that the profits a mining company can generate will depend on the amount of ore it can pull out of the ground.
A company’s success will depend on the degree to which it’s able to farm time and mine products from the hours it rents from its employees.
We’ll explain how to keep your time management efficient and we’ll explore planning processes that can create the kind of good productivity habits that keep your business moving forward at the speed you want.
An asset that’s just as important as time, is your team. A company is only ever as good as the people who work for it.
Team members will come and go, yet time will always be with you. Only the founders will feel a sense of deep loyalty to the company and will be willing to ride it all the way to the end. Everyone else will stick with the company only as long as they feel they’re getting something out of it.
Making it worth sticking with your company has to be more than just a wage. Every workplace will give team members a salary. To keep them the an employee has to feel that they’re getting more than money in their pocket.
The team employee incentives that you provide as part of your business, are as much an element of your biz ops as your delivery systems and customer support.
Good time management and effective team management will cover the most important aspects of your business operations. Your team will work for a while, but as your company grows, so will the way in which you run it. A business process that worked when you were just starting out might not be as effective when your team turns into a department. Then the department becomes a branch.
We’ll look at how to adapt your biz ops as your company grows and your ambitions, and challenges grow with them.
More employees mean more expenses, and more time doesn’t always translate into more accomplishments. Large companies are often slower to make decisions and have to win more approvals before work can begin.
Biz ops aren’t the sexiest part of a business. They’re not the bits of the company that you get to point at and say “I built that.” But the biz ops let you build the product you want, and generate the profits you need.
Manage Your Time, Plan the Work, Work Your Plan
The goal of biz ops is always to maximize efficiency. You want your business to reach its goals faster than your competitors. Also, you want to bring out a new product or the next update while your rivals are still sitting at their desks.
In the time you have available, you want to get more work done than the competitor does in the same amount of time. That’s where the victory is and where success lies.
Fast and lean is always better than big and slow.
Being fast and lean is one of the reasons the gig economy has grown so quickly. It allows freelancers the ability to work with the flexibility they desire. The gig economy also provides companies to add just enough work hours to their teams to complete a stage of development. This affords the company the luxury of vast team resources, without making a longer and more expensive commitment.
Even those extra hours cost money. Efficiency generated from your time management shouldn’t come at the expense of your financial management.
The goal is always to minimize your expenses while maximizing your output.
There’s a lot that you can do to make sure that every minute in your company has a function. These functions are built on three foundations.
Know How Much Time You Really Need.
The first thing you need is knowledge. You need to know how long a piece of work should take. You’ll then need to know how much time it could take.
You’ll start your business with a certain amount of knowledge. A coder setting up a software development company will know roughly how much time she’ll need to create part of a mobile app. This coder will only have the correct calculation of time if she does the work herself or if she hires someone with the same level of experience. This cost will be an amount close to what she pays herself. If she hires someone with less experience (and who costs less) she can expect the work to take longer.
If the founder of the company isn’t a coder, then she’s not going to have any idea how long the work should take until she starts asking why it’s not ready yet.
That’s why once an employee gets settled, it’s a good idea to track the time they take to complete a task. There are all sorts of tracking tools that will let you do this. You can install them on your employee’s computer, or you can just check the time they begin and the time they finish.
Check it twice.
The first time, don’t tell the employee what you’re doing with the timing. Just assign a task and tell them to let you know as soon as they’re done. That will give you an idea of the amount of time they’ll usually need to complete the task.
Next, assign a similar task but this time tell them you’re timing them. Don’t scare them. Don’t tell them that their job depends on them getting the work done as quickly as possible. Just tell them that you’re figuring out a timeline or that you need to know how much the company needs to charge clients for employees’ time. You’ll not want them to feel that someone’s looking over their shoulder with a stopwatch.
You do want them to feel that they’re under some pressure and that their work is being reviewed.
This way an employee knows they need to get on with it. They should know that they can’t waste time. What you’ll end up with are two kinds of time. You’ll have the amount of time a tasks usually takes and the time a task can comfortably take when the pressure’s on.
You can increase the pressure but you need to be cautious. There will be times in a business when the heat is really on, when your staff are going to have to shut the door, pull on their headphones and steer clear of the water cooler. You will watch them really burn to meet a ridiculous deadline.
This “burn-it” under pressure happens in all companies. But it can’t happen all the time, even in a start-up.
When your staff burns-out, they leave. Nothing slows down a company more than having to replace one productive, experienced team member with someone new.
So you’ll need to find a way to add just enough pressure to squeeze the employee to work faster, but not so much pressure that you squeeze them out. You want your team to work fast and efficiently but you don’t want them to crash and burn. It’s all about finding a balance, and we’ll talk about that in the next section.
Plan Your Work And Work Your Plan
Being able to accurately estimate time that a certain task takes means that you’ll also have to have the information you need to create plans. You’ll know how to plan when you can expect the first phase of development and when you’ll expect the last. Knowing how long the testing will take and when the marketing efforts can begin, and when you’ll be ready to ship, are all interdependent variables.
As a business owner, you are the only one that is privy to all of this information.
No one else will have a broad enough understanding of the different tasks required to complete that development phase, and the amount of time each task will take. It will be up to you to list those tasks and figure out when each task will end and when each new task will be ready to begin. Your team leaders can help you begin calculations on all parts of the project.
Pull the team leaders into a meeting.
Ask them how long they estimate their teams will need to complete their projects.
Be prepared to argue with them if what they say doesn’t match your experience. Team leaders might bid too low to impress the boss, which will lead to unexpected delays and a mismatch with other teams. Others might bid too high to enable their team members to work with less pressure.
Make sure you have enough knowledge to be able to negotiate terms with the teams.
You’ll want to measure your responses carefully. Observe how you can give a tough team leader more time and reduce the chance of their team members burning out and leaving. Consider giving a relaxed team leader a bit more pressure and get the work done more efficiently.
You’ll only be able to hold those negotiations if you’re confident in your ability to estimate the time the teams need. Make sure that you gain some experience practically, from a mentor or through study.
What your team meeting will give you is a timeline for your plan. But it won’t give you a completely accurate timeline.
No two tasks are exactly the same or worked with exactly the same amount of experience or under exactly the same amount of pressure. The time estimates that you’ve created will only be estimates. You’ll need to be flexible and know the limits of that flexibility.
A business development schedule will have different kinds of deadlines.
Hard deadlines have expensive consequences. If your pitch deck isn’t ready for the meeting with the VCs then you’ll miss an opportunity. If you’ve promised customers that you’d ship at a certain date, then pushing back that date costs trust, recommendations and customer loyalty.
Tasks must be completed before those deadlines, even if it means working extra hours. But those rush periods are paid for with softer deadlines. A task might run a few days over, especially if it’s possible to make up the lost time on the next task.
As you build your development plan, besides knowing how long each tasks takes, you’ll also need to know where your hard deadlines are. Also keep in mind which deadlines you can keep soft.
Creating a great plan will help you get your project to reach its most important milestones. The plan will also add pressure. Just as an employee who knows he’s being timed works faster, so a company moving forward at a brisk pace retains its focus. When everyone can pull up their calendar, see the schedule and feel that the time is tight, they won’t be sneaking out for long cigarette breaks or stretching their lunch breaks. Wasting time adds pressure to everyone else.
It’s not always comfortable. Yours won’t be the sort of business in which employees count down the hours and leave on the dot at five o’clock. They won’t be sitting around chatting and wasting time. They’ll be getting things done—and they’ll be working with a sense of purpose.
Share Your Calendar
Key to retaining the pressure that a plan can bring, is to make sure that everyone can see the schedule. Employees need to be able to look ahead and see what’s coming up. They need to feel that if they linger over this task, they’ll have less time for the next one.
The best way to do that is through the liberal use of your calendar.
The calendar app that your company uses isn’t just for seeing who’s available for a meeting and at which times. However, you should be using your calendar for that, too.
Nor is your calendar just for scheduling meetings and informing people what those meetings are about. There is also the task of making sure that attendees arrive prepared. When you schedule a meeting, include an agenda, frame the topics of discussion as questions to which people need to bring answers. Make it clear that the meeting will result in a decision so that everyone takes it seriously and comes prepared.
A calendar app should be able to do all of those things, as well as remind users of the events they have coming up.
A shared calendar reminds everyone in the company that they’re in this together and can see what other people are working on. All teams can then see which tasks they have to perform next. They can see when the current task is due to end and whether they need to burn to get things done. You can also encourage the option of finishing early and starting work on the next thing.
Clearly, the business owner won’t want to share everything on their work calendar. (And there’s no need to share a personal calendar that doesn’t affect the workplace.)
The calendar should contain different schedules for different employees, groups and projects. But everyone should be using the same calendar tool, and that calendar should be able to show each employee how the project is developing. Teams need to know where the project will go next, and where the work that they’re doing contributes to the final product.
A calendar isn’t just a schedule or a way of organizing time, though it’s clearly both of those things.
Your calendar is a team tool, a platform that unites the different groups and shows everyone what all people are doing. This tool shows when they’re doing the work and reminds everyone that they’re in this work together. Cubicle walls might give employees a sense of privacy but they also divide the team. Public schedules on a shared calendar bring them back together again.
It’s easy to think of time management as little more than a stopwatch and a strict manager.
Understanding the time available to a business is a vital element in biz ops. When minutes and hours are a company’s most valuable resource, understanding their value is an essential part of building an efficient business.
You will need to understand how long it takes to perform different kinds of tasks. You’ll need to be able to pull all of those elements into a single plan. And you’ll need to be able to make sure that everyone has access to that plan by glancing at their calendar.
Those three factors will go a long towards folding time management into effective business operations.
2. Build Processes to Keep Your Team Motivated and Efficient
Time is one vital asset that you’ll need to manage. How you manage it will form an essential part of your biz ops. The other crucial asset in your company will be your staff. The efficiency with which you churn out your product and the quality of the service your company provides will depend on the talent of the team you build and the culture in which those team members work.
You control both of these factors.
Recruitment Is Part Of Biz Ops
Dan Yoo is the COO at NerdWallet and used to lead LinkedIn’s Business Operations and Analytics team. In a post on LinkedIn, he describes biz ops as “a decision-support mechanism that helps with everything from optimizing day-to-day options to carrying out high-priority initiatives to tackling the most important strategic questions.”
One of the tasks Yoo performed at LinkedIn was to study the metrics that the company’s users generated, and see how the figures revealed areas that could be improved. Those metrics included the company’s staffing levels. After reviewing one set of data, Yoo found that:
“according to the “magic number” for software-as-a-service companies—a sales efficiency figure that incorporates revenue and sales and marketing expenses—our hiring-solutions business could get significantly larger and at a faster rate. So I recommended pouring on the gas—hiring many more salespeople. That corner of LinkedIn’s business grew from tens of millions of dollars in revenue to $1.3 billion last year.”
There’s a fair amount of jargon in there but the principle and result are both clear. Yoo saw that a department in his company was understaffed. He recognized that those missing workers were costing the company opportunities and revenue. Yoo formulated a plan to exploit those opportunities and a strategy which more than paid its way.
That positive result wasn’t inevitable though Yoo knew the “magic number” for his industry. The magic number for an industry is the figure that suggests maximum efficiency between revenue, sales, and marketing.
There might not be a magic number for your industry, and if there is, you might not know it. But you should know that trying to save money by keeping the company too lean and working your staff harder instead of adding staff could turn out to be a false economy. It can lower your revenues, leave opportunities unfulfilled, and may lead to the kind of staff burnout that breaks apart the team and slows you down even more.
Part of biz ops is knowing when you need to hire more staff.
It means understanding how many staff you might need. And it means knowing who to hire and how to get the most out of them.
The qualifications you’re looking for should be straightforward.
You should know which programming languages a coder will need to be able to supply. Then, you should be able to review a graphic designer’s portfolio or a sales executive’s track record of increasing revenue and closing deals. Those factors are either in the resume or in the portfolio—or they’re not. As founder, you can’t control the skills your business needs or whether a candidate possesses them.
What you can control, though, is the culture to which those recruits bring their skills and their talent and their experience.
As soon as new team members walk through the door, they should feel that they’ve moved up in the world. They should believe that they’ve given themselves a bigger challenge, the chance for greater satisfaction, and an opportunity to see what they can do next. They should feel that they’ve now joined the elite team to which they always aspired.
The new team member should know that they need to hit the ground running and that there’s no room for complacency in your business. Your team gets things done so they need to get things done, too.
A new recruit also affects the rest of the team.
Current team members shouldn’t feel that the addition of a new team member means that you don’t think they’re up to the task. It’s not a sign that you don’t have confidence in them or that you believe they were so inadequate that you had to bring in someone else to do their work.
Nor should they feel that an extra pair of hands lifts the pressure from them. They can’t loosen up because the workload is now being shared more widely.
Recruiting new staff members should come with a statement of faith in the team. To maintain and raise morale, you should make clear that the growth of the department demonstrates the importance of that department. You’re investing more resources into the team because they’re worth that investment.
Now as a team member, they have a chance to benefit from the investment you’ve made to help them have greater success.
Your current employees should see the addition of a team member with skills that they lack as a chance to learn. Mentoring should be a part of your corporate culture, even between peers. Team members are accustomed to sharing what they know and explaining what they’re doing. The addition of a skilled new recruit adds to the company’s abilities and it improves the skill sets of each individual team member. The growth of the team gives them another reason to stay with the company: as the business grows, they get to grow with it.
No employee incentive is stronger than the opportunity to grow and learn.
Motivation And Incentives
Only poor managers believe that the best way to motivate an employee is to offer them a pay rise. It doesn’t work. Business books are full of cautionary tales of valuable employees who walked into their boss’s offices with a job swap offer in hand, walked out with a pay rise and were gone within six months.
Staff has to be paid. They have to be paid at market value. But the part of biz ops that deals with staff retention shouldn’t be focused on remuneration. The kind of workers whose only reason for staying with a company is that they like the salary is the kind of worker you can happily lose and can be easily replaced.
A team member will receive money anywhere they work. Only at your company, though, will they find the particular meaning and satisfaction that creating your products and services provide. A talented software developer will be equally well-paid at Facebook, Google, and Apple. All will let the developer point to a product and say “I helped to build that.”
Only your company can let your team members say “I built that.”
And, only at your company can those workers see the next rung up the ladder and the heights they can reach.
Biz ops are often data-driven and analytical. It’s usually about looking for measurable results that improve productivity and efficiency—a search for Dan Yoo’s magic number.
Team morale and pride aren’t easy to measure, but this metric makes a huge difference, affecting everything else in your business.
However, as long as biz ops concern the team management, maintaining that morale should form a part of the concerns addressed and watched in their field.
All employees want the same thing. They want the same thing that you want: to succeed and to feel that they’ve succeeded.
The definition of success will vary from team member to team member. Not everyone wants the responsibility that comes with managing large departments. Some will prefer to remain at mid-level, provided that their seniority is respected. For others, accolades and awards are the proof that they need that their work is appreciated and valued.
Know what drives each member of your team.
Make sure that they know their importance in creating the product, or in generating revenues. Let them know your appreciation for maintaining customer satisfaction. Each team member has a role, and it’s vital that they feel that their role is important. It’s that sense of importance that keeps them on the team. It’s the pride that they feel in their work that stops them from jumping ship.
Biz ops and cynicism don’t go together.
The moment that that pride starts to fade, then the team starts to fall apart. Nothing weakens a company faster than the sense that the work is meaningless and the company is only treading water. Crunching the sales figures and counting how many more staff the company could recruit might be more scientific, but the psychology of motivation at work has a role to play in biz ops too.
Business leaders shouldn’t have to be cheerleaders to get their team to do the work for which they’re paid. But it is important to recognize that each team member is the chief executive of their own work. Like a business owner, they want to see that work grow. A team member is psychologically motivated as the company increases in value. It makes them proud.
Part of biz ops is to make sure that each team member feels that pride.
The Changing World Of Performance Reviews
A successful firm is one in which employees and executives see things the same way, and there’s one thing that they always see the same way.
Both sides hate annual performance reviews.
Managers hate the experience of sitting face-to-face with an employee and telling them what they’ve been going wrong. The manager has to form uncomfortable ideas into words that are can paint an understandable vision to the employee. The manager has to describe where and how the employee has been coming up short, and why they’re not getting the bonus or the promotion they think they deserve. That’s never a fun conversation.
Lousy for the manager and employee alike. Though managers usually become adept using the words and can block the emotions that they feel in the face of the devastation. An employee is not so lucky. A manager can help these situations by improving their emotional IQ.
Even doling out praise and encouragement in those reviews is less enjoyable than it sounds.
Team members generally assume that they’re doing their job well. If they weren’t, surely someone would have spoken to them about it by now. If they deserve praise for their contribution, they’d rather hear that praise constantly, not just once a year. Most employees are left wondering all year how they’re doing, and whether they’ll get their bonus this year or the promotion they expect.
Critics have accused annual reviews of restricting creativity, generating large amounts of pointless paperwork, and restricting collaboration and innovation.
Worse, both employee and manager are looking backward, not forward. They reward activity undertaken over the previous twelve months and leave bad habits to fester for up to a year. Team members are not ready for the road ahead and this review throws up roadblocks to ensure them the ability to move forward.
That’s why an increasing number of companies are turning their backs on annual performance reviews and turning to continuous feedback.
According to a report in Harvard Business Review, 12 percent of U.S. companies had dropped annual reviews altogether by 2014. Another report the following year suggested that only 12 percent of the U.S. companies surveyed were not planning to rethink the way they conducted performance reviews.
The system to which companies are moving is the one in use by software developers. Agile is intended to be faster, flexible and more responsive than annual reviews.
It aims to be able to churn out prototypes quickly and react immediately to customer feedback. Each “sprint” session is immediately followed by a debriefing that explores how the project went and what could have been improved. The technique has migrated from software development into a system of ongoing feedback used by managers across different industries.
Agile isn’t going to be entirely appropriate for every kind of business. Exchanging a simple, measurable system for one based on ongoing conversations isn’t going to be straightforward. Marking each employee from one to ten for different aspects of their work might horrify employees, but it does make life easier for managers.
This “agile” system is catching on and spreading as a faster way to work and iterate or pivot quickly when necessary.
But it’s spreading. According to the Harvard Business Review, companies like General Electric have created special apps that let managers create notes and records of chats with team members so that they can keep track of development and advice. IBM is said to use a similar system that also allows employees to give feedback to each other and send the boss a copy. Managers are able to follow feedback to see how an employee is progressing.
That system might work for large companies with thousands of employees but for small businesses, it’s likely to be both too much work and unbearably creepy. The idea of team members telling each what they think of each other’s efforts—and copying in the boss—isn’t guaranteed to lead to a harmonious work atmosphere.
Key principles that make constant reviews so useful for software firms can be applied to other industries and improve the biz ops of small firms.
At the center of the system is clear communications.
In a system of constant appraisal, everyone always knows where they stand. They know their current role and they know what their role is likely to be in the immediate future. Because they can see how fast the company is growing, they know when there’s likely to be an opening further up in the company and when they’ll be given more responsibility.
Communication is the key to motivating employees.
As the owner of a business, you know where you’re going. You can see where the company will be in twelve months, in three years, and in five years’ time. You know that the road is long and never goes exactly where you expect but you have a direction and your hands are on the steering wheel.
Your employees might be driving their own work but they’re passengers on your journey. They don’t get to dictate the direction. They might not even know the destination. If an employee feels stuck or they start to wonder whether the company is taking them in the direction they want to go, that’s when they start to think about leaving.
When they lose pride in the product, that’s when cynicism starts to kick in and productivity falls away.
When they believe that their skills and their qualities are being taken for granted, that’s when they start looking seriously for another job. If an employee believes that their own careers are in danger, that’s when they begin sending out the resumes and taking time off for interviews.
The role of a performance review is to ensure that team members are aware of where they’re coming up short, to feel recognized for what they do and to feel—in their wallets—that their progress is valued. The goal is to ensure that they continue to grow and that they don’t leave the company and disrupt the team.
It’s possible, though, to do all of those things without taking the time to sit each person in your office for half an hour for an uncomfortable talk.
Make sure that every employee always knows where the company is going. And make sure that they can see their own progress as the company grows. As long as your team members believe that working with you will give them the career satisfaction they crave, they’ll stay with you and work at the most efficient.
3. Biz Ops In A Growing Business
All companies start small. Some start very small indeed, with little more than a garage, an idea, and a single desk. Initially, those small companies are easy to manage. The first employees know each other and trust each other. They understand each other’s work habits and they can rely on each other to get things done. The company starts to see success.
Revenues and investment income start to flow.
And that’s where things start to go wrong.
As a business grows out of its first office, hires people, and sets up departments and managers to oversee those departments, the business operations that worked initially no longer function. A process that worked with a team of four or five doesn’t work with a team of fifty or a hundred.
Twitter was formed when the small group of people working at Odeo went to the park to toss around some ideas and came up with a public messaging system. Neither Twitter nor Square can make decisions like that outside of boardrooms and without consulting directors anymore. They’re too large and they carry too great a responsibility.
Three aspects of biz ops change when a company grows out of its first stages.
1. The Role Of Biz Ops In Growth-Stage Product Development
A new company will usually start with a single product idea. The inspiration is likely to be a problem for which the founder lacked a solution or a gap they believe they spotted in the market. But once the MVP has been developed, what happens next? As the company moves on to the second stage of growth, how does it know which direction to take?
Carl Majette, a biz ops and finance leader at Facebook, has written on LinkedIn about the point at which a software company has had some success with its first product iteration and isn’t sure where to go next.
“You can imagine a SaaS business that also has a freemium/stripped down product, initially created as lead-gen for the core product. It may be that there’s an entirely different segment for whom the more basic product is a great fit. The current product team doesn’t have time to fully manage it, and no one has bandwidth to evaluate whether the company should put more resources against it. This is a great project for BizOps to manage and evaluate.”
The evaluation takes place through a mixture of data crunching, user research, market research, and planning.
It’s the sort of thing that only a biz ops team—or manager—has the know-how and time to do. The result will be a strategy that enables the business to take advantage of an opportunity it might otherwise have wasted.
Majette goes on to argue that the constraints of developing another product—other than the difficulty of finding qualified software developers—are focus, competition and opportunity cost.
Businesses need a core product for which they’re best known.
Google is still best known for its search engine. For Amazon, it’s still the store, despite the revenues generated by its servers and its warehouses. And Microsoft, decades after its founding, is still the company of Windows. But all of those companies have also launched other products, even if every product hasn’t succeeded.
Alphabet, now the parent company of Google, has experimented in fields as wide-ranging as wearable tech and self-driving cars. Amazon might be best known for its store but the logistics that support that store have given it a whole new revenue stream. And Microsoft has dipped its toes into gaming consoles and its mobile phones, even though its operating system is still its core product.
Part of biz ops is to assess the assets that should be retained for that core product and calculate, using data analysis, how much resources should be put into trying to develop other lines.
The resources to be invested at this stage of a company’s growth won’t just be financial. They’ll also include employees’ time; hours that could have been spent working on a different product or moving the core product forward.
That time won’t just be wasted if the biz ops team argues for too many resources to put into a product that doesn’t succeed.
It will also give the competition a chance to catch up. Every company has competitors—and every competitor is just hoping that their rival will waste time and resources developing a product that doesn’t work instead of investing in the improvement of a product that does.
That’s what makes biz ops so vital for a growing company. A new firm has limited resources and few options. It just wants to get the first version of its product out. But once it hits that milestone, once it has revenue and some stability, then the company has to make decisions. It’s up to the biz ops department to make sure that those decisions are informed and not taken blindly.
2. Biz Ops Beats Analysis Paralysis In A Growing Company
- Each of those informed decisions has two characteristics:
1. The information is given.
2. The information is taken.
The answer is given and the answer not taken, is the lifelong challenge of every part of life. To easily see this principle in action — or rather inaction, observe:
1. The parent gives the information. The child does not adhere to it.
2. The teacher gives the information. The student doesn’t hear it, take the information, nor will the student apply the information.
3. The laws are made. And, surprise, the laws are broken.
4. Someone has a great product that works. No one hears.
The founders of a company should have a vision. They should know where they want the company to go, and they should have an idea of the milestones the business needs to reach on its way to that goal. But a vision isn’t the same as a plan. A vision is a destination. The plan is the route that gets them there. It includes the places to refuel, to rest, to meet others who might help and to pick up all of the people and resources that need to be collected on the journey.
Founders, owners, entrepreneurs (whatever you want to call them) must have the vision and enough descriptive information. Those who hear the information, can actually take that vision and put the information into a workable form.
Don’t fall into the “I’ll research this to death” folly.
The company will often begin with a simple plan. It might be nothing more complex than finding a developer and creating an MVP. As the company’s executives start to wonder what to do next, though, the temptation is to dig too deeply into the research.
So much information is collected to make a perfect decision, that no decision is made at all.
They open a planning cycle that just keeps rolling forward as the market moves. More and more data is added to the pile. One piece of research leads to another, and so on, until the drive for the perfect information mounts so high — that can produce a perfect decision leads to no decision at all. In the meantime, competitors are turning a planning cycle into a plan, hiring staff to implement the plan, and beginning work.
A biz ops department forces a decision. They produce a report with actionable steps. The CEO only has to decide whether or not those steps will lead the company in a direction it should take.
The head of the company can focus on the firm’s day-to-day operations, leaving the biz ops team to do all of the deep thinking for her. Because the biz ops staff—and it’s often just one person—knows their job. This team or individual isn’t there to conduct research and crunch data, but to turn that research into an implementable plan. Because a biz ops person knows the job, they don’t get bogged down.
The company can move from its first milestone towards its second milestone while growing at a sustainable rate.
None of this information is simple to carry out, and there are no shortcuts. We are merely giving you the actionable steps here — so you can find your way.
Your biz ops team is tasked with assessing whether to pour additional resources into supporting a freemium product. The decision may be whether to invest more in the paid features that generate direct revenue that won’t have a template that they can follow.
Their tasks will include reviewing what statistics and data have been generated by users.
It might mean conducting surveys and reviews. It will mean producing accurate estimates of the number of resources that should be invested and the returns those investments are likely to generate.
Each process will be different. Certainly, every company will be different. The data generated by users will depend on the product, on the activities that users perform, and on the information that the company collects. Biz ops teams get to enjoy seeing a plan they produced being implemented.
They get to enjoy the creativity that comes from turning a spreadsheet into a vision of a company’s activities.
The process of seeing that vision and building it into a plan will change each time. Because that process is difficult and detailed, it’s easy for executives with other responsibilities to overlook its importance.
It’s much easier to keep an eye on the core product and think only of ways to improve it or to put it in the hands of more customers. But biz ops provides the thinking that gives the company the opportunities to grow in new and unexpected directions.
3. Biz Ops Helps A Company Grow Fast
Biz ops can be used to outsource thinking in a growing company. It can clear the mind of the chief executive and other team leaders while someone else wades through the metrics to look for opportunities and plots a path that exploits them.
It can also create and implement that plan quickly, and keep it on track even as the company moves at speed.
That speed comes from two sources. First, a biz ops team is focused and lean. Instead of trying to schedule big meetings with every stakeholder, team members only need to check the calendar to see when a developer or a designer or a member of the marketing staff is available for quick chat. Biz ops processes are streamlined. They consult rather than meet, making the transfer of information fast and efficient.
Your biz ops don’t get lost in the data.
Every business generates vast amounts of information, especially today’s online firms. Biz ops teams might find all of that information interesting but they can cut through to draw out the data they need the most.
And second, that number-crunching is ongoing. Companies generate data as they move. The more they grow and they more customers they collect, the more information they produce. Assessing that data shouldn’t only happen when the company is considering a new plan. It needs to happen all the time.
The biz ops team should be regularly following the metrics to see whether customers are behaving in the way the company expected, and how the product is performing.
That’s true as the product is being rolled out but it’s also true when a growth plan is being implemented. It’s only by being able to spot and fix problems as they occur, and being in a position to grab opportunities as soon as they arise, that a company can grow at optimal speed.
Users give companies feedback all the time.
They don’t have to wait to be asked—and that feedback will grow as the company grows. The role of biz ops is to be constantly listening, to be constantly reviewing the data and assessing whether the plan is rolling out the way it should or whether it needs to be adjusted.
Companies can grow quickly. Some companies need to grow quickly. But a biz ops team makes sure that that rapid movement doesn’t lead to a crash. It keeps eyes on the road so that the top managers can keep their hands on the steering wheel.
Effective Business Operations Conclusion
Biz ops are a complicated thing. They’re rarely the part of the business that customers see or value, but they should be the part in which business owners take the most pride.
Few business owners actually make the products that they sell. The head of a supermarket chain doesn’t grow the vegetables in the produce section or build the stores that sell them. They decide where those stores go, which products they sell, how much to pay the wholesalers. Biz ops ensure that waste is minimized.
The owner has to understand product development enough to be able to make informed decisions. But the main job of the business owner is to hire the people who know more than they do about specific parts of the business. Business owners have to build the processes that enable the people they hire to do their best work. They have to identify and exploit the opportunities that those people generate. And they have to make sure that the company operates at its most efficient.
Those are business operations, and the decisions that define those operations are the work of a business owner.
Three of the most important areas in which business decisions are made are shown in this guide.
First, we talked about time. The most successful companies will always be those that manage their time best. The company will create environments in which staff feels that time is precious and shouldn’t be wasted but don’t experience so much pressure that they feel they have to leave.
We talked about using time tracking to know how much time tasks require.
We discussed how sharing a calendar makes clear to everyone that hours, days and weeks are a resource that everyone needs to share. When one person takes too much time or resources, there’s less time and resources available for others, and the company slows.
We also discussed team management.
Part of biz ops is knowing who to recruit and when but it also encompasses motivation. Employees aren’t only motivated by money. They want to feel pride in their work, and like the business owner, they want to believe that the work they do has meaning.
Maintaining morale might not involve as much number-crunching and statistical analysis as other parts of biz ops. However, these are the processes that maintain pride and are no less essential to a company’s health.
And finally, we talked about how biz ops become increasingly important as the company grows.
As the company is growing many options become available and widen with increasingly in-depth decisions needed. This is when biz ops really need to be able to cut through the data, spot the opportunities and turn ideas into actionable plans.
Biz ops, the value of efficiency.
There’s plenty more to be said about biz ops, but the most important lesson to remember about them, in general, is the value of efficiency.
Make sure that you and your team understand the value of time.
Make sure that your team understands the value of their work and the degree to which you appreciate it.
Know how you can turn the data that work generates into new ideas and new plans.