Operations is much more than Operations

December 18, 2018
5 Minutes
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In SaaS businesses, operating results are earned every single day; and good businesses are made, not found. Writing here about building organizations, learning from the experience, and appreciating the ride.

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At Lock 8, we think and talk a lot about operations. Which raises a valid question: what do we actually mean when we use that word “operations?”

Like most words, operations can mean a lot of things to a lot of people. The Miriam-Webster Dictionary defines it as: “performance of a practical work or of something involving the practical application of principles or processes.” I like the pragmatism of this, although it’s a bit sterile and lacks the necessary business context for use here. Separately, BusinessDictionary.com offers the following: “Operations transform resource or data inputs into desired goods, services, or results, and create and deliver value to the customers.” Again, really helpful, but a bit too theoretical to be really valuable.

Before going any further, allow me to inject what we DO NOT intend when we talk about operations (or, at least, we do not intend in any exclusive, strict, or limiting way):

  • Operations is not (just) LOGISTICS stuff
  • Operations is not (just) BACK-OFFICE stuff
  • Operations is not (just) PROCESS stuff
  • And Operations is definitely not (just) COO stuff

Rather, when we use “operations” in the context of small-scale B2B SaaS businesses, it encompasses all of the above, and more. In fact, it represents virtually all of the complex and interrelated activities necessary to build and grow a sustainable business. Which raises another legitimate question: how can you wrap your arms and brain around something so vast and impactful? While I think that is a great question to discuss over a coffee or beer, I’ll take a crack, by offering a framework centered around a company’s stakeholders.

Very broadly speaking, many SaaS company’s stakeholders can be broken into four categories, as follows:

  1. Market: This is a broad swath and is comprised of any business or entity that is a prospective (but not yet current) customer. Said another way, this is the total addressable market, excluding a company’s existing client base.
  2. Customers: These are current, paying members of a company’s client / partner community. These are the lifeblood of a SaaS business, in that they make repeated purchase decisions (often annually or monthly) as to whether they wish to remain a paying subscriber to (and funder of) the company’s software / service.
  3. Team: This one is simple. It’s the team of staff-members, contractors, volunteers, and anyone else who works hard to move the needle on fulfilling a company’s mission and realizing its vision (more on those things in a future post).
  4. Owners / Financial Stakeholders: This certainly includes investors, but also extends to lenders, management, suppliers, customers, and virtually anyone with a vested interest in the financial health of the business.

For me, operations encompasses all strategies / tactics / initiatives / projects / tasks that are focused on, and fall within, any of these stakeholder buckets (Market, Client, Team, and Owners…with a few caveats and qualifiers around the last group). Before the objections rain down, I’ll try to explain:

Under this model, operations would include: identifying a company’s target customer segment, articulating its value proposition, codifying its competitive positioning, establishing its packaging and pricing, defining its go-to-market strategy, scaling its selling motion, and much, much more (Bucket 1: Market).

Operations would also include: deeply studying the problems target clients are trying to solve, designing and developing a solution to address those needs, defining and delivering against a roadmap that fulfills that solution vision, mapping the journey organizations travel as they endeavor to resolve business challenges, provisioning a set of experiences that enable and augment a given solution, and much, much more (Bucket 2: Clients).

And operations would cover all of the necessary people-related needs associated with getting the right people on the bus, into the right seats, headed in the right direction, excited for the journey, and helping to power that vehicle toward a shared destination (Bucket 3: Team).

And finally, this definition would cover establishing appropriate company goals, implementing systems to monitor performance, and fostering processes to inspect and adapt to environmental changes…all in support of reaching financial milestones (Bucket 4: Owners). That being said, I consider the Owner Bucket to be different from the others in two material ways: (1) Far more so than any of the others, this group of stakeholders is focused on outputs (results, outcomes, retrospective measurements) versus inputs (sales pipeline, product backlog, key hires, etc.). (2) The owners are arguably secondarily impacted by an organization’s operations, whereas the other stakeholders are either the producers or the immediate recipients of every operating action. More on this interrelationship in a future post.

Clearly this post only begins to scratch the surface on the Grand Canyon-esque topic of company operations. But hopefully it has provided at least enough background to demystify the general scope and scale of what we are referring to when we use the term “operations” in connection to growing SaaS businesses.

(1) https://www.merriam-webster.com/dictionary/operation

(2) http://www.businessdictionary.com/definition/operations.html

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