The day-to-day execution and administration of a business often takes an excessive amount of time, so the primary reason to augment your team with an Operations Executive is to maximize your CEO’s and other co-founders’ contribution to the enterprise.
I firmly believe that staying true to a vision is best achieved by having a founder as CEO. It is almost always preferable over “hired guns” that can help you execute on the vision but seldom understand it as well and are often too pragmatic. That said, a management hire can be very much a champion of the vision and a true partner with the founder. Good managers are seldom unreasonable, and it takes “unreasonable people” to do the sorts of great things that normal reasonable people wouldn’t consider until you showed them enough proof that it can be done. For that reason among others, boards should try as hard as possible to keep the founder in the No. 1 slot with a good president/COO or an otherwise strong execution team under him or her. This will preserve their instinctive feel for the new space and the new rules.
In my experience, the overwhelming majority of the first time founders never knew they needed an Operations Executive. Usually either their investors, board of directors, or advisors were the ones who insisted they get one.
What are the signs that a company is ready for an Operations Executive?:
- The company has started selling to formidable clients and these sales represented a major portion of the company revenues. Anything but an excellent execution and customer experience was just too high of a risk for the company.
- Account management, customer service, and product implementation was becoming the reason customers stayed or renewed contracts. It was no longer enough for the product to be decent and for the founders to work their magic convincing a customer to stay.
- The CEO spent more than 20% of his/her time on the day-to-day management of the business. Operational execution saps a lot of energy and takes away from the #1 job of the CEO – to set direction, run product vision, and be the face of the company. Operational execution also requires a skillset and related ultra-efficiency (and pattern recognition) that is often the polar opposite of what is required to create innovative/competitive products and lead the vision of the business.
- The founders realized they were building a sky-scraper on a small house foundation. What was acceptable for a team of 5 was no longer working for 10, 15, 50, 100, etc. A good Operations Executive will bring the best practices, discipline, and a systematic approach to growing the company. He/she will also build a strong foundation without destroying the one the company was built on.
- Investors or advisors realized a “professional pragmatist” was needed to help the CEO remove impediments on the path of growing the company. Some of the best CEOs and founders are eternal optimists. Even if hell is opening in front of them, they proceed with tireless optimism. But, this is really not a sustainable philosophy.
- In cases where the company has several co-founders who are very passionate about their areas of expertise, they found themselves spending too much time in passionate conversations as the company grew. Therefore, they brought Operations Executive to add some balance.
- There were concerns of plateauing or shrinking revenues, often coupled with shrinking profit margins.
This list could be much longer, but I wanted to focus on the most common reasons I experienced or heard most often.
How about timing?
As with any functional area, realizing that you will need a senior person in 6 – 12 months means you need to start recruiting for this role NOW and immediately snap up the person you think is right when you come across them. This is especially true when the market is hot. With senior level talent, the interview process, negotiations, and transition time your new hire may need to properly leave their current position often takes several months. For example, I have handed in 4-6 month notices before leaving and that was barely enough time for a graceful exit.
Note on the level of Operations Executive:
1. Hire for where you realistically will be in 5 years. Never ever hire someone who has mostly built companies way beyond where yours will be in 4-5 years. If you realistically will be a $10MM business, don’t hire someone from a $200MM revenue business. An Operations Executive with experience in that large of an organization is simply not equipped to help your company. If you find a lot of value in the “big kahuna”, then get him/her on your advisory team.
2. In-betweeners are the best value for your money, if you can find them. In-betweeners are the high-potential talents that are great for earlier stage ventures (pre 100-employee or ~$20MM in annual revenues). These are folks who may not have officially held a COO or VP of Operations title before but have very clearly handled responsibilities of this level.
3. Never hire relatives for any leadership role! Companies with spouses, siblings, cousins, etc. as executives tend to end up as dysfunctional and highly-political organizations.
What should you look for in an Operations Executive?
Please refer to the article I have written before: What To Look For In a Chief Right Hand Person (COO, VP of Operations)
Have questions or comments? Just hit me up on e-mail or connect with me on Twitter.
Photo credit: Tom Magliery