When Is the Right Time to Hire an Operations Executive (COO, CFO, or VP of Operations)

by Nov 1, 2020Operations Leadership, Talent Management

The day-to-day execution and administration of a business often take an excessive amount of time, so the primary reason to augment your team with an Operations Executive is to maximize your CEO 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.

Legendary Silicon Valley investor Vinod Khosla, the founder of Khosla Ventures.”

In my experience, the overwhelming majority of the first-time founders never knew they needed an Operations Executive until they almost got replaced by the board or scaling of the business ended in a down-round. Usually, either their investors, the board of directors, or advisors were the ones who insisted they get one.

What are the signs that your company is ready for an Operations Executive?:

  • CEO spends more time in the business than on the business. Day-to-day execution may not be as much of an issue with five people on the team. Yet once the company starts scaling, day-to-day issues soak up disproportionate attention from vision, product, and outreach. 
  • Operational execution requires a skillset and pattern recognition that is often the polar opposite of what creating innovative/competitive products and leading the vision of the business requires. Said difference becomes very apparent as the company starts to stall in product development.
  • The most capital-efficient way to scale is by avoiding repeating the mistakes others have already learned. The experienced operator brings a large toolbox and library of best practices learned through mistakes paid for by others. 
  • If the company is landing major enterprise customers, the company must possess sophistication to service said customer. Learning to execute from scratch with Fortune 1000 customers is skydiving with just parachute material and a sewing machine.
  • In cases where the company has several co-founders, the pragmatic operator is the balancing force necessary to keep the team operating effectively.

How about timing?

Like with the independent board members, founders should bring in qualified operations executives before they prescribe one. By the time CEO receives direction to get COO/CFO, the power balance has already tipped in an unhealthy direction, and overcoming the friction with the Board and investors will be that much harder.

What should you look for in an Operations Executive?

I have several related articles on the subject:

What To Look For In a Chief Right Hand Person (COO, VP of Operations)

Common myths are about Operations Executives.

Have questions or comments? Just hit me up on e-mail or connect with me on LinkedIn or Twitter.

Photo credit: Thomas Fuhrmann

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