Business Operations – The Ops Garage

tl;dr

Because we don’t know what it is.

And I can end the blog post right there because it’s true.

I’m sure everyone with a “Head of Operations” title on LinkedIn will vehemently disagree with me and talk about what they’re doing to transform their companies to more precisely align with the evolving digital world in which we live. Now that sounds rather good, but I’ve seen some very talented BizOps professionals navigate their companies right off a cliff, along with their amazing bag of analytics tricks. Perhaps BizOps made those failures stupidly efficient. Regardless, it’s time to step back and try to figure out what business operations is.

While attending graduate business school, I was thrilled when I enrolled in my first Operations Management (OM) course. It was around the time that I was transitioning from my engineering management position into product management and a marketing role for a Fortune 500 tech company. Having continually experimented with so many operational facets of product design, development, and delivery over the years, I expected the OM course to challenge my thinking while supplying me with a new arsenal of weapons I could use against my competition and help capture a healthy chunk of market share. I quickly realized the OM curriculum wasn’t going to take me along the path I hoped. Instead, I learned about planning and scheduling tactics, quality control techniques, material requirements planning (MRP), enterprise resource planning (ERP), statistical process control (SPC), ISO 9000, etc. Don’t get me wrong: these were all interesting, but were they all the operational elements needed to run a business? No, they were just parts. So, my journey began.

I went to the business operations people in my company and found out that what they were doing was very different. Sure, the manufacturing folks were excited about MRP, but the finance team was thrilled about different operational models pertaining to our sales channels. Getting to the definition of “business operations” was getting confusing. I just wanted to find out what ops was. “The operations executives must know,” I surmised and met with them when I headed out from Boston to our corporate HQ in Silicon Valley. They too viewed operations in an entirely different way, this time looking at which operational metrics to share in the company’s quarterly updates to investors and analysts. I was starting to feel like Charlie Brown in search of the proverbial Christmas tree: everyone had different requirements. I, too, with my own operational models was guilty.

Over time, I sought wisdom from the upper echelons of thought leadership: Robert Kaplan and David Norton’s The Balanced Scorecard; Michael Hammer and James Champy’s Reengineering the Corporation; Larry Bossidy and Ram Charan’s Execution: The Discipline of Getting Things Done; and many more. With years of research (and much of it applied on the job), I felt as if I were getting a Ph.D. in operations. The more I learned about operations, the more confusing it became, so I began integrating models in an attempt to come up with a more unified and effective way to do operations.

Stochastic Processes – © Bertrand Fougerat

I then reviewed operations research and management science programs in academia and beyond from around the world. I built statistical functions, made product launch simulators, and developed stochastic models for the markets in which I competed. When I applied these operational elements, the results were excellent. Luck? Hardly, because mathematics helps. Repeatable? No yet. A clearer view of operations? I wish.

And my operational obsession didn’t stop there. As I moved up the corporate ladder into the C-Suite, I had access to some rather impressive CEOs, COO, and Board Members, who – not surprisingly – had still more views of operations. Even the fantastic operational consultants we hired had their own approaches and paths to operational excellence.

Today, business operations is now seen as a catalyst to help companies attack markets more effectively, deliver products and services more efficiency, all while keeping customers quite happy. Both big company intrapreneurs and lean startup entrepreneurs are slowly starting to realize that this nebulous thing called operations may be just as critical to their success as what they’re developing. And we’ve even given this new shiny object a new, fresh, retro name: BizOps.

So here’s the deal: business operations is an amalgam of many different interrelated, complex, and evolving components. Figuring out how to build, integrate, and optimize these components requires diverse expertise and an excellent grasp of science, technology, and mathematics. These elements combine to create a litmus test for your “Head of Operations.”

So, why do we suck at business operations? Realistically, we don’t. We’re just not applying it holistically because we don’t understand what business operations is. Solving this is the next business revolution, whether we call it BizOps or something else.

How often have we heard? “We missed our revenue goal because of the market.” “We shuttered the company because of the market.” “We screwed up blah blah blah … because of the market.” It’s easy for the leaders of companies large and small to blame the market for their woes, even though so many can’t tell you what “the market” actually is. But it’s time for them to stop blaming this nebulous, external thing that’s out of their control and focus on the internal stuff that’s really the problem: their business operations, also known as “BizOps.”

As critical as BizOps is, it’s just not an attractive part of the business world, at least when compared to the belle of the ball, strategic management. And that’s a shame because any comprehensive strategy is useless without especially good operations. But isn’t this obvious? Unfortunately not. If it were, CEOs and their management teams wouldn’t be blaming the market. Or maybe they’re just lying or delusional. Regardless, it’s time for companies to bring BizOps to the forefront. Too bad most just don’t know what to do.

For more than two decades, I’ve worked with and for companies that ranged from single-person startups to global Fortune 500 firms. As both an executive and a manager, I ran engineering, product management, business strategy, corporate development, customer service, sales, and marketing. I understood that something needed to tie all the functions and departments together. My teams and I had wild market success when everything was operationally integrated. When they weren’t, we missed the market, disappointed that the proverbial wheels came off a rather good cart. I’ll elect the former scenario any day. What did I learn along this journey?

All functional companies are alike; each dysfunctional company is dysfunctional in its own way.

Please forgive my vandalism of Leo Tolstoy’s famous opening line from Anna Karenina, but it really hits the mark. So, what makes some companies succeed while so many others – the majority – struggle to make it? Excellent operations is the foundation for functional companies. Such organizations will not only adapt to constantly-changing market conditions, but also achieve productivity levels that eclipse their peers and excite their customers, partners, employees, and shareholders.

My interest in operational excellence began during my first startup venture as a young programmer. When two management consultants came in to take a look at our small tech business, I saw for the first time how all the business parts fit together. Fortunately, we were an operationally well-run company subsequently acquired by a larger competitor nearly 18-months later. Ironically, that bigger company had some serious operational challenges and was unable to grow the business it obtained, a common (and inexcusable) occurrence in the M&A world.

From that point forward, I began constructing operational business models that allowed me to diagnose corporate performance and helped me verify that all the right business components, such as people, processes, tech, and ecosystem, were aligned. What these models continued to demonstrate was that gaps in operations could be caught early enough, before the wheels fell off. Though financial measures, such as operating revenue, net profit margin, etc., are valuable, they measure outcomes, and they’re often too late; the wheel is already off.

BizOps and everything around it is a big deal, and it’s broken in most companies, so it’s time to fix it. I used business operations modeling to validate my assertion that ops is indeed a problem – a big one. Now I look forward to a broader discussion among business leaders, investors, academics and everyone else in the operations equation.

When looking for a metaphor to overcome the BizOps problem, I thought of my friend Joe who owns a local garage where I take my older cars. Joe and his main guy Steve always manage to fix the problems, no matter how ugly they are. I grew up working on cars, but these guys are good. When I asked them their secret, Joe and Steve replied.

We know how all the components fit together and influence one another. That’s the only way to fix problems and achieve the best performance.

Amen. Now that’s operations wisdom. Too bad they just focus on cars. We need a garage for ops.

Category: Business Operations

Why Do We Suck at Business Operations?

Business Lessons from Leo Tolstoy and My Mechanic