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In this edition
After several weeks of discourse on the challenges of building a constructive culture, let’s get back to something a bit more tangible and operational!
A decent number of my advisory clients and prospects are having problems evolving how they work. The struggle is real. Implementing processes is a hard-won benefit. Changing them, particularly in a fast-moving business, is mighty hard work.
It’s exactly the place where executive leadership can turn the tide. And yet I often find executives are either too busy or too uncomfortable wading into the deep end of the pool.
This week’s Great Exec/ution Newsletter focuses on how to do that impactfully without needing to master the subject.
Let me know what you think.
Getting in the Weeds (but not really) of Operational Excellence
There are two great-yet-entirely-avoidable failings I see in executives. One is not taking time to speak one-to-one with people across the team, especially in the lower part of the organization. The other is that they become so distanced from the “coal face”, the day-to-day work that people do, that they develop a blind spot to this critical element of effectiveness, profitability, and scale. The two go together.
The failing arises from the fact that execs are busy people, and as businesses grow, it is incumbent on them to be able to delegate to and count on people to run the business. That a founder or small company CEO can do this is actually a mark of quality. For in my advisory work I regularly see founders and senior execs who stubbornly cling to the details of the business and, in turn, failing to do their jobs and frustrating their deputies in theirs.
Yet the separation can also go too far, especially in times of stress and very fast growth. In other cases, particularly in larger companies, CEOs may have come up through nonoperational ranks (often in sales or finance positions) and, by dint of career chance, be less familiar with the nuts and bolts of the business.
Whatever the reason, there are distinct disadvantages with being nonconversant in these matters. Whether you call it “operations” or “customer success” or “product support”, the way a business operates directly impacts customer retention and operating margin. Obviously. When you are not conversant or in tune with operations, you can easily find yourself in deep water.
Dynamic business, lagging process
As a business evolves, it’s important that its ways of working evolve with it. Yet in the vast majority of businesses I’ve encountered, processes tend to lag behind. There are many reasons for this. One is that they often require a broad and deep command of technical, functional, and customer detail. Operational excellence is something that springs from big bangs, but from tightening those bolts a quarter turn every day, every week, resulting in marginal gains which are meaningless in the short-term but quite significant in the long term. (By way of example, I have led functions that, over a year, improved operating margin by 3-5 points, but it took a solid year of effort.)
A second reason is that they are psychically taxing. It was hard enough to get people to start working one way; getting them to change can be highly destabilizing. Then there are questions of agency and permission: can I personally decide to go for it? if not, who gets to decide? Sometimes those questions of permission are pernicious: someone may have a vested interest that is not necessarily the right thing to do for the business. Maybe there are budgeting implications as well. And finally, nobody ever lets you stop the train to change the wheels.
Where you can step in
It is ultimately self-defeating and even a bit sad, then, that outdated or ineffectual processes are such a common source of disgruntlement up and down an organization. After all, it’s not like people don’t believe things would be better for everyone if the broken stuff were fixed.
This is precisely where you, as a leader, can step in.
There are three prerequisites to building a culture defined by operational excellence. None of them require more than a cursory knowledge of how the business runs and a good anchoring in business strategy.
- Prioritization: There is nobody better than the boss to say “This is really important, so let’s do this.” Sometimes it takes the boss to break logjams or deescalate internecine turf wars that prevent progress.
- Objective objectives: No, that’s not a typo. This is about setting goals that are data driven, that transcend personal preferences or biases, and that represent what is unequivocally beneficial for the organization’s success. You can have healthy discussions about the underlying assumptions for these goals, but they need to be set.
- Sustained Momentum: Cultivating an environment where the drive for improvement is self-perpetuating. This involves creating systems and a culture that support continuous progress, where each success builds upon the previous ones, creating a positive feedback loop of improvement.
You will obviously be at a disadvantage if you are barely conversant in these conversations, but this is the best part of all. It takes so little time to walk around the office (literally or virtually) talking to people and ask them “so what are you working on right now?” It is my experience that, within 15 minutes, you will become aware of what works well for them and what doesn’t. Watch how they work. Ask questions. Do two thirty minute sessions each week: that’s one hour out of your week.
Something interesting happens when you start making rounds. People see you as being more connected. Through genuine and open conversations, they see you as more human—perhaps even worthy of trust. In that process, you get a first-hand view of how the business is working, one which will be sufficient to make you at least minimally conversant in the essential functioning of the business. And where you lack detail, you will know whom you need to talk to get more.
Conclusion
Lightly weaving yourself into the operational fabric of the organization reaps substantial benefits, including heightened employee morale, increased operational efficiency, and improved customer satisfaction. Engaged leaders who regularly interact with their teams and stay attuned to the day-to-day operations foster a culture of trust and accountability, making it easier to identify and resolve inefficiencies and bottlenecks. This proactive approach not only streamlines processes but also enhances the agility of the organization, enabling quicker adaptation to market changes and customer needs. Consequently, these practices lead to better financial performance through cost reductions, revenue growth, and a stronger competitive position in the market.
In short, when you get stuck in, you can significantly impact the operational health and overall success of your business.
Start today. Seriously.
LinkedIn Roundup
In case you missed it, I am now doing 60-second videos on topics related to execution! I’m excited about this as it gives people the ability to know me in a different way. Here are the things I talked about this past week on Linkedin.
When you’re ready, there are two other ways I can help. Email me at hello@jddeitch.com for more information.
Business Advisory
I help growth-stage leaders and investors in B2B tech-enabled services businesses align strategy with execution. I focus on the twin engines of execution excellence—process and people—to transform your business, paving the way for growth and enhanced profitability.
Transaction Support
With 20+ years of operating experience and a substantial M&A track record, I help investors evaluate strategic and operational strengths and weaknesses and navigate post-deal risks to unlock value.