4 Major Operations Mistakes Startups Make That Hurt Their Growth
These mistakes could hurt your growth, or even worse, kill your business.
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The majority of startup glory goes to the CEO or major milestones in sales, marketing and funding. The founders and CEO receive all the praise while the operations team quietly makes everything happen. The truth is that ideas and marketing are not enough. Your success as a business will come down to your ability to execute. You need an outstanding operations department.
While strategy and other factors come into play, history has shown that a great operator, or great operations department, will have an immense impact on whether or not a business succeeds or fails. In many cases, it's the difference between success and failure.
Since operations is so important, and often invisible to most people, here are four big operations mistakes many startups and businesses make that you should avoid at all costs.
1. Failing to hire a true operator
The term "operator" describes a professional or leader who can turn an idea into a reality through processes and execution. They can design and run the systems and processes necessary to create a product and realize a vision. Put simply, they execute.
One big mistake startups make is assuming that a CEO or founder is an operator. There is a discernible difference between having a co-founder occupy the role of a COO and hiring a leader with a proven track record as an operator.
It's rare to find a visionary who also possess the skills to execute on the operations side of the business. Therefore, most entrepreneurs start their businesses with an unqualified co-founder in the COO role. These startups do not scale in an efficient way, or they fail to successfully scale at all.
The remedy is to make sure you have someone on the founding team, or an early hire, who has a proven track record in operations in your vertical, or a similar vertical. Do not settle for less as you will only be doing yourself a disservice.
2. Poor leadership in the COO position
An ineffective COO is not able to create and enforce accountability structures within their organization. They might allow bad performers to get lost in the shuffle. Also, they might deflect responsibility for any missteps - often blaming third parties or other factors inside and outside their control. This has a toxic effect on the culture of the operations team and negatively impacts the entire business as product delays or quality issues impact sales.
A great COO, on the other hand, knows that accountability is the key to building an organization built around processes. They know that accountability starts with them, and they are accountable for anything, and everything, that happens in the department.
Hire and retain a COO that makes accountability as important as the execution itself. Without accountability, sustainable execution is difficult, if not impossible.
3. Failing to plan ahead
It's the job of the COO to make sure that everything is running smoothly and output is sustainable. While it's easy to sit back and enjoy a process that is running well, great leaders anticipate potential issues in supply chain, manufacturing, software development, customer service or in any other area that could slow growth, hurt product quality or harm the customer experience.
Andrew Grove, a co-founder of Intel, famously said that only the paranoid survive. I've always appreciated that perspective, and have found it to be accurate. Great leaders invest the time to imagine and anticipate unforeseen challenges that could threaten the company's success.
4. Poor organizational structure
While every business is different, there are a number of best practices that great companies follow and mediocre companies ignore. In this case, companies that struggle with operations often have an organizational hierarchy that is not designed for success.
In many cases, the organization can be too tyrannical, with all the power being held and yielded by the COO. This keeps team members from making their own decisions or contributions. In other cases, the organization can be too wide, including roles and functions that should not be in the operations department at all. For example, the sales and marketing teams should be separate from the operations team and work together in a cross-functional manner.
A great COO will only focus on operations. They know that spending energy on sales or marketing will only create blind spots in their focus on operations. That's when bad things can happen. A great COO knows how to focus on operations while collaborating with other departments to ensure everything gets done, and done well.
While it's certainly not as exciting as other parts of your business, it serves you well as a leader to understand the best practices in operations. Consider reading books on operations or studying how great companies have scaled successfully. Operations is an easy part of your business to overlook, and that can be a costly mistake.