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For smaller businesses, Director of Operations might be a relatively new term, for which reason James and VirtualDOO’s Lloyd Thompson will be defining the role and answering, what does a director of operations do? They already talked previously about how an operator can make you money. In this episode, the discussion covers:
– the importance of a business process audit as the initial step in engaging a Director of Operations;
– the difference between addressing a business emergency versus a proactive plan involving a Director of Business Operations;
– and how having a capable head of operations helps to drive business growth and optimize revenue.
Table of contents
1. The power of operational audits in business
2. The challenge of timing in seeking operational help
3. Preemptive planning’s critical role in business operations
4. How external insights can unveil hidden challenges
5. Efficiency and team harmony start with an audit
6. Clarifying the role of a DOO in scaling
7. The part a DOO plays in Optimizing founder focus
8. Emotional returns of streamlining operations
9. When redundancy is the goal…
10. Building sustainable growth through fractional operations support
11. Combating chaos with operational smoothness
12. Fueling business growth and revenue optimization
13. From solo management to team efficiency
14. Transforming time, smoothness, and scale for business growth
The power of operational audits in business
Operational audits are important in businesses, especially for overwhelmed and busy business owners who find themselves stuck in the daily operations, looking to break free from the overload of tasks.
Lloyd stresses that while many seek ways to enhance profitability, the primary appeal of operational expertise is in providing relief from operational burdens and strategizing for efficiency.
Lloyd advocates an operational audit as a critical initial step, as opposed to diving straight into problem-solving which can lead to a reactive, firefighting mode. The audit serves as a foundation for identifying core issues and areas for improvement, setting the stage for a proactive approach to business management rather than a reactive scramble in response to emerging crises.
James compares it to the difference between reactive emergency care for a snake bite and proactive health management involving thorough checks and preventative strategies.
The challenge of timing in seeking operational help
It’s a common scenario that James And Lloyd encounter in their consulting experiences – clients seeking their expertise only after facing an emergency situation, rather than preemptively. It highlights a pattern where business owners and leaders wait until they are overwhelmed by challenges before considering external support, indicating a gap in recognizing the value of proactive guidance.
While he prefers engaging with businesses before crises arise, Lloyd acknowledges the rarity of such foresight among small team leaders, who often attempt to manage escalating situations on their own until they reach a breaking point. This underscores the importance of understanding not only the immediate challenges but also the long-term objectives of a business, with emphasis on the transformative potential of timely, strategic intervention to prevent operational emergencies.
Preemptive planning’s critical role in business operations
James further highlights the value of preemptive planning in business operations through his experience in scaling an SEO business. Anticipating needs and preparing in advance, he says, can significantly ease the process of meeting demand, versus attempting to scale up under pressure, which is both slow and challenging.
Lloyd further elaborates on the process and value of conducting an operational audit as a form of preemptive planning. For a fee, an audit provides insight into a business’s operational efficiency and potential areas for improvement. It’s important, he says, to understand both the challenges faced by the business owner and the team’s perspective on what works and what doesn’t. This approach not only identifies common pain points but also secures team buy-in, which is crucial for implementing changes.
How external insights can unveil hidden challenges
James and Lloyd discuss how external insights can play a pivotal role in uncovering hidden challenges within a business. Business owners often lack awareness of issues due to a lack of feedback from team members, who may feel intimidated or reluctant to share their concerns. This dynamic can leave significant operational problems unaddressed, as employees might fear repercussions or believe that their input would only add to the leader’s stress.
Bringing in an external party to conduct an audit or review can change this dynamic, signaling to the team that the leadership values honest feedback and is committed to improvement. External consultants, with their broad experience and objective perspectives, can identify and articulate challenges that internal members might miss or feel unable to express. This process not only facilitates discovery but also encourages a culture of openness and continuous improvement.
Lloyd underscores, too, the value of external validation for business owners, who may have noticed issues but seek confirmation from a neutral third party. Even when business leaders are aware of potential problems, the perspective and affirmation provided by external consultants can be crucial in acknowledging and addressing these challenges effectively.
Efficiency and team harmony start with an audit
An operational audit serves as the cornerstone for enhancing efficiency and fostering team harmony within a business. By examining the setup of the team, the alignment of personnel with their roles, and the efficiency of systems, processes, and team dynamics, the audit can swiftly identify areas lacking structure or needing smoother operations. This process not only reveals immediate opportunities for improvement but also sets the stage for a more structured and effective team environment.
The audit also functions as a trial period for integrating an external operator with the existing team and leadership, assessing compatibility and the potential for a productive collaboration. Following the audit, the business has the flexibility to decide on the best course of action, whether implementing the recommendations themselves, continuing with their current operations, or engaging the auditor for a comprehensive solution.
Clarifying the role of a DOO in scaling
Lloyd clarifies the conditions under which a DOO becomes essential. In smaller teams, typically around eight to ten members, the presence of a DOO is uncommon, but as the team size increases, the role of an operations manager or a similar position becomes more necessary and prevalent.
Lloyd explains that in such scenarios, his function would be to establish and oversee the structural framework within the team, acting as an intermediary between the founder and the operational facets of the business, including sales, marketing, IT, and finance.
Lloyd further discusses the primary goal of engaging a DOO, especially in the context of scaling businesses: to save the founder’s time. This objective is achieved by positioning the DOO as a central point of contact who translates the founder’s vision and directives into actionable plans and oversees their execution across the team. This arrangement allows the founder to step back from day-to-day operational concerns, focusing instead on strategic decisions and growth, while the DOO or an equivalent fractional service ensures the smooth running of the business operations.
The part a DOO plays in optimizing founder focus
The Director of Operations (DOO) plays a dual role in optimizing a founder’s focus, both by streamlining the flow of tasks from the founder to the team and by scrutinizing the founder’s activities to identify areas where their involvement can be minimized.
This approach allows the founder to concentrate on high-value tasks like deal-making and sales, while operational tasks, especially those involving team management, are either automated, delegated, or handled directly by the DOO.
This strategy is aimed at freeing the founder from the minutiae of daily operations, thereby preventing burnout and enabling them to focus on strategic growth and leadership activities.
Lloyd illustrates this with an example of an e-commerce educator, whose dual roles as the public face of the business and as the manager of team issues were leading to exhaustion and suboptimal decision-making. The intervention of a DOO not only helped in identifying inefficiencies, such as uneven distribution of overtime work due to poor delegation by team leaders, but also facilitated operational adjustments that saved money and improved team dynamics.
This case underscores the DOO’s critical role in balancing operational demands with the founder’s strengths and priorities, ensuring the founder’s energy is directed towards activities that drive business growth and brand visibility.
Emotional returns of streamlining operations
The introduction of a Director of Operations (DOO) into a business operation not only streamlines processes and saves the founder’s time but also yields significant emotional benefits.
The feedback from founders frequently highlights the reduction in stress and the mental relief that comes from having to communicate with only one individual regarding operational issues. This “return on emotion” points to the immense value of delegating operational responsibilities, allowing founders to focus more on strategic growth and less on day-to-day management concerns, thereby enhancing their overall well-being and satisfaction with their business operations.
When redundancy is the goal…
The concept of redundancy as a goal for fractional Directors of Operations (DOOs) raises intriguing questions about the motives behind their engagement and their long-term role within a company. A debate revolves around whether these professionals aim to prepare businesses to eventually manage without them, thereby becoming a temporary solution, or if they propose a more permanent partnership.
Lloyd and James discuss this dynamic, highlighting scenarios where the objective is indeed to make the DOO’s role redundant by fostering autonomy and efficiency within the team, ensuring that the business operations run smoothly without their continuous oversight.
Lloyd’s approach to his role, aiming for redundancy by optimizing business operations to the point where his intervention is no longer needed, aligns with a broader philosophy of empowerment and self-sufficiency within businesses. This mindset reflects a commitment to genuine value addition and long-term client success, rather than perpetuating dependency.
James echoes this sentiment, applying the same philosophy to his role as a general manager and coach, where it’s important to achieve a state where challenges become negligible, indicating a successful empowerment and operational optimization.
The integrity and value of a service that seeks to render itself obsolete are commendable and relatively rare in the professional services industry, where ongoing client dependency can often be more lucrative. This approach contrasts sharply with practices in some sectors where services are structured to ensure continual client engagement.
Building sustainable growth through fractional operations support
Lloyd discusses the strategic advantage of leveraging fractional operations support, particularly in the context of a rapidly growing business planning to transition to a full-time Chief Operating Officer (COO).
This approach not only prepares the operational groundwork for the incoming COO but also ensures a smoother transition by addressing potential challenges and optimizing processes in advance.
As before mentioned, the fractional team’s readiness to facilitate a seamless handover shows a commitment to the client’s long-term success over maintaining their own position within the business.
The interaction between the fractional operations team and the new COO highlights an important dynamic. While employees might view external consultants as competition, the groundwork laid by such teams can significantly enhance the incoming executive’s ability to succeed, even if their contribution might not be fully visible due to the improvements made.
This foundational work by the fractional team, aimed at making operations efficient and autonomous, not only benefits the immediate business but also fosters a strong referral network, underpinning the business model’s sustainability through client satisfaction and word-of-mouth recommendations.
Lloyd’s approach underscores a business philosophy that prioritizes making a positive impact over embedding the consultancy within the client’s operations indefinitely. By focusing on empowering businesses and their teams, and by being open to adjusting the scope of their involvement as companies grow and their needs evolve, the fractional operations support model proves to be both flexible and valuable.
Combating chaos with operational smoothness
Lloyd emphasizes the crucial aspect of operational smoothness as a counter to the chaotic, “Whac-A-Mole” environments often encountered in businesses. This smoothness is achieved through establishing effective team rhythms, utilizing dashboards for monitoring metrics and KPIs, and implementing feedback loops to continuously improve processes. By integrating these elements, businesses can transition from chaotic to streamlined operations, ensuring tasks and objectives are managed more effectively.
In an example involving a Canadian e-commerce business founder overwhelmed with managing tasks and suffering from burnout, Lloyd illustrates the negative impact of operational chaos on both the leader and the team. The founder’s scattergun approach to task management led to team exhaustion, attrition, and hindered the achievement of business goals. This underscores the importance of operational smoothness in maintaining team morale and productivity.
James relates to this, having had experiences with leaders who lack coordination and clarity, exacerbating workplace stress and inefficiency. This highlights the value of having a mediator, like Lloyd, who can intervene between visionary yet overwhelmed founders and their teams. This intervention is aimed at not just alleviating immediate stress but also addressing deeper issues such as leadership training and the influence of toxic team members.
Lloyd’s strategy for combating operational chaos involves a comprehensive approach that includes planning, monitoring, and improving business operations in a structured manner. By teaching teams to plan effectively and establishing metrics for regular review, Lloyd helps businesses move towards operational smoothness.
Fueling business growth and revenue optimization
Lloyd introduces the concept of scaling as a crucial aspect of business growth, challenging the common perception of operational roles as mere cost centers. He posits that with the right operator in place, businesses can actually enhance their profitability.
This is achieved by freeing up the founder to engage in high-value activities, such as generating new business, and by optimizing revenue operations (rev ops), which involves leveraging opportunities for growth in sales, marketing, and customer relationship management (CRM).
Sharing the example of a performance marketing team’s inefficiency in handling leads collected at global events, Lloyd illustrates how operational improvements can directly impact revenue. The simple yet transformative solution of implementing a mobile CRM system enabled the team to immediately capture and follow up on leads, significantly improving lead management and the evaluation of event ROI.
This operational tweak led to the company’s best revenue year by allowing them to identify and focus on the most profitable events.
James ties the discussion back to the broader theme of operational efficiency as a lever for business growth. He highlights the benefits of fractional operation services as a cost-effective alternative for businesses not ready to commit to a full-time operations director.
This approach enables companies to access expert operational support on a part-time basis, bridging the gap between emergency triage and the hiring of a full-time operator, thereby fostering sustainable growth and revenue optimization.
From solo management to team efficiency
Lloyd identifies several key indicators for when a business owner should consider seeking operational support, highlighting the transition from solo management to team efficiency.
For businesses experiencing challenges in project and people management, especially when the team size exceeds the capacity for efficient management by the owner alone, it’s a strong sign that an operator’s assistance might be necessary.
Lloyd notes that businesses with teams of fewer than five members often attempt to manage operations independently, and while he is open to offering guidance through discovery calls, his services are typically more aligned with larger teams.
For businesses with teams of five to ten members and annual revenues reaching seven figures, the need for a director of operations becomes more apparent. This “amber zone” is characterized by the founder’s potential denial of needing help, despite the growing complexity of managing a team that size effectively while also focusing on strategic goals.
Lloyd suggests that businesses in this stage are at a critical point where operational support can significantly impact their ability to scale and focus on higher-level objectives.
The “red zone” includes teams of ten to thirty members without an operations person, where the lack of operational support is acutely felt, and the business is likely struggling to maintain efficiency and growth. Lloyd’s ideal clients typically fall within this range, particularly in the fields of performance marketing and e-commerce, as well as other online businesses with a similar team size.
Transforming time, smoothness, and scale for business growth
James summarizes the conversation by highlighting the transformative impact of operational support on time management, operational smoothness, and business scalability. He notes that operations can significantly reclaim time for business owners, streamline processes, and facilitate growth by alleviating the burden of tasks they might not be best suited for.
This support is particularly crucial for businesses exceeding a million dollars in revenue without a dedicated director of operations or equivalent support, indicating a readiness to professionalize their operations.
Those interested in exploring the potential benefit of operational support can reach out to Lloyd ([email protected]) or visit VirtualDOO.com for more information.
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