Accelerating Through Chaos

Your business exists in a constant state of chaos. The daily brawl against changing market dynamics, new competitors, product bugs, and dissolving sales pipelines is only stunted by uncontrollable macro-economic, political and public health oscillations. All odds are stacked against your company as these corrosive factors have one objective; increase disorder and push toward entropy. It is a fundamental law of the world.

For those unfamiliar with entropy, it was a concept originally developed by Rudolf Clausis. Entropy displays the desire for systems (and in this case your business) to move toward disorder and chaos. It impacts everything around us. It is the reason our universe is expanding. It is the reason we eventually die. It’s the reason businesses fail. 

Disorder is the desired state of the universe and entropy is king.

Entropy, however, can be used in our favor. You see, disorder is energy and if controlled, it is converted into potential energy, which when liberated accomplishes miraculous tasks. It launches a rocket into space. It propels a cheetah to 58 mph when pursuing prey. It transforms a small online book marketplace into a $1.5 trillion multinational technology company. 

Simply put, navigating entropy is the silver bullet for success. 

Whether it is combustion, evolution, or market capitalization, traversing, and ultimately transposing the chaos relies on the creation of acceleration. Entropy is friction; a constant negative force, which can only be counteracted through a more powerful increasing positive force. Or in scientific terms, acceleration.

From a business stand-point, acceleration is what every founder, employee, and VC want. It is the release of a novel, disruptive product. It is a seamless expansion into new markets. It is the positive, focused, motivated attitude that permeates across your teams. It is a hockey stick growth chart. 

Effectively, acceleration is the efficacy and execution of your business strategy. 

It is the ability to understand the chaos surrounding your business, convert it into potential energy, and develop a system to harvest that energy. And while this may seem intangible, creating acceleration for your business is the responsibility of one core function, Operations. If Entropy is Goliath, Operations is David.

However, the success of your Operations teams relies on an acceleration aligned structure. And while countless business lectures have been dedicated to this topic, I prefer to pull my learnings from the Law of Motion developed by Sir Isaac Newton. If you are going to battle with a fundamental law of nature, it only makes sense to leverage another scientific law. Fight fire with fire, right?

Anyway, in Newton’s research he broke acceleration into three fundamental elements:

1. Direction. Acceleration is a vector and therefore must have a direction. Is it negative or positive? Up or down? Are you making money or losing money? 
2. Magnitude. This tells you the speed. It tells you how fast you are going in the direction defined above. This is your Annual Run Rate. 
3. Rate of Change. Magnitude and Direction alone is velocity. Introducing the rate of change converts velocity into acceleration. The rate of change tells you how quickly the velocity is changing. It is this added layer of complexity that provides invaluable insight into business growth. It is, essentially, your ability to scale the business. Year over year (yoy), quarter over quarter (qoq), or month over month (mom) are all common intervals for displaying the rate of change across your company.

So the purpose of this physics lesson is not to point out the obvious. Of course, a $50M ARR business growing at 250% yoy is accelerating. No one will argue that. The goal is to show you how to create acceleration in your business through orienting your Operations structure against these key tenants, which I will refer to as pillars moving forward given their incremental role in supporting business growth. The framework is displayed below. 

Where these pillars sit within your business is less important. Some companies organize them under a centralized business operations team (most effective for small to mid-sized companies). Other companies build these pillars within each functional org (most effective for companies with several products / business units). Others have all three pillars existing as separate teams (most successful for large, established companies). Regardless of your company’s structure, the importance lies in:

1. Fully investing in all three pillars including hiring specialists and allocating substantial budget
2. Clearly outlining the focus and scope of each pillar
3. Aligning objectives, incentives & culture across these pillars to enable collaboration
4. Developing and prioritizing collectively to drive strategic alignment

Let’s now go a layer deeper into these three pillars.

Analytics & Insights

Goal: Identify the right direction for your business

How: Answer questions to understand business gaps & opportunities

Analytics & Insights is the foundation of acceleration and business strategy. Your company could be sprinting a million miles a minute, but if the direction is wrong, entropy will ensue. The right direction for your business is determined by answering questions.

• Who is our ideal customer?
• Where do we find our customers?
• How much should we charge for our product?
• What market should we launch next?
• What is our break-even point?
• What KPI should each team focus on?
• How much revenue will this customer cohort drive?

These are all projects for your Analytics & Insights pillar. Give them the question and let them run. The output is an answer to the question (or sometimes a list of more questions). It is not a process or a program or business solution. It is an analysis, a model, a report, or an additional data field. Remember, the goal of this function is to identify the ideal direction for the business. You don’t expect your engineers to make sales cold calls, so don’t have your analysts implement programs.

The effectiveness of this pillar relies on several factors:

1. Start with a list of questions. If you start with a process or program and ask your analysts to prove out the value, you have just broken the golden rule of the scientific method. Don’t get me wrong, you should start with a hypothesis, but all too frequently leadership has their mindset on a solution before the analysis has been done. This could result in steering the ship toward the eye of the storm.
2. Prioritize assuming you get an answer. Analytics & Insights’ budgets often get slashed because their projects lack the direct tie to revenue impact. And yes, frequently the output is not an answer to the question, but a set of additional questions. With that being said, you must prioritize assuming you get an answer. Because if you do, the business impact will follow. How much revenue would identifying your most ideal customer segment drive? How much of a competitive advantage would you gain through identifying the most opportunistic launch market? How many new customers would you acquire from finding the most effective marketing channel?
3. Let them work. Analytics is a gruelly job. You often take one step forward just to take two steps back. Your day is filled with constant frustrations of incomplete data, SQL schema errors & excel quitting without saving. Kicking off a project is a massive brain exercise in itself. Not to mention, most analysts are frequently learning. If you are prioritizing questions correctly, then most of their projects have never been done before, so research is a key focus for any good analyst.
4. Avoid analysis paralysis. Every analysis and therefore business decision is rooted in assumptions. Historical behavior assumptions. Future projections. Commonalities with other situations. You have to accept this and not expect a 100% guarantee from your analysts. Challenge the assumptions and make sure they are strong, but for the purpose of that analysis, you must take them as facts.
5. Invest in specialized analysts. Having employees who can pull reports and create pivot tables is a great start, but I’m talking about investing in true analysts. The three main roles are:

• Operations Analysts: These functions develop robust reports for company processes, customer-facing insights, and user / customer experience. They are usually responsible for building out the sales funnel, customer growth metrics, feature-level insights & productivity metrics.
• Strategic Analysts: These individuals are responsible for modeling out the business. They leverage assumptions based on high-level strategic decisions and bottom-up trends to model different scenarios for the company. What happens if we double our sales team? How would a new pricing strategy impact customer retention? What are the levers to drive increasing ROI?
• Data Scientists: These are your hard-core, technical experts. They are very proficient in SQL, R & statistical modeling. They can transform large quantities of raw data into meaningful insights. This function is predicting customer behavior, developing customer segments, and analyzing statistical certainty for your big strategic bets. 

Programs & Process

Goal: Provide velocity to your business

How: Solve the highest impact gaps & opportunities 

If Analytics & Insights is the bow, Programs & Process is the arrow. They take all the learnings from that team and sprint towards a solution. This team is scrappy and has a focus on immediate business impact, but still maintains a pulse on the future. In other words, this team is your firefighters, but immediately after putting out the fire, they start scoping the schematics for a sprinkler system. They are strategic, analytical project managers. 

This function prioritizes business challenges, develops a solution & sees it through to completion. They do not stop until the targeted KPI moves in a positive direction. If their initial solution does not work, they have several more ideas queued up. They obsess over their assigned business problems. Their expertise lies in creative problem solving and execution. 

The effectiveness of this pillar relies on several factors:

1. Invest in Program Managers. A program manager has the execution prowess of a project manager but is analytical, strategic, and technical enough to do the development and implementation. They are phenomenal context gatherers, confident communicators & process-oriented thinkers. They can speak an engineer’s language, but also pitch a solution to leadership. Almost all Program Managers have a strong analytical background mixed with on-the-ground operational experience.
2. Prioritize business challenges. Do not try to prioritize solutions. Prioritize the business gap or opportunity. Leverage your Analytics & Insights team to identify the business gaps and opportunities, assign it to your Program Manager, and let them work. They will context gather and identify the best solution for the business.
3. Provide clear ownership & runway. Once a business problem has been prioritized, give the Program Manager complete ownership and runway. Their success lies in their ability to identify a solution and drive the implementation. Leadership should clearly communicate this ownership. Frequently these programs will require the Program Manager to work with functional leaders, specialists & front-line employees. Effective collaboration with these stakeholders is imperative.
4. Facilitate context gathering. Good Program Managers will conduct several rounds of interviews with stakeholders before outlining a solution. They will need to pick apart every aspect of the current business process to identify the ideal path forward. Leadership should help build these connections between teams and levels. 
5. Integrate retrospectives into program development. The goal of this pillar is to move a KPI through a program or process. Did the solution impact that KPI? If so, by how much? If not, why? How could there have been a stronger impact? While this might seem counterintuitive to their goal of driving continuous business velocity, this exercise will enable them to architect more effective solutions in the future. 

Systems & Tools

Goal: Consistently increase the velocity of your business

How: Scale your solutions.

Sticking with the bow & arrow analogy, Systems & Tools is a crossbow. This pillar drives scale across your business solutions. It is the rate of change transforming your company from a fast-moving company to an accelerating company. 

This function is often referred to as Business Systems, Product Operations, Technical Project Management, or Internal Business Tools. The roles include: 

• System Program Managers who possess a high-level understanding of your system environment and lead the architecture of these projects
• Admins who are experts in specific systems and shoulder the majority of the execution work
• Developers who are proficient in declarative programming languages and drive the technical workstreams
• Technical Project Managers / Operations Managers who frequently partner with engineering and more technical stakeholders (both internal and external) to support the management and release of new products, features, and integrations

And while Systems & Tools can drive exponential growth for your business, it comes with a caveat. It is expensive and resource-intensive. These projects frequently involve purchasing SaaS tools, partnering with Product/Engineering, and require long implementation timelines (anywhere for a few weeks to a few quarters). 

The success of this pillar relies on the right direction (Analytics & Insights) and a foundational solution to build upon (Programs & Process). The initial program is imperative to understanding and prioritizing the largest opportunities for scale. All too often, companies invest in scaling the wrong parts of their business. This results in Business System Teams (and frequently Product Teams) burning cash with minimal business impact.

Development of scale through your Systems & Tools pillar relies on several factors:

1. Start with a “hacky” process. This proves out the business need and ensures you are investing in scaling the right solutions. It also provides invaluable early learnings that can drastically improve the initial system build and therefore drive a more immediate business impact. These solutions take a while to build and without an initial “hacky” process, these early-stage observations will occur much later (and frequently too late).
2. Develop in MVPs & VXs - Recording and implementing constant feedback (both from KPI trends & end-users) is vital to the success of scaling your business solutions. Releasing fewer features in more iterations will prove to drive a higher impact. Start with an MVP (what is necessary to make this function at the same efficiency as our current solution). Then scope and develop V2. Rinse and repeat. This is not a novel concept and is leveraged by the most successful Product and Ops teams. Check out Eric Ries’s The Lean Startup if your company is not currently operating in this manner.
3. Protect their bandwidth. This pillar drives value through developing systems, implementing tools, and integrating processes. Every minute they spend in meetings discussing unproven business needs detracts from the impact they can drive. It is the responsibility of the other pillars to prove the value and prioritize.
4. Implement a Task Management System & sprint process. For anyone who has ever developed in a cloud-based system or implemented a sales tool or pushed data through an API endpoint, they know how tedious this work is. The devil is always in the details. A task management system paired with a regular occurring sprint process (2 weeks is usually ideal for Ops System Teams) ensures nothing falls through the cracks, provides visibility to other business stakeholders, and enables this pillar to balance several priorities at once. Check out my article on team productivity to learn more about Task Management benefits.
5. Consolidate tools, align processes & organize your ecosystem. There’s a reason cars come with an operating manual and bicycles do not. The continued investment in scale will lead to more complex and integrated solutions. This is a great thing for the business, but this situation attracts over-engineering potential. Solve for this by

• Consolidating your tool stack. There is a specific tool for every operations niche and you don’t need every single one. Find tools that fit your current business needs and work with them to adapt their solution to fit your future requirements (trust me, they will appreciate the extra revenue). 
• Building new processes on top of existing processes. This will require close alignment across system teams and will frequently elongate build timelines but the investment here will drive future efficiency gains, promote stronger solutions, and assist with solving bugs. A decentralized ecosystem is a breeding ground for entropy.
• Mapping out your systems. Having an accessible, organized view of all the system and tool integrations is essential to building out the Systems pillar. This will facilitate an integrated building approach and drive context for stakeholders and new team members.

Closing Thoughts

These three pillars work in perfect harmony to drive acceleration for your business. They are responsible for developing, executing, and supporting your business strategy. And just like with any structure, removing a foundational pillar compromises the integrity of the architecture. Therefore, if you want any chance of defying the laws of the universe and growing a successful business, each of these elements must exist in your company. 

The push toward chaos is a force as real as gravity and without an intentional focus on direction, velocity, and scale, it will degrade your business. 

Entropy is an unstoppable force, but Operations is omnipotent.