Execution + Revenue Are How

"Execution eats strategy for lunch."

These words are famously attributable to Fred Smith, the founder and CEO of FedEx. Execution makes strategy tangible. Ops is where and how execution gets computed into actions, processes, employee roles, information tracking, analysis, and delivery of the products and services the strategy was designed to sell the most of at the best price possible.

But all of this, every item to be executed against, and every operational department to be hired for, depends on the company's having the resources to finance these directives.

Revenues are the resource. Revenue is how Ops goes live. And Ops is how companies make the best use of every resource dollar the company receives.

Over the last 15 years, operating companies and working with founders and owners to build their operational strategies, I have learned that Ops ultimately becomes the organization's biggest driver of financial optimization.

Better Ops is how you grow margin when competing in a space with razor-thin margins. As I've said before, Ops is how you enable the production of your product to be cost-efficient enough to hit the price that Walmart needs to take your great idea nationwide. If your brand and the quality of what you do are significant enough to convince consumers to pay luxury prices, Ops is how you grow margins that will be the envy of every founder and owner.

Better Ops is about better money. Here are some of the ways I've seen Ops improve financial outcomes for companies:

1. Better Ops creates better processes when companies pick, pack, and ship their goods. Better pick, pack, and ship creates more accurate deliveries, which reduces the number of returns, drop ships, and revisits a company must make to get the customer what they ordered in the first place. Money is saved every time one of these less-than-optimal outcomes is avoided.
2. Better Ops creates better problem-solving for customers. In a customer's eyes, a company's brand mainly depends on their experience with customer service when something goes wrong. Every fire that needs to be put out for a customer is an opportunity for the company to create a return customer, a more loyal customer. Better customer service training, process design, and internal communication systems with other departments create better and faster positive outcomes. In this scenario, money is saved through better execution and new revenue is generated by creating repeat customers.
3. Better Ops automates redundant tasks to limit human error during meticulous processes and to use human time within the company to be used for the tasks that best fit the team's skills and complex thinking that people can execute better than software. In this case, the most significant opportunity is eliminating redundancies. Doing this for high-volume tasks enables organizations to hire fewer people as they scale, as the output of one person in your billing department or purchasing department can be exponentially amplified.
4. From a human resource management perspective, the goal of Better Ops should be to slot every team member in the right seat on the bus (thank you, Jim Collins) and then work to use technology to improve efficiency and automate tasks that don't need to be done by people. You should thoroughly review the best skills of each team member and slot them into or create roles that match their best abilities. Yes, better Ops can be about headcount reduction, but in a growing small company, it's less about reducing headcount than avoiding the need to hire for my positions. Getting this piece right is one of the best ways an organization can reduce costs and create more profit from the revenue.
5. All of these areas of operational focus serve to create a company that is not only more profitable but more valuable. Even when gross margins are razor thin, this is how you grow your EBITDA. Even when production inputs are expensive, this is how you have the dollars to keep investing and, over time, create a highly profitable set of processes and operational dependencies to run your company. Even when sales have slowed, and you are struggling to land your next big customer, this is how you grow profitability and become a more valuable company.

Yes, execution eats strategy for lunch. Great execution and great operations also enable many strategies to be the right strategy. Better operations enable better execution for every strategy, which in turn grows the value of the resource called revenue so that you scale on the strategy that works or pivot to something that might work better.

Better operations create better money. Better use of revenue as a resource is how you grow, scale, and create a more valuable company.

John