Leadership6 min read

The New Frontier: Operations-Led Growth

Photo for Mike HayesMike Hayes

When you’re thinking about how to best grow your business, it’s easy to debate modern Product-Led Growth approaches - relying on the products themselves to draw customers - versus traditional Sales-Led Growth strategies - hinging success on the power of an effective sales force.

In leading VMware’s worldwide operations, I’ve come to believe the product-versus-sales conversation misses a critical point. High performing organizations are only high performing if they recognize the power of Operations-Led Growth.

Operations has been traditionally (and mistakenly!) dismissed as merely a lever for cost savings. Too many organizations think of operations in terms of efficiency or eliminating redundancies. Expert organizations see operations as a true growth driver. This is especially the case in today’s world, where expectations for the ease of doing business are higher than ever before, and where data is making things possible that would have felt like miracles just a few years ago.

The world doesn’t (yet) talk about Operations-Led Growth, but it is the next frontier in customer value, profit maximization and shareholder return. 

Here are four ideas to help realize the power of Operations-Led Growth.

Operations is a Goldmine for Non-Linear Growth

We all understand the big-picture goal: a business that grows exponentially. And yet, so much of our thinking on the operations side is linear in nature — needlessly capping our growth potential.

I was in a conversation recently with a CEO of a business that just hit a $1B valuation, and he was trying to figure out how many more salespeople to hire to best accelerate performance. That sounds like a simple question for sales or HR leadership, but it’s actually not. Sure, we can take the straightforward approach, evaluating revenue quota per salesperson against the amount of investment we want to make, but the smarter way to look at this question turns it into a strategic operations issue: how can we make each salesperson far more effective because of the way the rest of the business operates? 

In the end, I advised my friend that he should certainly evaluate risk and return relative to the sales force, but the focus should be on how to maximize profit regardless of the size of the sales force. Maybe what’s needed isn’t more salespeople, but better policies, processes, and technologies to leverage those salespeople exponentially, and be able to raise their quotas ever higher. 

For instance: 

  • What content can be created so potential customers can be automatically informed, saving the salespeople massive amounts of time and improving win-rates?
  • What opportunities exist to speed up the sales process, so the salespeople can do more in less time? 
  • How do you bring new sales reps up the curve as quickly as possible - especially in today’s high attrition environment?
  • How do you systematically harness what’s working for the most successful salespeople, in order to more effectively arm the rest?

At scale, you inevitably need to systematize — to become 2x larger, or 10x larger, you can’t grow costs (like salespeople) by 2x or 10x along the way. Instead, you need to find solutions that aren’t just good for one but good for many, and that lifts the entire organization up.

The kinds of questions my friend had to ask were ones that would affect the entire business, from end to end — and siloing them in the sales department meant missing out on tremendous opportunities. Where do those opportunities emerge from? The next three ideas provide some places to look: data, process, and the entire operations system underpinning an organization.

Operations is How You Benefit from the Data Revolution Happening Around Us

I don’t need to re-tell the consumer-first story about the power of data that pretty much everyone understands by now. Whether it’s Amazon surfacing product recommendations, Spotify knowing the music you’ll like before you’ve ever heard it, or DoorDash making it easy to add those dumplings onto your dinner order, we get it: data about the consumer leads to more consumption.

The problem is that we don’t always carry that story through to the B2B arena. It’s easy to fall into the trap of thinking the old ways are still the best ways when it comes to selling to enterprises — but data has just as much to teach us here as it does in the B2C space. Good, rich, unified data across your enterprise drives insights, and speeds and future-proofs any organization’s agility. 

Most of us understand how to use data to see where time and money are slipping through the cracks — and how to recapture those losses. But that’s just the cost-cutting side of things.

Operations-Led Growth can: 

  • Surface world-class data insights that tell you how to turn existing customers into deeper customers and non-customers into first-time buyers. 
  • Identify which products and services are being used together — and how to upsell and cross-sell to the customers not yet recognizing the need. 
  • Provide a feedback engine from sales and marketing back into product design and engineering so you can build the products and services your customers value most.

And that’s just a start. The right insights can turn IT and engineering into growth partners and not just cost centers. They can feed off the information coming back into the system and respond directly to customer needs — as long as the data is robust, accurate, and actionable. That’s what’s so critical about rich infrastructure, and why it has to be a huge focus for operations.

Operations is the Vehicle for Smart Processes — Leading to Far Stronger Outcomes

It’s popular to dismiss “process” as the gateway toward needless bureaucracy, but that’s thinking about it in exactly the wrong way. Good process doesn’t lead to more checkpoints and bottlenecks. Instead, it enables simplicity and clean workflows that eliminate as many stopping points as possible. (And simplicity scales far more effectively than complex and broken systems.)

Good process is about faster decision-making — and more principle-driven decision-making — so that even those who disagree with an outcome still trust how a choice was made and remain committed to the larger cause. Good process is also about spending less time on corporate minutiae and more time on things that matter — internally but also for customers and business partners externally.

Internally — we can go back to the sales example. Maybe salespeople are failing to optimize their efficiency because they’re spending 40% of their time on administrative work, which is not only wasteful but fails to take advantage of the skill set they were hired for. If you can put processes in place that save each salesperson six hours a week, you not only get those six hours back, but you give them each six extra hours to actually do the things they’re best at. At VMware, we’ve modeled it out - of course it depends on assumptions but a low/high sensitivity analysis shows us every day we give back to the sales force adds $2.5 to $3.2M in top line. In effect, good process frees people’s time from administrative bloat, making them happier and more productive, encouraging them to stay at your organization longer, grow their skills, and cultivate stronger talent behind them.

Externally it’s exactly the same story. Customers freed from barriers and bottlenecks can spend more time actually engaging with your brand, understanding its value, and ultimately buying more product. Why does Amazon shine? Because it’s so frictionless to buy, sell, return, track your order and so much more. But what looks effortless on the front end requires an incredible amount of coordination on the back end, between vendors, warehouses and more. It requires operations at the elite level. This is even truer — and harder to achieve — in the B2B space. We’ve all been mired in corporate processes that make procurement a nightmare. We’ve all spent hours dealing with legal, with finance, with salespeople who can’t execute what you need. Imagine if all of that went away – at least on one company’s side - and it was less of a bureaucratic nightmare to procure products and services.

We all naturally gravitate toward pleasant experiences, especially in a world where so much is trying to grab our attention. When you make it easy for people to do business with you — an operations issue for sure — they will buy even if your product isn’t breaking new ground (but even more so if it is!). If it’s seamless and quick, growth and profit will follow.

Operations is the Glue That Fits Together the Entire Organization — Guiding Everyone in the Same Direction, Paving the Way for Growth

Organizations that don’t think strategically about their growth drivers miss the opportunity to strike the optimal balance between product-led, sales-led and operations-led growth. In essence, good operations is about the entire system working together. The reality is that the whole of an organization is greater than the sum of its parts. Siloed decision-making, siloed priorities, siloed budgets, siloed data and siloed accountability are major blockers for growth, whereas an effectively connected organization is unstoppable.

What people fail to recognize is that operational discipline is the engine of innovation. Great ideas — the kind that drive exponential growth — are too often isolated to small groups and individuals. But making ideas a reality requires the right data and the right people. On the data: good, consistent, shared data, allows everyone to see the same information, and chase the same goals — which makes it possible to streamline processes and make business easier for customers and employees alike. On the people: bringing ideas to fruition in a company requires the right people to get behind them and drive them forward — meaning cross-functional buy-in, which is only made possible when: 

  • Resource allocation is clear and sensible
  • Decision-making is clearly identified and unified, and 
  • Priorities are consistent across the entire organization.

Part of what creates this operational discipline is culture. We all want to build strong teams — but that’s just a buzzword. What building strong teams means in reality is an organization where everyone is focused on the same goals (the right goals!), armed with the tools to reach them, and unleashed to achieve their best. 

Good operations allow you to actually solve problems, because it means that someone is empowered to not just see a part of the picture but understand all of the details. Operations is really about seeing the system as the interconnection of technology, process, and policy, and so when issues arise, there’s someone equipped to address them.

These four ideas are just the start for an Operations-Led Growth mindset. As competition grows across industries, and as customers’ expectations for service increase, businesses who see operations as a growth driver (not just a way to trim costs) will come out on top. Operations may not grab as many headlines as new products or new tech, but in the end, it’s how you excel, and I see it as the next big difference-maker no matter your industry.