Lesson 15: Buildings Operations Teams

Building Operations Teams

Before building your operations team, decide what you mean by operations. In that way, the title of this section is a trick. Operations are manufacturing, supply chain, production, inventory management, shipping, and a bunch of revenue generating activities. When finance, HR, recruiting, etc. are the focus, we are talking support operations.

Much of the difference depends on who you are talking to and the industry they are from. For example, engineering in a tech company is hardware/software development, QA, and even customer service, aka technical support. A traditional manufacturer who makes widgets has an engineer that maintains, sets up, and operates heavy machinery if it requires a high level of skill. Engineering may just be skilled labour at the manufacturer where a team of people who learned on the job are led by someone who got their mechanical engineering degree.

For a technology company, revenue generation can come out of engineering, especially if you sell software without a physical product. Hardware technology companies have teams for design, manufacturing (outsourced), and shipping under the operations umbrella. Long story short, know which one you need when building the team.

For support operations, it might can be tempting to save by hiring one utility player who can do finance, some HR, and some recruiting using external service providers. While this is a viable way to go, you are probably better off going with individual contributors with experience in those fields. Hire an FP&A associate since an analyst requires a knowledgeable manager. Hire someone with experience in just HR. Also, hire someone to do recruiting if you need them internally. When you expand the team, add someone who can do individual contributor work and lead a team. If you hire people with a foundation, passion, and intelligence, you will come out ahead for less.

You are expanding total work hours available when you hire more people instead of one utilitarian. You might think you are hiring less quality but don’t confuse breadth for quality. One person who can do three different roles still only has 24 hours in a day. Therefore, support operations always end up on fire despite having high level players. The support operations department is chronically understaffed, particularly at engineering-heavy firms. Even as they grow, they add more high-level players instead of adding six functionaries. You need that high level support operations manager when the work becomes highly complex, not when there is a lot. You hire a high-level specialist to get specialized work not to get more work done. Contrast this approach to the data team approach where you start with a solid utility player and build out the team as it gets more complicated.

The key difference is that as data evolves, the specialists focus on smaller, more specific, and specialized things. Support operations specialists are for the bigger picture. If you think about the roles, you can determine which approach to use for each department. Support operations are heavily task-oriented in terms of work much like assembly. However, design, much like data, is less about checking off tasks and more about specialized knowledge, creativity, and generating insights. The work is driven by milestones and breakthroughs. There is no standard accounting breakthrough that advances things. Usually, the breakthrough is discovering the source of a mistake, but if everything is rolling forward smoothly, it is just about finishing the task.

Coming back to support operations, you need a CFO when you are clearing millions and preparing for an IPO to run finance and much of support operations. Early on you might need two accountants, not one, just to stay on top of income and expenses, and you may also need someone who knows capital budgeting. The CFO can do all of that, but the CFO has eight work hours a day. The three-person team has 24 hours, and if they are good at their roles, they will get that work done. The CFO comes in when things get even bigger and the CEO can no longer manage that team, and specialized knowledge is required.

This section is not about how to build the other operations team, because building that team overlaps with both the engineering and data teams. Either way, it’s important that you know which one you need when building the team.