What does ‘operations’ mean at a tech startup?
I’ve been working in ‘operations’ for a while now and I’m yet to find a consistent definition. I thought it’d be helpful to spell out my interpretation of it and associated terms, for anyone non-technical looking to join a tech startup on the ‘business’ side of things, with a view to helping you identify roles that suit your skills and interests.
I’ve put this together from my experience of being an Operations Consultant at Newton Europe and Head of Operations at Jukedeck — a London-based AI Music Startup. It also reflects the experience of my peers at other startups.
The rough format is:
- Intro to Porter’s Value Chain
- Overview of the three broad ‘operational’ areas
- How your role might differ with company type
- How your role might differ with company stage
Note: this is just my opinion, I suggest asking individual companies how they view the role you’re applying for and what you’ll be doing day-to-day.
The business value chain
It’s helpful to start with Porter’s Value Chain - the classical representation of a business and its activities. For the purposes of this article, it’s useful to focus on the split between the core value chain (in green) and the supporting functions (in yellow). I’ll use this as a basis to explain the different operational roles at startups in the following sections.
There are three broad areas your role might fall into:
1) Operations — the supporting functions
Remit: support business operations, and keep the wheels turning day to day.
At Jukedeck my initial scope as Head of Operations covered what’s called ‘Firm Infrastructure’ and ‘HR Management’ on Porter’s Value Chain. These are roughly:
- Finance (Operational): ensuring bills are paid on time, sales invoices are issued and payment collected, managing an outsourced accountant/bookkeeper, setting up software (Receipt Bank, Xero, Quaderno, Paypal, Stripe, etc), managing employee Expense Claims, managing schemes such as Cycle to Work, paying Payroll, filing quarterly VAT Claims, claiming back R&D Tax Credits if appropriate
- Finance (Management): monitoring cash burn, ensuring accurate and timely reporting to the board and founders, setting budgets / forecasts
- Legal: working with lawyers to ensuring contracts are in place with employees, contractors, suppliers and customers. Ensuring the business meets all its regulatory requirements (e.g. Auto-Enrolment, Data Protection), and has necessary insurance in place (professional indemnity, public liability)
- HR: implementing recruitment, development, appraisal, compensation and retention schemes, and generally ensuring the team functions effectively (making people talk to each other)
- Office: ensuring the team has adequate facilities, equipment and software
These functions support delivery at all stages of the value chain. You know you’re doing well if you’re relatively invisible - everything should just work. It covers everything fulfilling regulatory requirements, to maintaining employee happiness levels. You could also be responsible for ensuring these functions scale with the growth of the business — for example building a hiring pipeline to match the forecast business growth.
2) Business Operations — the customer value chain
Remit: ensure the business is executing well, establishing systems and processes to continuously improve this core delivery of value to customers.
If you’re working in Business Operations you’ll most likely be improving the core value chain or ‘Primary Activities’ on Porter’s image, i.e. more efficiently and effectively delivering your product or service (read: increase revenue, reduce costs). You’ll be working in one or more business units (e.g. Sales, Marketing, Distribution) to optimise its systems and processes, maximise revenue, minimise cost and deliver outstanding value to the customer.
For example, you could be working with:
- Sales: to implement targets and meeting structures that improve their ability to deliver on business goals
- Marketing: to optimise their inbound funnel, increasing user or revenue conversion rates, whilst lowering marketing spend
3) Strategy — steering the business to maximise value (for all stakeholders)
Remit: define the future business, to maximise competitive advantage over the long-term.
This section could use an essay of its own so I’ll only touch lightly. In a small company its highly likely your operational role will have a fairly sizeable strategic element. This could include business planning (like market research, modelling and forecasting) and implementation (like organisational structure, setting goals and targets, corporate finance). The diagram below shows a rough overview of the activities involved in strategy formation and implementation.
Company type affects the definition:
Technology companies tend to fall into two rough categories, ‘technology-intensive’ and ‘operationally-intensive, technology-enabled’. This changes the type of work you’ll probably be doing.
- A technology-intensive company (think: Twitter or Facebook, on the Feed Ads side of things) is operationally light compared to a traditional business like manufacturing. You could be spending your time in the supporting functions, working with the Sales & Marketing Function or Customer Service to ‘optimise the funnel’ (read: attracting, converting, retaining customers). You could also focus on the core product — either working to improve stack service levels or lower their cost, or even making a move towards full Product Management.
- An operationally-intensive (tech-enabled) company (think: Amazon’s E-Commerce or Apple’s Hardware Divisions) has a much more complex value chain, and hence you’ll focus there more. You’ll probably have your hands full optimising this as a whole, or working in one stage of the value chain e.g. inbound, logistics, customer service.
Again, this section could have an essay of its own so I haven’t dived into much detail.
Company stage affects the definition:
I’ve spent most of my time at a pre-Series A company, and have been able to compare with friends at larger companies for their take on how company stage and size affects the scope of operational roles.
At the most basic level you’ll be stopping the wheels falling off the bus so everyone else can concentrate on building the product
- At an early stage company (pre-Series A), operations — as a general rule — should serve to maximise the productivity of the rest of the business in the pursuit of product-market fit. At the most basic level you’ll be stopping the wheels falling off the bus so everyone else can concentrate on building the product. It’s broad in remit, flexible to the skills and interests of the individual, and relatively unpredictable. Your role will likely span all of the supporting functions. The role could also expand to include a heavy strategic component — market analysis, product management, financial modelling, raising finance.
- Once a company’s found product-market fit, usually around Series A and beyond, the role tends to be defined differently. To continue my poor analogy, this is much more about keeping the bus running on time, then get it running quicker, more efficiently, with lower fuel consumption and a higher passenger count. Your role will likely fall into the business operations area I describe above, with a strong influence on strategy.
- As the company scales up, through multiple funding rounds, you’re more likely to either a) join a specific function such as Marketing, Finance b) work in a centralised unit for Business Analysis / BizOps & Strategy, or c) own a stage of the value chain (Logistics, Distribution, etc).
Operational roles vary massively depending on the company type and stage.
They tend to fall into three main areas:
- Operations — the supporting functions
- Business operations — the value chain
- Strategy—steering the business to maximise stakeholder value
Hopefully that’s given you an overview of the non-technical, ‘operational’ areas of a startup, and helps you hone in on what you’re really interested in.
I’m trying to practice my writing and this is one of my first articles - any feedback is welcomed! You can get in touch at hi[at]rich.fyi