Editor’s note: This is a series of stories brought to you by Julius Bachmann, a Berlin-based founder coach, and Joyce Mackenzie Liu at Pegafund, providing hands-on advice for how to build and define a startup’s operating model — feel free to reach out to them if that’s something you need. The articles are written exclusively for tech.eu and edited independently by our team.
For every scale-up, having a well-defined operating model is key to growth. This operational design tells you how to deliver value for customers, clients, and investors, and guides day-to-day decisions around staffing, resources, and strategy. It gives your teams a roadmap and a clear sense of direction.
Recently, I sat down with Jan Willem Meijer, Director of Commercial Operations at social marketing platform Falcon. Falcon is a 400-person company with annual recurring revenue around €40 million, and over 2,000 customer logos. We discussed how Falcon has developed an operating model to help channel growth in the right direction, and how other European scale-ups can do the same.
Jan had a lot of great tips for any scale-up looking to stake their claim in the market, from designing an operating model to help people thrive in times of crisis, through to getting a holistic view of company growth and performance.
We kicked things off by discussing Falcon’s recent acquisition history.
“The best confirmation we could get” — Why operating models matter in company acquisition
Falcon offers a unified SaaS platform for social media listening, engaging, publishing, and managing customer data. Founded in Copenhagen in 2010, the company was acquired by US firm Cision in 2019. Recently, the private equity firm Platinum Equity acquired Cision.
As Jan explains, this process of acquisition offered a chance to put Falcon’s operating model to the test. “For me, this was the best confirmation we could get about how well we are running things,” he says. “Since we were initially acquired, the investors realised we were managing things too well to be messing with it. They recognized how smooth and well-integrated our systems are, and so they’re leaving everything in place.”
“This means we have a lot of freedom to continue our role as the commercial operations team, in terms of processes, resource allocation, and strategies for growth.”
Besides providing people with certainty when it comes to resource allocation and growth strategy, what does Falcon’s operating model look like in practice?
“Answering the hard questions” — What an operating model means in practice
As helpful as it is to have an operating model to guide company growth, many companies don’t have a consistent definition of what their operating model means in practice. This can make it tricky for people to find the guidance they need around their daily responsibilities.
For Jan, Falcon’s operating model helps their people to ask - and answer - the hard questions.
“Initially you just try to answer the basics, like sales and customer conversion rates, opportunities to secure new business, all of the usual things. But we apply our operating model to almost everything. For example, our model helped us with our recruitment funnel, through showing when we needed to bring people on board to reach certain growth targets.”
Having a great operating model also helps significantly with long-term forecasting and planning. For team members managing areas of change and ambiguity, such as recruitment and onboarding, this can offer helpful guidance and direction.
“We’re working on our strategic plan for the next few years,” says Jan. “Our operating model helps us decide on our approach to marketing, recruitment, training - the whole funnel. That’s the nice thing about a connected model. You can catch problems before they happen and adjust quickly, rather than telling the CEO about an issue on the last day of the quarter.”
But what should companies do if their operating models start to become too complicated?
“The complexities can be distracting” — How to stick to the basics
Having a great operating model can help answer a lot of questions. But sometimes, says Jan, people can go a little overboard with the level of detail.
“The complexities can be distracting,” Jan explains. “This is where some people can go wrong with their operating models. You build a crazy spreadsheet, and you lose track of the chain of inputs and outputs. If you keep things basic, you can see the people and the processes behind the numbers.”
“You should be able to map out the core mechanics on a napkin within a minute. This way, you can see where you might have made a mistake, or where the data might not be adding up. The world isn’t perfect, and things change. But if you can understand the basic cause and effect inside the numbers, this helps you make better decisions.”
This focus on the fundamentals can really help people to focus on the things that really matter. It’s especially helpful, says Jan, when your teams are juggling a lot of different stakeholder interests at once.
“There are always so many decisions to be made, and so many stakeholders to be managed. If someone is focusing too much on the distinction between a conversion rate of 10 or 10.1, they’re probably missing the point. You have to lift your understanding to a higher level, and focus on the broader trends in the market, rather than a specific historical number.”
“At Falcon, we’re using Quarterly Business Reviews with all teams to identify areas for improvement. We use numbers as the starting point for the conversation, but the key to to get to actionable objectives. That is what drives change in the end.”
On top of these actionable objectives, a good operating model can also help people make the most out of moments of crisis.
How a good operating model helps in times of crisis
Like pretty much every company around the world, Falcon is working through what the current COVID-19 pandemic means for their business. Their operating model has helped to highlight what this could mean in the long term, and how things may continue to change.
“Our assumptions have had to change,” says Jan. “For example, let’s say the number of meetings is going down around the world, and we have to offer a greater discount to bring new clients on board. With our models, we can factor in these changes. It’s quite simple to play around and see what the range of these effects might mean for us.”
As part of their planning process, Falcon looked at a number of different plausible business scenarios both during and after the COVID-19 pandemic. “By having clear early funnel metrics distinguished, like connect rates and opportunity creation, we could see early on what the potential revenue impact might be as a consequence.”
As with any planning process, the question of which data to use is key.
Access to the right data is crucial
As Jan explains, the data requirements for revenue and growth planning always depends on the type of question you’re trying to answer.
“We have very stable data for a couple of years, but how we use this data depends on the question at hand. It’s not necessarily a requirement to look back too far - you just need a period that you feel is statistically significant in terms of volume.”
One other thing that really helps people to plan and strategize? An integrated data system.
“Having an infrastructure connecting the different parts of the customer lifecycle lets you validate key data points,” says Jan. “When you consistently gather specific data points along the way, you build a full 360 view of the customer - from their first interaction with marketing, to their contract renewal, and how these all work together. By having clear points where this data is added, you know which data you can trust, and which data may not be reliable.”
And speaking of reliability...
Why the right software stack makes all the difference
As Jan explains, another key element of Falcon’s operating model is about investing in the software tools people need to execute on their responsibilities.
“A clean CRM is the key,” says Jan. “We use Salesforce. For marketing we use Marketo, and for our inside sales team, SalesLoft. We’re looking for a 100% match between the systems in terms of information flow. We also use a customer success tool called Gainsight, which helps us get a complete picture of what our customers need through different playbooks.”
“We also use a BI tool called Looker to get a view of all the data across this ecosystem. Though really, if you have a CRM running correctly, you can get all the key observations. Looker is nice to have in case you have a lot of datasource that you want to connect together.”
To cap off our discussion, we talked about the critical importance of teams working together to put a company’s operating model into practice.
A great operating model needs collaboration between teams
No matter what the future has in store for Falcon, the company will stick with a critical strategy: matching operational specialists with specific teams within the business.
“This way, you have the detailed knowledge of the area to determine what to change is needed and the close relationships with the stakeholders to make it happen,” says Jan. “Though at the same time, by working across all commercial teams, we can easily switch priorities and resources between them as well.
“This is a core thing for us, and helps us to gather the right information and make refinements as we need to,” says Jan. “It’s about giving the right context for the numbers, and building a holistic view of performance across the business.”
“For example, if we’re looking to double our market presence in a particular area, our management needs become a key question. What is happening within the relevant teams? Are people ready to be promoted? Are people getting set to leave? If you have an operating model based on collaboration between teams, you can answer these questions. You can’t do that with a spreadsheet.”
The right operating model can help your people to work together more effectively, and to think beyond specific numbers to see wider trends and patterns within the business. This way, your teams can solve tough problems, and can identify and pursue opportunities for growth and expansion.