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It's past time to reconsider what we mean by "operations." Manufacturing isn't the only aspect of operations anymore. Operations are, and always will be, what allows a company to act: to deliver value to end-users, collect value for stakeholders, and share value with its community. Operations enable an expanding range of startups in the age of ubiquitous digitalization, as they become more modular, networked, and dispersed and became software and data-oriented increasingly.
Digital technologies have enabled operations ever since their inception. And besides, information management has long been a vital component of operational excellence. Whether using operations research to improve projections at Nike or using Toyota's Kanban method to order inventories, operating skills depend on handling and utilizing digital data. So, what has changed now? Because of the widespread use of digital technology and its wide range of benefits in web apps, smartphones, and now the internet of things, the creation and implementation of technology solutions are beginning to change the fundamental fabric of our strategic and technical environments. If supplying market participants with "the capacity to act" is the core of operations, digital technology is changing how capacity is conceived and dispensed.
For cONference 2021, Operations Nation decided to sit down and chat with Hari Raghavan, the CEO of AbstractOps, and a former fintech COO, and Allison Pickens, an investor, and the former COO of Gainsight, to gain some insight on how operations have evolved over the years and how operations professionals need to have a wide range of skills, not only at a micro level but at a systems level.
Note: Following are excerpts (specifically of the host and Hari) from the fireside chat linked above.
I have the honor of kicking off our Fireside chat by welcoming Hari Raghavan, the CEO of AbstractOps and a former finTech COO. Welcome, Hari. You've told us about your professional journey so far. The next question is: Did you know that operations were something you wanted to pursue?
Hari Raghavan: I think it comes down a little bit to my emotional motivations. Inefficiency drives me crazy. Anytime I see something, I'm like, how is this the way it works? It makes me want to bang my head on the table. And it makes me want to fix that kind of bottleneck or issue. And if I were to try to boil down what operations mean, it's just that. It's the identification and resolution of bottlenecks. When you're doing something 50 times, it is a rate-limiting factor. And how can you make it repeatable or streamlined so that you can do it with twice the effort of doing it at one time? That's what operators do all day. It's just like, "Okay, I have to do this thing over and over again. How do I make it much more efficient?" If you look at the different kinds of operations and how it means other things to different people, it can mean many different things. But that's the essential element they all have in common.
I mean, back in the day, in the era of manufacturing operations meant supply chain operations or manufacturing operations, right? Where, again, it's the same thing: You're making 50 widgets. How do you make it only twice as expensive as making three widgets? It represents the repeatable elements of every single function in today's era. In engineering, it's DevOps; in Sales and Marketing, it is SalesOps, and for marketing, it's MarketingOps. The particular kind of operations that I'm spending most of my time on is corporate operations. It's like the repeatable things: HR, finance, and legal. I think it's just an operator's job to figure out where the rate-limiting factors are to scale, where the bottlenecks are, and to resolve those. It just scratches the itch like nothing else can for somebody who hates inefficiency.
Hari, to probe a little deeper, you made that transition from COO at Forge to then CEO and founder of AbstractOps. We'd love to hear what kind of mindset required shifting from being the operator to then picking on the CEO role?
Hari Raghavan: The thing that I was kind of expecting but was still a fairly material surprise to me, was that the sense of the buck stops here, right? I did feel a lot of personal responsibility and duty of care if you will, as COO, but the weight on the shoulders is ever so slightly different.There's no other person to check and balance what I'm doing, or to verify what I'm doing, or validate what I'm doing, and make sure I'm not screwing up. I think that element has been a little bit different. It's not hard. It's not more complicated. In fact, in a lot of ways, there's a huge benefit, which I'll come back to in a second. But it's certainly a little bit more stressful. The benefit is the fact that CEOs are unique in their ability to scale themselves. And by that I mean (and it's true of CEOs and other executives too), I don't actually have to be good at something that I don't think I'm good at. Well, it has to be good at operations. Right. I mold my role as CEO into whatever I want it to be. I can decide that I want to be good at engineering and product. I'm not an engineer, but I actually put on the product-hat quite a bit and it actually meant that I stopped doing anything to do with corporate operations. I stopped doing anything to do with sales and business development. I stopped doing everything to do with operations and scaling and customer success because I just didn't get joy in those things. We have a COO and he takes on many of those things around marketing and operations, allowing me to focus on product building, which I found is like a huge passion of mine.
So, the benefit is that:
a) I get to choose what I want to work on and where I get to direct my time, which is fantastic.
b) I get to exercise what I consider my area of strength, pattern matching. Like knowing a bit of every function, speaking the common language, and translating knowledge and context across those different functions, and
c) I get to hire super-badass execs who are way better than me at their things. I'm constantly putting myself out of a job, and somehow that's the best thing I should be doing, which is excellent.
Did you have the temptation to get more hands-on, or have you enjoyed taking a step back from operating?
Hari Raghavan: In the year of exploration that I had after Forge, and while I was still in the idea maze, if you will, for AbstractOps — I just spent that time talking to people left to right, doing a little bit of angel investing. It's kind of funny because you get to exercise the muscle of what is cliched in VC-land as like, "How can I be helpful?" The problem with VCs and the reason that's become a bit of a meme is that if you're an institutional VC managing institutional capital, it's not just about the dollar amount you raise. Still, it's also the dynamics of the portfolio construction, and, sorry, this is going a little bit aside from operations. But I think if you're leading rounds, you can't just be helpful because it's a zero-sum game. You have to be the giant check in the competition. You have to own 15% of a company. You have to take board seats. And if you have to take board seats and their expectations and fiduciary responsibilities and all of those things that come with it, that means that you can't just actually really try to be helpful, right? Because you have obligations, LP obligations, fiduciary obligations, and so on. It's all about GPs. I love the other phrase, which is 'solo capitalists.' It is like, "I'm a capitalist." But if you're writing non-lead checks or occasional lead checks, it frees up your time to genuinely be like - "What does this founder need?" "What more does my fund need?" - which is so much more liberating. I'm happy I had that Explorer period of like one year because I got to put on that hat and do nice things for people, which is so fun. Especially as you get into leadership, you're directing or deploying something.
One of the things that we've talked about as the founding team of operations nation is - wouldn't it be amazing if more investors or LPs were previous operators? Spreadsheets are great for projections, but authentic operators know what's behind the spreadsheets and what's behind those numbers. I feel like operators would make even better investors because you'd be able to see through the PowerPoint presentation.
Hari Raghavan: I think the converse is true too. Making angel investments has leveled me up as an operator. When you put on that hat, you have a 10,000-foot view into the likely success or likely failure. You have a more 3D idea of things rather than just seeing the thing that's right in front of you. You get to zoom out and look at it from multiple angles. Like, "Oh, what are all the things that could go wrong?" "And what are all the things that can go right?" The questions you ask yourself as an investor and do that in day-to-day operations are constructive frameshifting in your perspective. I will also say for all the folks out there (myself included) and pretty much everyone who suffers from imposter syndrome from time to time, and it's also true that the breadth also extends the other way. You find out that most people don't know what they're doing. We have some reaffirmation. It's like you're avoiding the Facebook effect, where everyone puts up the best version of themselves publicly. You get to like, understand that not everyone is like scaling 10 X year on year. As an operator, you know what you're doing. It's not like 99% of the top, but it's not terrible either. So that's nice from time to time, for sure.
How do you think the perception of operations has evolved over the past decade? How do you think operations have evolved? And what's empowered the scale of that growth?
Hari Raghavan: The engineering function benefits from building these tools for themselves. That's where I think operators and salespeople tend to have a little of a handicap; if you will, it's harder for us to build things that scale us. But as those things get made, it's basically like an iron man suit profits - super operators, right? If I know what needs to be done and you give me the tools to do it, I can 10x leverage myself. No code has been around for a long time. It's just a cool buzzy word because guess what? One of the earliest no-code tools ever was Excel. Excel is actually like a programming language. It's a company for non-technical or pseudo-technical people. So the emergence of iron-man suits that allow people to create leverage for themselves: be it in sales, be it an operator, for back-office operation and, be it in engineering as well.
The second trend is repeatability. A lot of the bottlenecks tend to be around the transfer of information. So with the emergence of those tools, specifically API service-oriented architecture as Amazon defines it. All of the repeatable work (operators), be it in sales ops, corporate ops, or whatever else, were essentially human APIs. So we're now moving toward replacing human APIs with actual APIs, allowing people to be way more strategic.
And that brings me to the final endpoint: it allows you to be a systems thinker. Because all of the go-between stuff happens automatically. You set and forget the rules. So now you can actually like, look at the whole board. You can play chess. You can look at all the things that are happening and line up the building blocks in a way that creates leverage for you and the company at large. I'll extend that point a little bit. And this is what I was talking to my friend who was building something similar to data science as a service. I was like: Hang on! Isn't that one of the most critical functions of a company? And isn't that solely bespoke for the company? And like, it's not right, because there are playbooks. Like data science and e-commerce companies, it is pretty well-defined. Data science at SaaS companies is well defined, and so on. So as those things start to build and those playbooks start to emerge, just like they did for Salesforce, we're beginning to see playbooks appear for data and biz-ops, for all of these other things. As that happens, essentially, it's moving more and more in the trend of what Gardner defined is like the idea of a composable enterprise. You have a bunch of building blocks. All you're doing is putting them together. It's like building Legos. As that happens, systems thinkers are pretty much all you need. It would help if you had people who can glue that stuff and then you can create a tremendous amount of leverage in terms of the $45 million businesses with nine people. It reminded me of my fellow founders. When we talked about procurement as a core competency, his perspective was that the comparative advantage of the 20th century was critical. Like finding great people, right? The competitive advantage of the 21st century might be procurement because everything's modularized. If everything's turned into building blocks, selecting those things and putting them together (which is basically what procurement is doing) is way more important than recruiting. The most powerful and high leverage thing you can do is figure out how to glue the suitable systems together to create scale.
What advice would you give to operators as we see the industry evolve? Should we zoom out? Should we focus on systems thinking? How do you build these systems-building skills? What advice would you give?
Hari Raghavan: I think the solution to that (at least for me) was experience to a certain extent. It was realizing that "Oh if things break, it's not that bad. None of this stuff is like the end of the world." Like, you know, we are not playing with people's lives for the most part. That's just customer churn, and it sucks but it's not the end of the world. It's people with good intent — working on things and working hard and trying to get stuff done. You encounter enough things going wrong and realize that things are okay to break. And so when you do that, you start to realize that like, "Okay, if I want to have any form of sanity in my life, I need to create leverage for myself and trust the people that I'm working with." Because even if it goes right 90% of the time, let the last 10% go. If 50% of the things are going wrong, then you have a problem on your hands.
Trying to be a perfectionist is just a recipe for burnout and unhappiness. I used to be super burned out when I was a COO, and I was not a great version of myself. I was not pleasant to work with. But realizing now that is like: "Just let go. It'll be okay. It'll all be fine." It has been relieving in terms of making your peace with the fact that, again, we're not playing with lives, things will break, and that's okay. Create leverage for yourself and enjoy the journey.
What is one thing that you're deeply grateful for?
Hari Raghavan: Even if the day-to-day or week-to-week is sometimes up and down, as will always be the case, I think whenever I zoom out for a hot second, I realize that there's nothing else I could be doing with my life that's better than this. It's one of those things where you connect the dots, looking backward. To misquote Steve Jobs (from one of his commencement speeches), it feels like I'm supposed to be here. It feels like this is what I'm supposed to be doing with my life, which is a gratifying feeling. I cannot imagine anything else I should be doing that would be a better fit for me, which is fantastic.
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