Operating System

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When I’m not writing this newsletter I lead a sales team for a technology company. Throughout my career in sales and revenue operations I’ve come up with an operating system I use to lead revenue generating teams.

This “Revenue Operating System” has three components each of which have been pulled from various experiences throughout my professional career. They are:

1. Incentives

2. Diagnostic Visibility

3. Operating Rhythm

While these exact three components may not be applicable to every corporate team, every leader should have a clear operating system of their own. Think about the framing in this way, if you were plucked from your current team today to another team at a new company that was one stage smaller than your current company, what would you do? How would you guide them to their next level of growth?

Operating Systems become the playbook by which leaders operationalize their expertise.

Again, while the exact pillars of my Revenue Operating System may not be applicable to you, my hope is that by getting a brief overview of these pillars you too will be better able to conceptualize an operating system for your team.

Incentives

The above Charlie Munger quote is one every leader should be familiar with. If you are not thoughtful in your incentive design, you will not be successful.

Effective incentives are comprised of four parts: directional alignment, causal impact, influenceable outcomes, and proportional reward.

It may seem obvious, but directionally the incentives you create must be aligned with the outcomes you desire. This forces you as a leader to be clear both in your desired end state and in the way you track progress toward that end state.

Those outcomes you incentivize should have a causal impact on the overall end state you pursue. If you incentivize people for things which don’t drive change in your business you can find yourself in the unenviable position of rewarding outcomes which missed the overall mark.

The metrics you incentivize should be able to be impacted by those you’re paying to impact them. If luck is the main currency in the outcomes of your business then there is no need to pay for an incentive system which those on your team did nothing to bring about.

ROI matters when creating incentives. Your team can’t have a tremendous quarter but then be upside down from a payout perspective because you rewarded them for more than the outcomes they drove. Make sure your incentive system is enough to reward and retain talent, but also allows for continued profitable operation.

When incentives are aligned with your desired end state, your team will row in the same direction.

Diagnostic Visibility

It’s really hard to know where you’re going if you’re wearing a blindfold.

I don’t follow sports often these days, but like so many who got caught up in the Formula 1 craze following Drive to Survive, I too fell in love with motorsport. In thinking about the second pillar of my Revenue Operating System I often think of the teams of engineers pouring over data before, during, and after races to give their driver an edge in Formula 1.

While you may not have teams of engineers to support you, you too need clear visibility into the status and progress of your team.

Clearly defined targets with clearly measured leading indicators which you track consistently are the way to ensure you make consistent progress, particularly toward longer term goals. Treating these systems and measures as your team’s diagnostic ensures you stay on track and course correct when needed.

Take the time to set up the systems needed in order to ensure you have clear diagnostic visibility into the work of your team.

Operating Rhythm

If Diagnostic Visibility is your guide to WHAT is happening, a clearly defined Operating Rhythm is your approach to HOW you plan to impact things.

At its core your Operating Rhythm is a series of meetings and status updates designed to either bring the correct people into the room to make changes as needed or hold team members accountable to their individual portions of the task.

MongoDB CEO Dev Ittycheria is fond of saying, “people rise to the level of their inspection” (he would have made a great Marine) and I agree. Think of your Operating Rhythm as the cadence you use to remain consistent in these inspections.

Effective Operating Rhythms are powered by effective Diagnostic Visibility. When aligned with the correct incentives you have an Operating System which allows you to deliver results.

How would you define your Operating System?

See y’all next week.