The Value of a Business Operating System

One thing many startups lack is a business operating system.  A high-growth startup that isn’t using an operating system to run the business either isn’t familiar with the concept, or they are familiar but are afraid it will be too cumbersome to implement and restrictive to operate.

An operating system might sound complicated to set up. But it’s not, and it can actually bring a lot of order, focus, and efficiency to the inevitable chaos that comes with running a startup.

When implemented well an operating system won’t slow you down, it will speed you up and improve your results.

What is a business operating system

An operating system is how a company runs the business at the highest level. How it plans, executes, communicates, and creates a culture of accountability and transparency. It’s a framework that sits across the entire business—think of it as an umbrella that is the layer atop everything else. 

An operating system allows you to set the vision and then execute, communicate, and report on results in an efficient manner. More than anything, it’s a discipline that helps define the cadence with which you will operate.

I’ve heard this called operating cadence, operating system, operating framework, and operating model. At the core, it’s all the same thing. 

An operating system can help your staff translate vision & strategy into initiatives & tactics then monitor and communicate progress against that plan. When implemented well, it helps create a culture of accountability and “say-do”.

I love the Wikipedia definition, because it succinctly describes an operating system.

An operating system is “… the common structure, principles, and practices necessary to drive the organization. The objectives of such systems are to ensure daily work is focused on the organisation’s strategic objectives and is done in the most efficient way. The systems deal with the questions “why” (purpose of the work), “what” (specific objectives of the work), and “how” (the processes used to do the work).”

-Wikipedia

And I really like this summary too, from an internal email sent by Ben Huh to his internal team.

“A business Operating System is a simple idea:

• Using the company’s values (of Truth, Excellence, and Happiness)…
• create a set of consistent rhythm for communications, meetings, procedures and decision-making…
• which helps align everyone’s goals with the ultimate objectives of the company.

Put in other words: A business OS is how we consistently and clearly communicate, hire, make decisions, etc. that help us do more faster.“

-Building a Business Operating System, Feld.com

Why does your company need an operating system?

Well, not to be repetitive, but you need an operating system in order to tame some of the inherent startup chaos without impeding execution. An operating system will help you set vision & strategy, communicate it, and track it.

An operating system helps ensure your time, resources and budgets are going towards achieving company goals (sounds like a no brainer, but lots of high growth companies have inefficiency because of this—if you’ve spent a day in a high growth company, you know this is a fundamental truth). 

An operating system helps ensure everyone is working and communicating in the same way, rowing in the same direction and on the same page. It helps a rapidly growing team to know what to expect when to expect it, and how they will be measured. It helps create alignment across the entire organization.

I would venture to say every company needs an operating system. Here are some signs that you definitely need one:

• The business just “feels” out of control.
• The business is stuck—you are running in place and can’t get anything done or aren’t making progress. You keep solving the same problems over and over again.
• Executing on initiatives is more complex and complicated than it should. 
• You are struggling to create a culture of accountability. People aren’t sure what’s expected of them and how they are measured. Balls get dropped, and initiatives flounder.
• You have high employee turnover and/or low employee engagement. Staff is frustrated because they are unclear on company vision, goals, strategies, and overall direction.
• Missed targets, blown budgets. 
• Metrics that are all over the place—sometimes you measure X, other times you measure Y. Different departments are using different measurements of success.
• You can’t get out of what I call the “whack-a-mole” mode—moving from one problem or crisis to another, never getting to work on business strategy & planning.

An operating system brings clarity of purpose, gets everyone on the same page and moving in the same direction and enables focus. If you implement the right operating system and maintain it, it can transform your business.

How to implement your operating system

To create your operating system you will need to decide, define, document (codify) and deploy these things:

• Your vision, values, and culture
• When and how you will set strategy & vision (your planning cadence and framework)
• How will decisions be made as teams work cross-functionally and interdependently
• What, when and how you will communicate and to whom (communication cadence and architecture)
• Why, when and how you will meet (collaborating, deciding and acting)
• Goal setting framework (like OKRs and/or Balanced Scorecard)
• How you measure and report on company performance
• What and how you will track and measure individuals and teams
• How you will assess and reward performance—financial, promotions, etc
• Expectations for process, playbooks, documentation, working norms

While it may seem like a long list, it’s really basic stuff for operating a well-run business.

The first time you set out to create your operating system, you don’t need to perfect it, you just need to ship it. It just has to work for right now. So strip away what you don’t need and commit to evolving your operating system as your company grows. 

What to expect from your business operating system

An operating system creates the structure for how the business is run, and spans across the entire organization—the company, departments, teams, working groups and individuals. As you roll it out and apply it consistently, it will help bring executional and operational excellence to each facet of the business.

And if you are afraid an operating system will be too prescriptive and stifle creativity and innovation, know that the opposite is true. When you bring a bit of consistency and structure into a company, people have more mental space to do their best work. With an operating system everyone will be on the same page, working in a similar way, towards common goals. Staff will know what to expect, be clear on your vision, values, strategies and goals.

What high-growth startups need is a simple way to create and implement an operating system that will help them move fast, break fewer things, communicate more effectively, make sound decisions and keep an eye on the key metrics needed to run the business. Something simple, agile, flexible. Something designed to be adapted as the business scales. That can, and should, come as a result of implementing your operating system.