The Changing Role of RevOps As Organizations Scale

Sustainably growing a business is fucking hard.

It will test the mental fortitude, resilience, personal relationships, and flat-out endurance of those who lead or drive meaningful contributions to the organization’s growth.

Even when things are going well, it’s not easy. I often share with friends that I’m never sure I’ve got the tiger by its tail or if it actually has me. So far, luckily, there are no visible scars.

A central element of this challenge is that you must constantly deal with wicked problems. These problems are never solved. As you address them, they merely change flavor; before you know it, you’re dealing with that problem again.

The implication of this is that no solution lasts. If the solution level doesn’t improve at a greater rate than the complexity of the problem, the result will be a bigger fall.

As RevOps has become in vogue over the last five or so years, business executives are beginning to understand that RevOps isn’t one size fits and solves all situations. 

RevOps, done right, simplifies complexity, lowers total costs, and accelerates velocity. It’s a powerful proposition, but your approach to RevOps must evolve ahead of how your business evolves.

The Role of RevOps As You Scale

Small

78.5% of businesses have fewer than 10 employees, and 89% have fewer than 20 (source).

At this phase, with some exceptions, there is no role for revops. Candidly, you should be trying to create more chaos than resolve it at this stage. Certainly, you should be creating and managing mini-processes, but the limited money and attention are better invested elsewhere.

SMB

Characterized by reasonable levels of stability, moderate growth (10-25%), and growing beyond 20 employees to around 150 (read about Dunbar’s Number to understand why we use that number). All things considered, running a small business is a comfortable place to be (well, as comfortable as the stresses involved with running a business can be).

There are two core challenges small businesses face where RevOps should play a central role:

• Small businesses must pass through one or two inflection points requiring them to go from simple, people-driven processes to manage things to complex, systems-driven ones.
• A business is more vulnerable to market or economy shifts when growth rates aren’t consistently above 20-25%. Addressing this problem isn’t as simple as just “grow faster” because faster growth brings on a high new set of challenges that the business may not be able to traverse successfully, or the leadership may simply not want to grow that fast and deal with the proverbial headaches.
  
  There’s nothing wrong with a small business growing 10-20% per year. I know many owners who run businesses like these, and it’s not unusual that they are making more money and generating greater wealth than the CEOs getting all of the headlines for their latest round of funding.

The SMB phase is when RevOps begins to deserve the attention and investment it requires. Here’s where the RevOps function should be focused:

• Lead in the design, testing, experimentation, implementation, and iteration of processes that enable the business to gain the efficiency and predictability needed to grow while maintaining the resiliency and flexibility needed to thrive.
• One of the biggest obstacles small businesses face is that their needs often outstrip their resources. A common reframe stated by leaders and executives is the need to work on the business and not just in it. RevOps should be focused on working on the business.
• RevOps is crucial in ensuring the business anticipates opportunities and challenges and is prepared to manage them well. They do this by delivering meaningful insights across the organization to keep the focus on critical activities and how well they’re performing. The combination of robust, dynamic analytics and ongoing process design and management does this.

High-Growth

We define high-growth companies as those doing more than $1 million in revenue, with sustained growth rates (trailing three-year average) of 25% or more. The subset of these companies growing at more than 40% are often called hypergrowth companies. This means that high-growth companies are doubling every three years or faster.

High-growth companies must be able to thrive in tornado markets. When a business's size doubles every three years or less, it must continually transform, and transformations are disruptive. As high-growth businesses get bigger, the disruption associated multiplies. By the time a high-growth company gets to $10 million, a robust RevOps function is necessary.

This is where the focus moves beyond simple RevOps to strategic RevOps. It must move beyond managing and reducing friction to creating, operationalizing, and optimizing the systems, structures, and disciplines that become an organization’s growth operating system.

The biggest problem RevOps teams have in this phase is fighting the impulse to “control the tornado.” The high-growth phase is messy, and mistakes are going to be made. High growth challenges everyone in the organization, and it’s easy to lose confidence. 

In those situations, you lose your bearings when you feel like many things are going wrong. What’s more, you're typically getting conflicting data. An entrepreneur friend of mine shared a great analogy for this phase. It’s like being a pilot flying in bad weather. You can’t follow your gut or intuition. You must be instrument-rated. 

Side note regarding conflicting data: conflicting data is good. The common mistake we see is organizations are more focused on telling a clear narrative than optimizing their business performance. As a result, they ignore conflicting data or, worse, rationalize that conflicting data is a mistake; they actively seek to eliminate it.

There are two dominant priorities in the high-growth phase, both of which should be central to the mission of the RevOps team:

• Product-market fit. The ability to win, retain, and grow larger value customers is important to ensure profitability. What makes this incredibly challenging for many high-growth companies is what they’re selling and who they’re selling to may change multiple times.
• Defining unit economics (the math). Growth is not the same thing as scale. Scaling growth is growth that occurs with predictability and at lower costs. Neither of these things can happen if you’re unclear on your math.

Mid-market

For no other reason than because we can't agree on its definition, mid-market is a perplexing segment of the business world. We generally define mid-market as companies with over 150 employees and fewer than 5,000.

This highlights the biggest structural challenge facing mid-market companies. It’s what we call No Man’s Land. A company in No Man’s Land is too big to be small and too small to be big.

Midmarket companies must manage the same level of complexity and have the same needs as companies that are 3-10x larger than them, yet they have only a fraction of the resources to address them.

Strategic RevOps is a requirement in mid-market, and while many of the functions are similar to what RevOps is doing in the high-growth phase, the areas of importance are quite different.

By the time a company gets to the size of mid-market, they have, almost by definition, developed systems and structures. So, while RevOps should be maniacally focused on creating systems and structures in the high-growth phase, here, the focus is on keeping them fresh and relevant.

In the high-growth phase, everything is changing. RevOps teams must enable the organization to ride the tornado. The size and weight of a mid-market company require a level of stability that makes the tornado too disruptive, both for employees internally, and customers externally. At the same time, though, the organization must be able to maintain the energy and momentum needed to sustain strong growth.

Where success in the high-growth phase can be characterized by achieving product-market fit and getting your math right; these are established for successful mid-market companies. The hitch for mid-market companies is that it’s either too easy to view everything by looking in the rearview mirror or too scary to look ahead and embrace the changes to maintain the energy that enables sustained growth. 

In the mid-market phase, RevOps’ primary role is to keep the organization future-focused, and prevent inertia from taking root while leveraging its existing strengths. If you seek to change too fast, you risk killing the strengths that will enable the company to thrive. Too little change and you’ll get killed by commoditization.

Degrading

What happens when a company is struggling? When has it experienced successes, but has its growth stagnated or declined? There are a wide variety of reasons a company may be struggling, so my answer here will be directional.

When I work with companies that have either seen the growth stagnate or, because of a recessionary period, are experiencing negative growth rates (note: I don’t advise companies in a “turnaround” phase), I advise them to focus on their core. 

This advice inherently aligns with the role of RevOps. Their job is to enable stakeholders to have clear lines of sight in all aspects of the business. 

Strong RevOps performers tend to have a level of skepticism preventing them from falling under the intoxicating siren song of “The New Thing.” This enables them to provide the organizational leadership to make the choices required to return to a growth trajectory. 

The keys in this phase are to sacrifice sacred cows and to say yes to fewer things so that those things you do, you do exceptionally well.

The Essence of the RevOps Function

When I coached college baseball, I was the bench coach during games. My job was anticipating the opportunities and challenges we would face during the game. 

This meant that when we were winning, I put more thought into what would happen for us to fall behind and what we would do to prevent or respond to it.

For example, maybe our starting pitcher was throwing very well but was at their 70th pitch, and we knew they typically tired around 85-90 pitches. 

Conversely, when we were losing, I thought more about what would happen and what we could do to get ahead.

This would enable me to be “ahead of the game” and be highly responsive to the manager when he needed to make a decision and to proactively advise him in a manner that wasn’t disruptive to his ability to stay in the moment and manage “the performance zone.”

I can’t think of a better way to describe the role of RevOps.