I’m now including lightly edited transcripts in these podcast newsletters. Scroll down if you’d rather read than listen!
So you’re a COO or Head of Operations. What does it mean to perform well in the role?
In this fireside chat for On Deck’s Strategy and Operations program, with program director Fadi Hindi as my interviewer, I spoke about:
What makes a strong COO?
What should be your self-onboarding plan when joining a company as COO — and if you’re a founder, what should you expect from that new COO?
How can you run a top-notch OKR process to help all functions work well together?
See the lightly edited transcript of the podcast below if you’d rather read than listen. I hope you enjoy this conversation as much as I did, and feel free to reach out to me with any thoughts. Let's dive in!
If you’d like to hear more about topics related to scaling SaaS and Web3 businesses, you can subscribe to my newsletter (for free) here:
Leadership Roles:
As always, I’ll share some leadership roles at companies that I’m excited about:
Workstream:
Head of Content Marketing (Utah or SF)
VendorPM:
Customer Success Team Lead
Director of Engineering
Palette: Product Marketing / Head of marketing (US/Europe)
Guide: Marketing leader
Transcript:
Fadi: Super excited to do our first Fireside Chat. I am honored to be here with Allison Pickens, and I'm not even going to try to give her a background because I won't do it justice. So wanted to really kick things off by having Allison introduce herself to everybody. And then we'll dive into the topic of the role, the COO and just everything that's been happening on that. Allison, please take it away and tell us a little bit more about yourself.
Allison: Sure. Thanks everyone for having me here today. I know I'm surrounded now by some amazing COOs and happy to impart what I learned from my experience at Gainsight, my experience working with a lot of other companies, but also excited to see what you're seeing in your roles, and we can learn from each other.
As for my background, my last role was COO at Gainsight. I joined when we had about a million in ARR. So it was very small. Before that I worked in private equity investing and at Bain Capital, and the venture arm had led an early funding round in Gainsight. That's primarily how I got to know the CEO there. I joined in a really generalist capacity, a number-two type role. My title changed three times in the first three months. Happy to talk through all of that. But over the next six years I built out dozens of functions. I ended up leaving when we had about 85 million in ARR.
I also spent a lot of time on our thought leadership content. Since you might know Gainsight as a customer success software company, we were pursuing this category creation motion. And that meant having to become the focal point of a lot of discussion about how to drive net dollar attention, because customer success management was one of the teams that I was building over the years. The team ended up becoming this kind of incubator of best practices. And of course we were working with all of our customers who were in turn customer success teams. So we ended up building a lot of best practices about the topic and building a lot of community around that. That work the content and best practices led me to advise many B2B SaaS founders who were folks that we were trying to sell to.
And that led me to join a few boards. I've been on four boards, three private, one public. Currently I'm on the board of dbt labs, which is a data transformation company. And I'm also on the board of a public company called Commvault, which is in the data management data backup and recovery phase. It's fun to have seen the venture side and also seen the public side. And what's always fascinating is the public companies want to learn to be like smaller companies — be more nimble and innovative — and small companies want to become big companies. There tends to be a lot more crossover than you might expect.
After Gainsight, I wanted to spend all my time with founders. and I was trying to figure out a way to build a business model around that. I realized that if I raised a venture fund and I could co-invest alongside lead VCs, then I could formalize relationships with founders that I wanted to work with. So I did that and over the past year and a half I have invested in a number of B2B SaaS companies across stages, everything from pre-seed to pre-IPO. And I feel like I have amazing job, since I get to work with like incredible founders, every day, all day. And particularly this maybe goes back to our conversation, kind of serve as — I wouldn't quite call it a fractional COO because I'm not a service provider, but I call it a fractional COO thought partner, to many founders. And yeah, I’m excited to be here today and chat with you all.
F: Awesome. Well, I hope this intro allowed everyone to see the reason why we asked Allison to come in, so super excited to have her here and have this conversation and just wanted to preface for everyone. We will make sure there's plenty of time for live Q&A. So I'll kind of get started with some preset questions that will be super applicable to what you all wanted to learn. And then we'll make sure to save at least 30 minutes at the end for you all to do some live Q&A with Allison. Well, my first question already kind of got answers in your background about kind of how you got into the Gainsight role. Would love to kind of dive in and just talk about, in your opinion, based on your experience thus far, what traits and behaviors make a good COO?
A: I think the first thing to mention is that there are many different types of COO roles and depending on where you live in the country, what kind of business that you're supporting and especially what kind of CEO are you working with, the role can vary tremendously. I tend to see there being four types of COO roles. One tends to be a chief of staff type role, which is kind of the role that I entered into when I first joined Gainsight. So that’s type one, the chief of staff role. And it tends to be a generalist problem solver, an extension of the CEO. I actually recommend this to a lot of my founders, that they hire someone like this in the early days who can help them tackle more special projects, launch more initiatives and figure things out around the company.
There's a second type of a COO role, which I think of as a “CFO-Plus”. I tend to see this a lot in New York City. For some reason, that's a common role there. Maybe it has to do with e-commerce businesses or just the industries that are there. But it's often someone who grew up in finance and they're taking on more cross functional responsibilities over time. They're helping to manage certain functions that might have been called staff functions in an earlier era — finance, legal, HR, BizOps, and they're helping to serve as the glue across functions in their organization.
The third type of COO that I've observed tends to be a CRO. They might have the title CRO or COO, and typically they are managing the journey for customers and therefore interactions with all different customer facing functions. So they're managing marketing, sales, customer success. If they're a CRO, they may or may not manage marketing. That might be something different, but typically it's everyone involved in the customer journey, and there might be professional services or support that's added to that.
Then finally the fourth type of COO role tends to be a President, someone who is truly running the business, and they might have all the functions that the chief journey officer or chief revenue officer had, plus maybe people and ops or corporate development. Often it's everything except product and engineering.
So, going back to the question that Fadi was asking, I think the skills that are required for the COO role tend to depend on what type you are. And based on my description, you could probably start to imagine what the skills are.
I would say that as a general rule, there are certain skills that are useful across these. I think one is non-technical skills, like gaining broad-based buy-in across employees for initiatives that you're launching. Resolving conflict among diverse stakeholders, handling team member concerns and being able to gather buy-in, gather feedback, communicate decisions, help people understand why their point of view is valid, but may not be taken into account or help people understand why you decided with one point of view versus another. I think there's a lot of general communication and engagement that tends to be a big part of this.
I'd say, all four roles tend to involve creating OKRs or being really involved in the OKR process one way or another. So I think becoming an expert on that is probably a good idea.
And then, generally learning how to manage a really close, trusting relationship with a CEO who is typically the founder and often very product-oriented, vision-oriented, focused on community, evangelism, and is less interested in running operations, which is course why they hired you.
F: Super helpful. You actually even got into something you want to reference, which was you wrote this beautiful Substack article about the rise of the role, and you kind of referenced a little bit about it right now by describing the four types in your opinion. But maybe you could deep dive into why in the last five to 10 years this role has been on a rise and why are we seeing more people being attracted to bringing on a COO? This is super interesting.
A: Sure. I think there are sort of two sets of reasons. The first set has to do with founders staying in their roles much longer than they used to. 10 years ago or so 15 years ago, it was really common for a founder to start the company, run it for a couple years, get to some product market fit. And then a professional CEO would be brought in. That no longer happens, for a few reasons. One is that founders have much more power than they used to have. There's an abundance of capital even with the market downturn and valuations going down, there's still a lot of deals getting done. And there's the ecosystem is flush with all the capital that VCs had been raising particularly over the last year. [Allison update: This podcast was recorded several weeks ago; the pace of deals has slowed down since then, and some VCs are pausing their investing, particularly at the growth stage. How that translates into the founder-VC power dynamic has yet to be seen…] It'll take a while for that capital to, I think work its way through the system. If you're raising from a VC as a founder, that VC is very eager for you to accept them on your cap table. And the last thing they want to do is appear to be un-founder-friendly, like they're going to replace you at some point. And actually they may not even take a board seat even at series A or sometimes B or a lot of the time these investors are much more hands-off, trying to be much more supportive to founders.
Also I think software companies in particular are much more product-led than they used to be. Product is important, not only for driving the value proposition, but also for the growth strategy, for example, in product-led growth companies. The founder skillset is often product oriented. It makes sense for them to continue to run the company.
And then, finally I think a lot of people through making mistakes have realized that if you replace the founder, you're removing the person whose spirit has infused the organization. And the organization can suffer from a deficit of purpose and mission. And it becomes this executional machine that people may not be inspired to work at, customers may not be inspired by, and it loses its essence.
So for all those reasons, founders are staying in their seats much longer and that means there still needs to be someone at the company that's helping to run things, but that person is not going to be the CEO, it's going to be someone else. It opens up the possibility for a COO role being much more essential.
And then, there's another category of reasons for the rise of the COO role which has to do with things not related to the product. For example, to run an effective go to market strategy nowadays, you need to be able to align all functions. They can't operate in silos anymore, especially if you're at a PLG company. All these organizations need to be able to work super closely together. It requires someone who can help orchestrate that very nuanced ecosystem.
People are moving away from the vision of a company as being this sort of militaristic army-like structure, which is previously what had informed corporate hierarchy in the fifties. Now people see organizations as being flatter and much more focused on how people collaborate, how they depend on each other, how they work together to achieve goals. That might be goals in common as opposed to goals that only particular functions own in silo.
I think the final thing is that companies are growing faster than they used to. It used to be triple, triple, triple, double, double, or triple, triple, double, double, double. Now it's quintuple, quadruple, triple... That's partly because the product is driving growth, but you still have people and it's still hard for people to experience change. Arguably it's even harder when the change is more rapid, and you need a leader who can help orchestrate that change management.
Those are the reasons I see why the COO role has become a lot more popular.
F: Cool, super helpful. Now we learned the landscape and how it has evolved over time, different roles and different stages, why you need a certain type of COO. Segueing into, “you are now in the role of COO,” I would love to understand from you, when you onboard onto one of these four categories of COOs and you're at this company now, what are some strategies or approaches you've built in your career that says, this is the best way to onboard as a new COO?
A: I think listening is the most important part of COO onboarding. It can be tempting to come in and immediately try to prove your value, but it's hard to know what counts as value if you don't know your context. So I find that a lot of COOs come in and do a listening tour. They spend tons of time with the CEO, digesting everything that's in the CEO's brain. That's important partly so you can make the right decisions as COO. It's also really important to lay the groundwork for that trusting relationship that I mentioned earlier. You want to understand how this person thinks, what their hunches are, what they enjoy, what they prefer working on and what they're expecting from you. And then, over time you can start to reciprocate and share your points of view and bounce ideas around it. It lays the groundwork for a good relationship.
I also recommend listening to your board. Meeting with the individual board members, hearing what their views are on the company, why they invested, what their theses were, what were they expecting would happen, and did the company to fulfill those expectations? What do they think are the biggest challenges and opportunities going forward? I'd make sure when you're meeting with these board members that you've, of course, received permission from the founder. Board relationships can be sometimes a little bit sensitive from the founder's perspective, even in a situation where they're in the power seat. It's important to bring the CEO along your journey of meeting with different board members. But I do think getting their perspective is valuable.
It also, again, helps lay the groundwork for your relationships with board members. So that in future board meetings, when you're presenting, you feel more comfortable. Also, you know what to speak to because you have in mind what each of these people is looking for from you.
And then of course, arguably the most important listening that you're doing is the listening to team members. So you might set up, depending on how big the company is, focus groups of people, perhaps by function or by topic area or by location. If you have offices in different places — a lot of companies are remote first nowadays, so my guess is that's probably less common — but again it depends on the company. I think what you want to clarify in advance of those is that you are here to learn, that these folks have experience in this industry and at this company, and that's very valuable.
You want to hear what's going well, what's not going well, how can you make people's lives easier? How can you grease the wheel? How can you make sure that there's better collaboration at the company? And then, once you've listened, you want to play back what you've heard. That's true for any stakeholder that you meet with, but especially team members really value when they know that you've heard them. You don't have to say necessarily, "Here's what I'm going to do about what you talked about," but it is valuable to say, "Here's what I heard from you. And in the coming months as I get up to speed, I'm going to be thinking through how to prioritize these things. And you'll start to understand the prioritization as we, for example, roll out our OKR process or hone our OKR process."
F: I guess once your listening is done, you've gathered all these data points that you've gathered from the board, the CEO and different stakeholders, what do you typically do with it? Do you have a set process or a strategy for driving execution? Oftentimes what we hear is people are like, "I'm constantly fighting fires." There's always so much to work on, but then how do you create the right focus areas or priorities so that you know for a fact, these are the five buckets I need to focus on for the next 90 days, six months, 12 months.
A: Yeah. I think the OKR process is the vehicle for prioritizing. OKRs are objectives and key results. I think of the objective as being the spirit that's behind the metric. Why does this metric matter? Why are you doing this? And the “why” is really important because for so many reasons, it helps you understand the prioritization. It helps motivate people to achieve goals. Some people are very oriented toward metrics, some people are not as excited at the end of the day if they achieve a number or not. The objective can be an inspiring force within the company.
What you want is three to five of these OKRs across the company. Eventually as your OKR process becomes more mature, you can trickle down — or up, depending on your view of your organization — but basically those OKRs should translate into goals that individual people are working on. In terms of how to translate the feedback that you're hearing into OKRs, it's useful to involve everybody in that process, in some form or another.
For example, you are gathering your leadership team, plus maybe an extended group and maybe an offsite at a key point in the quarter, and together you are iterating on a framework that you and the CEO put together for an initial draft of OKRs based on what you've heard in the listening tour. There's kind of a sequential iteration process that you can follow and eventually you'll want to communicate that set of priorities to your company in an all hands. And there might be an initial period where anyone a the company can give feedback and you can have a last chance for anyone to comment. And then, a couple days later you say, "Okay, great. This is what we rolled out. This is filed for the quarter."
Then you've got your cadence for tracking against those things. Eventually, you'll want to make this an annual process, but assuming that you are coming into the company midyear, thinking about the next quarter is probably a good idea.
F: Once OKRs are in production, there seems to be this natural tension between teams, when it comes to priorities. How do you navigate polarities with your organization? Typically, what I've seen is, there's tension between Biz Dev and Product, or Marketing and Finance, for example. In your experience, how do you navigate this tension?
A: At the end of the day, it's impossible to avoid tension. I do think that's sort of a fact of running a company, but the more aligned that you can be as a company the better. And I certainly think that for the COO role, one of the measures of success of the COO is how aligned are people. So it's a great question.
There are a few ways that I've seen people try to mitigate tension or prevent it from happening. One is when you're designing OKRs, it's important to ensure that, if you're signing someone up for OKR, that they had the opportunity to say, "It's going to be difficult for me to achieve this OKR unless another function does certain things." We're all clients of each other's work at the end of the day.
If marketing, as you noted, is responsible for a certain goal and they need some input from finance in order to achieve that, or maybe they need help from product in order to make sure that a launch is successful, that's got to be built into OKR. So in this OKR process, you're mapping out all the dependencies and acknowledging upfront when people are going to be depending on each other.
Another way to ensure alignment is to rethink your compensation model. I'm used to working at companies and interacting with companies where every function has its own goal that it's responsible for. Sales has quota attainment, and marketing has a pipeline goal, and customer success has a retention goal, and their compensation is based on that.
I actually think — and initially when I started saying this, it was controversial, but now I've noticed a couple companies that are very successful doing this — I'm a big believer that basically everyone at the company should be paid a base salary, and that bonuses are distracting and often skew behaviors in strange ways. At the end of the day, we're all corporate citizens, or citizens of this organization. We're all on a mission together. From a financial perspective, our job at the end of the day is to help drive the valuation of this company. If you orient people toward being more mission driven in that way together, everyone is in the same boat, we're just in different roles, you set the groundwork for alignment in a much more robust, foundational way.
The final way you can solve for tension is often people get frustrated when they think that some other function is not performing well. It often if they're dependent on that function as the client, but that's usually where frustration comes into this. It's either someone is not performing well or there's a perception of that. Or someone is a blocker in some way. I think you can get rid of the blocker through the interdependencies that I talked about earlier. I think you can get rid of the perception of low performance being tolerated by having a cadence of meetings where you're going really deep into specific OKRs. I really liked the way we did this at Gainsight.
Let's say that we had four company-wide OKRs. Each Monday in the morning, we would have a 90-minute meeting on a different one of those company OKRs, and the executive sponsor for that particular OKR, together with a subgroup that was essentially the working group of people that had OKRs related to that higher level OKR, would present in that meeting. In advance, they would put together a certain data set and explanation. I think we could improve on what we did at Gainsight, by having a Notion doc, where you explain in detail, here's where we are relative to the OKR; here's what we're forecasting; if we're forecasting underachieving, here's why; here's specifically the three root causes; and here's some data supporting that; here's what I call a “path to green,” which is how you get from where you're forecasting today or where you are today to where you need to be.
That “path to green” is literally a waterfall chart that shows point A and point B, and what's the breakdown of how you get there. And each of the constituent boxes in the waterfall is a different tactic or initiative that you're running to course-correct.
When people send out that Notion doc in advance, a cross-functional group, basically an extended exec team, can read that. And then, during the meeting, it enables a focus on areas of disagreement or enables people to ask questions, to challenge each other in a friendly way. It creates a level of transparency and accountability that I think builds trust among people. And I think it helps ensure people that others are being thoughtful. If enough of these meetings happen and someone's not delivering repeatedly, it becomes pretty clear to everyone. It's not this thing where people have angst about it. It's obvious and therefore can be corrected.
F: The keyword that really stood out to me from what you were describing was the word dependency. I love that because I feel like we don't really hear that a lot when it comes to OKR process. That's not the thing that gets taught the most. I find that interesting, because as operators, we often build process and every process has dependency. When you go from one stage to the next to the process, there's usually something that would make the process go faster, dependencies attached to it, or if there's something going on and you know what that is. But I think in OKRs it's not described that way, which is really fascinating that you've that up. That really kind of put a light bulb in my head: there should definitely be dependencies. It's a great way to mitigate the tension.
I feel like a lot of times we do OKRs in silos. Team leads will go work with their teams in their own little silo, create their OKRs, come back to the executive team, say here's what our OKRs are. So we just did seven different OKRs in silos, and now we're trying to glue them together, but it doesn't make sense. I love the approach of, what are the dependencies in place and how do we make sure you're not going to fight for resources or say your team needs more than this and that. So it's super interesting. I like that a lot.
A: I'm happy you mentioned that situation with functions coming back to the leadership team with their individual goals. That is traditionally how so many companies have been run, and what it means is, there is strictly this functional lens of goals, as you said. Probably each of those functions is managing their goals differently, and they might have different numbers of metrics that they're tracking. Everything might be different about how they're instrumenting their goals. Besides there not being dependencies that are illustrated in that situation, there's also not an understanding of why these goals are relevant to each other and to a broader strategy. If you're an effective founder and you're thinking, "What do I need to do over the next two years to be successful?" it’s probably things like, "I need to make sure that this product launch goes really well." And of course the product team and the engineering team are going to be involved in that. But obviously, the marketing team is going to be super involved in publicizing this lauch. Customer support is probably going to receive tons of tickets afterwards, because maybe there was some bug, or inevitably the feature is imperfect when it was released. And then, customer success and sales have to think about onboarding customers onto this new product, and cross-selling that product into existing customers. I think most true strategic priorities require cross-functional alignment. If you start with what the company needs, as opposed to what each function is thinking they need to do, it ends up resulting in a much truer set of goals, than if you go function up.
F: For sure.
If you enjoyed this post, feel free to share it with another operationally-minded friend, or a CEO who needs one!
