I’ve recently been introduced to the concept of being a good “operator” in business. I’d heard the word before, but never really understood what it meant. I’ve thought a lot about leadership and management in the past, but being an operator is a bit of a unique concept.

When it comes to being a good operator – there are two things that matter most:

  • Keeping a firm view on the high-level business metrics (KPIs) that drive your business.

These are the same metrics that an investor or an analyst would look at to determine the health of your business. For example – revenue, cost of revenue, gross margin, employee turnover %, # of deals in the pipeline, days sales outstanding, revenue per employee, etc.

  • Deeply understanding the industry trends, resources, people, processes and values that drive each of those high-level business metrics.

What levers can you pull, incentives can you change, projects you can start that will actually impact your high-level business metrics. Which of those high-level business metrics are easy to change and which are hard? Which can be impacted quickly and which ones take a very long time to change?

The key to being a good operator is maintaining a firm view of the high-level business metrics that are driving your business, while at the same time deeply understanding the activities, trends and people who are driving each of those numbers.

Further, a good operator understands what the high-level numbers need to look like in order for their business to be successful and they understand what needs to happen in order for those numbers to look the way they want.

Most people can only do one or the other.

There are people who can define the high-level metrics that matter, and there are other people who know how to manipulate the business to change the numbers.

It’s a very rare person, a true operator, who can really do both.

Being a Good Operator
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  • Sounds like a nice advance of the Principle Agent Problem.

    The “good operator” can both understand the metrics that drive the business, and knows how to improve the metrics that help the business do better.

  • Just read the Wikipedia page for the Principle Agent problem.

    In some ways I think the conflict between supporting the company (principle) and acting in self interest (agent) reflects the common problem of only being good at either evaluating high level business metrics or being an expert on the business’ industry.

    Sometimes it’s just hard to look at things two different ways at once.

  • It’s a useful mental skill – flip things upside down, sideways, etc and see if you get different answers.

    Just crossed my mind – there’s an analog in optimization, the “dual problem.” You can frame any minimization problem as a maximization problem with different constraints, and vice versa. You have a global optimum where the dual solutions are the same, and you have an ill-formed (suboptimal) solution when they diverge.

    That said, measurement (defining and using KPIs) and operations (influencing KPIs).

    On a slight side-note, you might like this presentation on company culture, which relates to a similar problem – the process you have (to influence KPIs) can have other effects that actually hinder you.