Written by Katharina Dalka, CEO StellarOne
In a recent conversation with a very experienced investor, the subject of operational excellence came up. It’s a topic I had made a brief post about a while ago, and the investor mentioned how crucial this subject was to him for his investments to prosper. This conversation, together with my experience from StellarOne projects and growing responsibilities as the Chairwoman of DYDON AI and, motivated me to write about it in more depth.
As an intro, these are my 3 pillars of operational excellence:
- Clean governance
- Disciplined execution
- Sustainable (human) resource management
The subject of clean governance is particularly present in a board position, and even more so as the Chairperson – a major part of it being legal and financial.
The legal part involves the internal legal matters: an up-to-date shareholder agreement, any shares transmission documents, an updated and legally valid cap table, the annual meeting (to validate major strategic steps and the annual accounts), and regular board meeting including signed minutes, valid employment contracts. There are also all the external legal matters: customer and partnership negotiations and contracts, external communication (there are certain legal restrictions that need to be respected every once in while). And then there is the financial part: while day-to-day finances are rather managed by operations (CEO + finance departments or external accountants), the projections, evaluations for capital requirements and annual accounts are part of governance.
Furthermore, overall corporate strategy is an important part of clean governance, everybody needs to go into the right direction. It’s like setting the course for a ship before the crew starts to sail to the new destination.
Disciplined execution is very much in the hands of operations. In big companies, the board does usually not get involved; but in start-and scale-ups, that is a little different.
It is not enough to set a strategy; it also needs to be implemented. And that only works if the operational teams have an action plan, tooling, and training.
In my experience, tooling turns out to be a crucial part, may that be for sales (CRM), or finances (i.e. accounting software) or HR. Referring to my metaphor of a ship, the crew needs to be steered into the right direction. If crew members are not coordinated, the ship loses course and hits the Titanic iceberg eventually. A sextant is very useful here.
However, that does not mean that disciplined execution does not equate rigid execution. When a crew member views the iceberg from far, the captain better adjusts the direction.
This brings me to the 3rd topic of Sustainable (human) resource management, merely because there is no 1 and 2 without the 3. If you don’t feed your sailors, there I nobody to steer the ship. Specifically, in the service sector I work in, this is essential. My companies both do not exists without their teams. Their mental and physical wellbeing is crucial to deliver our services. On a larger scale, and for business in other sectors, sustainability is equally as important. If resources run out, there is no base to conduct business anymore.
As a Chairwoman and CEO, I am very adamant about the latter, because of ethical reasons, but also because I think this is the only route to long-term success.
All-in-all, to implement operational excellence, a competent, aware and connected board & management team is required. It is essential that those two entities work closely together for companies to thrive. In any case, operational excellence is mandatory to scale a company and generate viable margins.
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