Develop Operating MOdel

After substantial growth, our professionals guided our client through a much needed update to their operating model and vision.

Context

Client saw substantial growth over two years, reaching several new markets and establishing multiple product lines. This growth lead to significant, unsustainable investments to sustain market and product onboarding, but required considerable optimization as the client transitioned to a run state.

Solution

Our team sat with executives and senior leaders to gather information about revenue, investments, products, and overall strategy. As an objective third party, we analyzed customer profiles, market fit, operational processes, and financial structures that allowed us to model a new, efficient organizational structure.

The new organization structure allowed us to recombine talent into more productive teams that were aligned, based on product, which enabled leaders to make decisions more effectively. Furthermore, this new structure allowed for the company to evaluate P/L’s on a product by product basis, and provided much needed insights into where investments were needed.

Details

In their previous structure, our client tried to manage multiple products and product lines using a single P/L. With this strategy, it made it nearly impossible to determine the financial efficiency of any individual product as a standalone entity.

Furthermore, we found that several teams managed competing scopes of work, maintained systems and processes that ineffectively spanned multiple products, and ultimately prevented leaders from making decisions in a timely manner due to cumbersome change processes.

To address these shortfalls, our team restructured the organization so that each product had it’s own P/L. From there, we created product teams and tagged assets that directly supported each product. Afterwards, we created groups of shared teams and assets that could be systematically allocated across multiple P/L’s.

From there, our team helped the client revise and update processes and policies to create a cohesive operating model.

Results

These revisions allowed our client to make tremendous operational improvements. Though our client was originally concerned with excessive spend, they saw nearly a 50% increase in development velocity due to the improvements in decision making.

Additionally, our client was able to identify two products that had a negative return on investment, and were able reallocate those investments into their strongest product, which was previously thought to be something different.

In the end, these improvements resulted in a 20% revenue increase and a 40% reduction in expense. After a few months, our client noted that the operating model we developed was their competitive advantage.

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– Team Llama 🦙