Biz ops projects at start ups (Unicorn example)

Building an estimate for customer service headcount over the next year

Pedro Abreu, Sales Strategy & Operations at LinkedIn, ex-Gusto Publishled: December 28, 2020

In this post, we'll share a fictional, but very real, example of what a project looks like from a strategy & biz ops role at a silicon valley unicorn startup.

You've made it! You joined a BizOps team of "ZenStartup" - an awesome growing startup company you've wanted to join for over a year now, so it's a great day and a big accomplishment.

You've gone through the interview process like a rockstar, had the first few days to get to know the team, set up your laptop, get familiar with the space (forgot to mention this is in a pre-Covid world by the way). You're so excited that the first few days fly by - culture is great, people are awesome, business momentum is amazing, and you're eager to get your hands dirty and start contributing.

Project details

In your first project you're given an overview of your company's data: what is what, where is where, and who to reach out to if you have questions. You're then asked to estimate the headcount (HC) needed for the customer service team given the Annual Recurring Revenue (ARR) and customer growth the company is projecting for next year.

You're told you can do this by estimating the growth rate based on historical HC growth from the previous two years, by estimating the number of touch points (TPs) expected by customers and time to solve each, by some other way you can think of, or run the three different estimations and use them as triangulation points – whatever you think is best, but you've got to come up with a recommendation in two weeks.

1. Do the research

Two weeks... more than enough time to explore three different approaches you think and decide to create three models based on historical HC growth, projected TPs, and best-in-class industry benchmarking ratios that you've come across online. So you go deep into the data, you pull large data sets and start manipulating them. This takes a few more days than initially anticipated, since data lives in multiple places (SFDC, Tableau, Looker), and it means different things to different people. As the CX team pointed out: one customer contact does not equal only one TP. You have to spend some time talking to stakeholders from different teams to get to the source of truth. By the end of week one, you got it. Took a little longer, but at least now you're confident in what you have.

From there, and before the end of week two, you create three awesome models that spit out HC by the month for each team, with plenty of details such as rep productivity, seasonality, and new hire ramp impact, that are useful for month-over-month comparison and to test different scenarios if needed. When you look at the results you see that the two internal models (historical and touchpoints) share a similar trend – they're forecasting HC growth to be about double than the expected ARR/ customer growth. In other words, the cost of supporting your new (and existing) customers is not scalable. If this trend continues, it will dry up your company's margins and threaten its business model. The best-in-class model showed that the company is still far from best-in-class. This is a good reference point to have as a backup but not as relevant as what the internal data is showing.

Growing at a lightning pace, but being on the verge of having an unsustainable business model, is a scary-but-awesome finding and an insight worth sharing with your manager right away. You ping her on Slack and follow up with a chat. She understands it quickly and asks you to create a few slides that explain the story. You create the slides with some cool graphs and a catchy storyline that brings light to the problem the company faces next year if HC continues to grow as projected. You send the slides to your manager and set up a meeting to discuss the next day. She listens to your explanation and, at the end, says you did a great job and poses the question: what can we do about it? In your eagerness to share the findings you forgot that there's more to this job then just showing what the data is telling - you're expected to come up with solutions, not just surface the problems.

Your mind is blank. You were excited about finding this issue, but you didn't realize you needed to think about solving it right away too. In the moment you come up with some potential solutions like hire less, find cheaper HC, reduce HC by x%. However, your manager knows that this requires a discussion, a deeper analysis, a comparison of hypotheses, and an evaluation of trade-offs.

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2. Build alignment with stakeholders

This is where your real work begins. You're now given another two weeks to propose a solution to get your CFO, COO, and CEO's approval, while making sure impacted stakeholders will also be supportive (or at least not opposed to it).

You're excited and scared. You get to present to the leadership team in the first month you joined (unthinkable in a large company). But where do you go from here? What should you do? This is where the soft skills such as listening, communicating and stakeholder management come into play.

First, you try to root cause the issue and hypothesize solutions. There are several things at play. Sure, teams need to grow to support a growing customer base, but do they really need to grow at this pace? If we're spending so much on people, can't we try to outsource some of the work? Or why not automate? All looks good on paper, but you don't have context about the job itself.

So it's time to go down to the field and listen first-hand to what is going on. You speak to customer representative folks to understand their job and to their managers to understand their concerns. You also need to understand the dependencies of other teams, such as Marketing and Sales (given new offers and onboarding), as well as EPD (given new product launches), and so on. You're going deep, because you want to make sure that you get the full picture of what is happening.

3. Review options and start executing

Eventually it all comes together. With a mix of quantitative analysis and in-person feedback, you're able to paint a good picture of what is happening, why it is happening, and what can be done about it. You work with your manager, get your direct team feedback and come up with three proposals that can solve the problem.

• Option A: cut HC dramatically, impacting the customer experience and team morale, but keeping margins high
• Option B: take a margin hit on the short term, but explore scalable solutions for the long term (and you already have some ideas about those)
• Option C: take a small HC cut to keep things under control for now and bet on even higher growth in the future to make it sustainable in the long term

4. Following up and making sure everything stays on track

Leadership aligns on one solution and, just when you think you're ready to move on to the next project, it's time to make sure this one follows through. Someone needs to hold people accountable to make things happen and to know if we're being successful!

Time flies, and you're celebrating your one year in your dream startup. One morning you're curious, and you look at your numbers from last year. Confirmed. HC growth wasn't the double of ARR growth. You smile inwards, and then you start thinking about your new project, what it would look like if the company expands to all 50 states.