What does a Chief Operating Officer (COO) do in an Early-Stage Startup: Part 7
- Milly Barker
- Oct 22, 2024
- 8 min read
Did you know that a Chief Operating Officer can run most business functions, making them the most efficient and effective tool for any growing business with a limited budget?
An early-stage COO is, on average, responsible for about 7 different business functions.
From the anecdotal experience of my peers and me, this usually covers HR, Legal, Finance, Fundraising, Sales & Marketing, Product, and Engineering.
A COO can be responsible for such a broad range of disciplines because they're also responsible for the business's Strategy - aka turning the Founder’s wild and exciting vision into a reality - which has implications for all departments.
In this new series of posts, I'll break down how a COO does this - how do I, a detail-oriented completer-finisher with an unbridled love of spreadsheets, turn a creative, forward-thinking, relatively nebulous idea into a structured and realistic roadmap for success (and how I keep the entire company following that roadmap).
We’re going to follow the same 6-Point Strategy framework that I developed for my best-selling book How To Write Your Strategy. If you’re (like me) someone who likes to read ahead, you can get the whole book for 50% off here for the next few months using code SUMMER24).
All the articles in this series
Part Seven: Performance Management (this post)
In the previous articles in this series, we looked at how your end goal for a business can impact even your earliest decisions, how important a Mission Statement is to a company’s success, how to translate your wildest dreams into numbers you can achieve, how to set more manageable bite-sized goals, how to identify and prioritise your key outputs, how to write a winning Task list, and how a COO can help you through the hardest bits of all of those crucial things.
In this post, we’re going look at Performance Management (which is relevant even if you're a solo founder), specifically, the importance of splitting Performance evaluation into what you’re putting into the business and what you’re getting out of it, and how doing so will motivate you and your team to keep going, even when the results prove elusive.
Below is the Pay As You Go COO 6-Point Framework for a Strategy that I developed for my best-selling book How To Write Your Strategy. We’ve been working our way in from the left-hand side.
We're now at the very end of the right hand side. This is where we get reflective. We've become really clear on what we want to achieve and how we're going to achieve it, now it's time to get honest and ask - did we do what we said we were going to do? And did it deliver what we needed?
Being honest about your progress and facing up to the idea that you might not have achieved what you wanted can be an incredibly hard part of running a business. We're going to answer a key question: what happens if you're working day and night on all the priorities but you're still not delivering results?
What does a COO do in an early-stage company? How a ‘vision’ gets turned into a ‘reality’: building a Performance Management framework.
Performance Management is exactly what the name suggests - it’s a system for managing Performance, for measuring and improving on how well you’re doing in relation to what you set out to achieve when you wrote your Strategy and set it into motion.
In the goal-setting part of your Strategy, you will have written your Mission Statement and set your Objectives and your Key Results. As we know from the previous chapters, these Objectives and Key Results are your quantitative measures of success - they’re the things that will tell you, objectively, that you’re achieving your Mission.
But they’re not the only numbers you need to be looking at to measure how well your business is performing.
Objectives are distant markers of success - they lay out what you want to achieve in a quarter, a half-year, or a year. Key Results are more immediate measures that show that you’re on track to hit those Objectives.
Your Projects and your Tasks are the things that you’re going to do to ensure that you’re meeting these quantitative measures.
How do you start to think about managing performance?
In an ideal and controllable world, you’d simply complete all the Tasks, wrap up all the Projects and be exactly where you want to be in terms of your Objectives and Key Results.
Unfortunately (and for many reasons other than just your Strategy) we don’t live in an ideal and controllable world. No business is an island and nor can any operate in solitude.
Your business exists in the context of other things, including your competitors - both direct and indirect. It also exists in the context of your customers - their changing wants and needs and their feelings about the problem that you’re solving with your product or service.
These forces, the changing wants and needs of the customer, the things that your competitors do to try to beat you in the market, and the wider macro-economic impacts of the economy as a whole, are constantly shifting. These constant shifts mean that the environment in which your business operates, the market, is never the same from one day to the next.
Like a new car that loses a chunk of its value the second you drive it out of the showroom, your Strategy becomes old on the first day that you launch it. No matter how hard you work on it or how much research you do in advance, this is an unavoidable fact.
You will very likely not meet your Key Results or Objectives exactly as you thought you would because you cannot control the environment in which they and your Strategy as a whole exist.
To paraphrase the classic line from the often misquoted Prussian military commander Helmuth von Moltke, no Strategy survives contact with the market. (No plan survives contact with the enemy).
The foundation of performance management: inputs, outputs, and outcomes
So, how do you proceed when you know that you’re going to spend a lot of time writing your Strategy, breaking your Mission Statement down into your Objectives and Key Results and then designing the Projects and the Tasks that you think will help you achieve them, only to know it’s not entirely going to work out as planned?
You proceed with good Performance Management, which can be split into 3 measurable parts - your Inputs, your Outputs, and your Outcomes.
Let’s start by defining the terms.
Inputs | Inputs are your Tasks. They’re the effort that you’re putting into the business by taking single, small steps, day-by-day, to work towards the completion of your Projects. |
Outputs | Outputs are your Projects. They’re what you’re getting out of the combined effort of your Tasks. |
Outcomes | Outcomes are your Objectives and Key Results (OKRs) themselves. They’re the quantitative results that you hope to see once you’ve completed your Projects - the outcome of all your hard work. |
As you can see, Inputs/Outputs/Outcomes are just different names for Tasks, Projects, and OKRs, respectively. When you’re building your own Performance Management system, you can call them by either name; I’m showing you both to help expand your knowledge as you’ll likely come across these terms elsewhere.
When starting to think about managing Performance, it’s really common to think only about the Outcomes (hitting the Objectives or delivering against the Key Results), since these are clearly laid out in your Strategy as the numbers that denote success.
However, when monitoring and managing the Performance of your organisation, especially when you’re starting out, it’s important to assign value to all three - to Inputs, Outputs, and Outcomes. Yes, your Objectives and your Key Results are the Outcomes that you really desire and are thus the scores that you value most in the grand scheme of your organisation’s progress, but you can’t always control the outcome of your work.
The market context of your businesses (the changing wants and needs of the customer, the things that your competitors do to try to beat you in the market, and the wider macro-economic impacts of the economy as a whole) is not yours to control. Yes, you can impact customer wants by promoting products designed to fit their needs, and your moves in the market will impact how your competitors respond, but you can’t entirely control these forces.
How to incentivise inputs, outputs, and outcomes
As we discussed above, you can’t control the market, especially not when you’re launching a new business. Sometimes, you will spend hours designing Projects and scoping Tasks and still miss your Key Results and Objectives because of what is going on in the market.
What you can control is how you show up every day to put effort into the Tasks (Inputs) in order to complete your Projects (Outputs). And there’s nothing wrong with rewarding yourself and your team for that hard work. These rewards will increase your motivation for tackling the hard work of replanning all your Projects to try to get closer to your Key Results next time.
How you split the value you assign to Inputs versus Outputs versus Outcomes will be your own choice to make, and you’ll learn as you go, but a rough guide would split the rewards for completion equally as a starting point.
Metric | Weight on reward |
Inputs (Tasks being ticked off) | 1/3 |
Outputs (Projects being completed) | 1/3 |
Outcomes (OKRs being reached) | 1/3 |
Assuming you’re designing Projects (Outputs) that you think will move the needle on your Key Results (Outcomes), you should reward yourself for the work that’s gone into completing each of the Tasks (Inputs) and finishing the Projects - even if you don’t hit the Outcomes. This took a lot of effort, you will have shown up each day, hour after hour, to complete your Tasks to finish your Projects - that’s really an exceptional achievement.
How you reward yourself depends on the resources you have available and whether you’re working alone or with a team. If you’re working with a team, you could, for example, tie compensation into all three to keep motivation levels high even in difficult periods.
For example, if you’re paying a base salary and a bonus, split the bonus into thirds and pay out based on Tasks finished, Projects finished, and Key Results hit and show the team members that you value the hard work that they put into their Tasks and Projects, even if the Key Results were missed.
You can then learn from the results that you did see and better design the Projects and Tasks for the next period.
What's next?
There's obviously a lot more that goes into how to build and set up a performance management system for your growing company, but the basic methodology here should get you on a good path.
If you want to explore specifics for your business, I recommend either downloading the full book via the link at the top of this article or dropping me a line. At the time of writing, I’m currently taking calls with prospective clients for both Business Coaching and Fractional COO services (though I only take on 2 Fractional COO clients at once, so you need to get in there quickly).
Book a free, no-strings chat with me here:
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