The Case for Developing a Revenue Operating System
How Aligning People, Processes, Technology, and Data Increases Your Capacity for Strategic Execution
Navigating the revenue side of any organization can often feel like navigating a labyrinth of conflicting priorities, disjointed processes, and disconnected teams. However, this disorganization often stems from outdated structures and processes. It doesn’t have to be that way.
Instead, developing a Revenue Operating System framework unites people, streamlines operations, and fuels revenue generation. It enables leaders like you to champion change within your organization and make those changes stick.
At its core, the Revenue Operating System embodies a shared language, a common scorecard, and a unified direction, eliminating complexity and fostering momentum.
Keep reading to learn more about how establishing a Revenue Operating System will help you transform your organization and drive it toward success.
What is a Revenue Operating System?
A Revenue Operating System is a cohesive framework that aligns diverse departments within an organization toward a common revenue goal. It describes how we bring people together, eliminate complexity, reduce friction, and ensure that we work together in a coordinated fashion to drive revenue.
The key is that everyone has to agree on a specific framework, measures and dimensions, processes, workflows, and permission systems. These are all core tenants that typically gum up the revenue process. Marketing, sales, service, and management teams often operate on their own paradigms. They all value things differently.
Instead, we all have to start speaking the same language, share the same scorecard, and move in the same direction. That is what the Revenue Operating System describes, and that is when momentum takes place.
Revenue Operations vs. Revenue Operating System
While they sound very similar, revenue operations and a revenue operating system are two different things.
Revenue operations is the foundation on which all revenue should be built. It acts as the infrastructure or roads that enable everyone to move safely and securely between aspects of the organization to extract value. However, revenue operations often fails to describe the value that revenue operations provides to non-revenue stakeholders.
A revenue operating system, by contrast, brings everyone to the table, has something for everyone, and shows how everyone will participate and benefit.
What Are the Benefits of a Revenue Operating System?
Since a Revenue Operating System brings everyone to the table in alignment, it fosters collaboration and synergy across all facets of the business and generates a cascade of benefits.
Major Efficiency Gains
By establishing standardized processes, workflows, and performance metrics, the system eliminates silos and ensures that every team member understands their role in driving revenue. This alignment streamlines operations and enhances communication and accountability, leading to significant efficiency gains.
Revenue Optimization
When the entire organization operates with the same information to work collaboratively and efficiently, it fosters a culture of transparency and alignment. This transparency ensures that everyone has access to the most up-to-date data and insights, enabling information-sharing and informed decision-making at all levels of the organization. With clear visibility into key metrics and performance indicators, teams can leverage each other's expertise, identify areas for improvement, and implement targeted strategies to maximize revenue potential and business growth.
Adaptability to Market Dynamics
Another key benefit of implementing a Revenue Operating System is the ability to adapt to changing market dynamics. It provides the flexibility and agility needed to navigate uncertainty and disruption effectively.
By bringing everyone together with diverse perspectives and insights, organizations can adeptly prepare for market shifts, identify new opportunities, and capitalize on emerging trends.
Additionally, this system's collaborative nature fosters innovation and continuous improvement, allowing businesses to stay ahead of the competition and make proactive decisions instead of just reactive ones.
How to Get Started Building a Revenue Operating System
So, there are numerous benefits to implementing a Revenue Operating System, but how can you get started? Building a Revenue Operating System starts with a three-step process:
Frame (Decision Support and Stakeholder Alignment)
Focus (Readiness and Planning)
Grow (Implementation and Adoption)
It is essential to start by understanding the current reality. Issues arise because everyone defines their reality based on their perspective of the situation. Executive leaders can speak a different language than marketing or sales leaders. This is often extremely frustrating and unproductive.
That is why the first step is aligning around the problem or opportunity and ensuring that everyone uses the same measures and vocabulary. Only when everyone looks at the same thing in the same way will there be a way to achieve a common goal or end result.
Once aligned, you can move into the next phase and create a detailed plan outlining the required steps of a successful transformation.
Finally, the team can execute the carefully crafted plans and facilitate widespread adoption and integration of the proposed changes. This third stage is essential for achieving a sustainable digital transformation and the desired outcomes.
Only after following these three steps and aligning the team around the two pivot points — your current and ideal future reality — can you have productive conversations and march toward that future reality.
How to Create a Common Scorecard
Issues often arise during change because the high-level goals are not cascaded down and contextualized to clarify how each department contributes to those goals. This can be remedied by creating a common scorecard that helps define success for each individual part of the organization.
A scorecard should combine lagging indicators (revenue, customer acquisition, MRR, ARR, growth) with leading indicators (inputs we can control). Consider what you know leads to velocity or opportunities that are likely to close. What factors do you know can cause friction? Take it down to a granular level, factoring in things such as the number of calls required or the types of products. You can use regressive analysis to help determine these factors.
The scorecard needs to give every contributor clarity about whether they were successful each day or, at minimum, each week. It should be an actionable resource that allows individuals to know what activities align with corporate goals.
Of course, sending everyone a daily shutdown scorecard is only meaningful if you also help them understand what success looks like and what behaviors contribute to it. Managers should have their fingers on the pulse to observe and resolve issues as quickly as possible.
What Role Does Management Play in the Success of a Revenue Operating System
Management can make or break the success of a Revenue Operating System.
The system's purpose is to enable everyone in the organization to be more successful. Managers must believe their fundamental role is to enable other people to be successful. They should ensure every person on the team has every opportunity to be successful.
If anyone fails, it is the manager’s responsibility to identify and mitigate that friction. Managers should nurture their relationships and support their employees ' success instead of just hoping they improve or declaring them a poor fit for the role. In The Age of Empathy, people want to know that their managers maintain open lines of communication and are there to support them so they can best drive revenue.
However, substantial individual contributors are often promoted into these management roles, and great revenue generators don’t always equate to great revenue leaders. In fact, the opposite is typically true.
Regardless, managers can use the daily scorecards to find ways to reduce friction and increase the volume of positive behavior in their team. They can bring the scorecards to the strategy table, enabling higher-level conversations that identify key variables and predictable measures.
It all harkens back to looking at the same problem from multiple viewpoints and appreciating each person's role in success. Notably, a revenue operating system with daily scorecards also attributes credit to those who most contributed to your success.
Learn More About Revenue Operation Systems
For more insights on creating a Revenue Operation System, listen to this episode of Outbound Sales Lift about the benefits of Revenue Operation Systems.