The board of directors of a company should be focused on the strategy of the company, including value creation and value capture against desired company outcomes. A critical and necessary expectation of Board meetings is management reporting outcomes against plan, discussion about company performance, and strategic implications for future performance. In addition, the board of directors has various fiduciary and governance responsibilities. As senior operating partners at PeakEquity Partners, my colleague Jim Sheward and I serve on company boards. PeakEquity is a private equity firm focused on financing growth and/or recapitalizations of emerging software companies. Like most senior operating partners, we have both played executive and advisory roles in a number of technology companies. We understand the issues of growing and scaling companies across the various business and technical functional areas of a company.
In order to leverage our expertise, we have used the common practice of an Operating Committee (Ops Committee) model with companies whose boards we serve on. An operating committee is a subset of the board and the operating executives/leaders of a company that meet periodically to review, ideate, and advise on key operational aspects of the business that have strategic implications. The Ops Committee does not deal with day-to-day operational issues, but rather addresses operational issues at a strategic level. In our case, we leverage our past experiences, patterns, best practices, and leading company B2B SaaS metrics to inform, challenge, and partner with our portfolio companies to deliver better results in key operational areas of the company.
Typical participants in the Ops Committee meetings are the operating partners from the private equity firm, other board members (depending on the topic), and appropriate company executive and operational leaders. The participants for an Ops Committee meeting are not fixed but a function of the operational topics to be covered in the meeting. We have also invited outside experts into an Ops Committee meeting to bring deep subject matter expertise and outside perspective. Our practice is to hold the Ops Committee meetings off-cycle from the board of director meetings. Typical private equity-backed portfolio companies have five board meetings per year. We find that holding the Ops Committee meetings at a different time (typically a month after each board meeting), provides appropriate separation from the board meeting and allows for focused preparation. Initially, we strive to have a monthly cadence of Ops Committee meetings (skipping those months when there are board meetings). This allows for seven Ops Committee meetings per year, although more can be scheduled if needed. The Ops Committee meetings are typically in-person, at a location convenient for all participants, and involve an evening dinner and a meeting the next day.
In contrast to Board meetings which are report and dialog-centered, Ops Committee meetings are more joint efforts and do not have a reporting expectation. They allow us to roll up our collective sleeves and work together on a set of agreed-upon challenges and opportunities facing the company. There is strong emphasis on collaborative problem-solving at the operational level to achieve strategic outcomes. Operating partners at these sessions discuss proven frameworks, best practices, and critical thinking approaches based on their own mistakes and successes. Good operating partners are students of the industry and are constantly on the lookout for best practices, trends, and insights from other companies relevant to a portfolio company. The operating partners are not “telling” management what to do, nor are we accountable for outcomes. Management still owns the ultimate responsibility for both decisions and outcomes.
Ops Committee meetings may include a “read-ahead” package to get people thinking about and prepared for the session. Both operating partners and company management may be involved in preparing materials to guide the session, but the best Ops Committee meetings are organic and free-flowing so that creative ideas related to the topic can be explored, critiqued, and refined into actionable next steps. Outcomes from Ops Committee meetings vary based on the topic under discussion. Outcomes can range from marketing and product hypotheses and experiments to test a new idea to an overview of a new product discovery method.
Our process for managing the Ops Committee revolves around managing a prioritized backlog list of operational topics that may have strategic implications. The topics on the backlog are dynamic and can be added to the backlog by any board member, executive, or operational leader at the company. The company executives determine the priority of the backlog topics with input from the senior operating partners. Recent examples of Ops Committee topics include:
- pricing, bundling, and discounting,
- competitive analysis,
- product prioritization and road mapping,
- maturing product management practices,
- scaling go-to-market motions and defining/understanding cost per MQL and marketing program effectiveness and efficiency,
- organizational design for scale in a rapidly growing SaaS company,
- introducing a self-serve value realization capacity into a product,
- automation for scale across the tech stack, product stack, process stack, and business stack,
- identifying and retiring technical debt,
- ecosystem mapping and strategic partnership development,
- buyer journey definition, orchestration, and optimization,
- introducing a PLG motion into a large ACV B2B SaaS company with an emphasis on marketing content, community, and product snippets that minimize time and cost to first value,
- creating 18 months of cash run-way by managing operating expenses and headcount
Overall, we have found the Ops Committee model to be a very effective tool for supporting companies as they go through growth and scale stages.
- If you are at a private equity firm, what is your practice around Operating Committees?
- If you are a technology company, what has been your experience with an Operating Committee?
Special thanks to Jim Sheward for his contribution to this article.
