The Opportunity Cost of Unimportance in a Growing SaaS

By Justin Talerico

Feb 14 2019

I think sometimes that founders and leaders of growing SaaS companies forget what’s really important. I’ve seen this recently with some of our clients, and it’s been a good reminder for me on the opportunity cost of making unimportant things important. As the heads on the beast, we decide what’s important. Yes, of course, we get what we incentivize, but we also get behaviors that we condition into the organization. Since every employee behavior is a tradeoff for some other behavior, we need to make sure we’re getting the ones we really want.

The SaaS Mission is Growth

So let’s back into what we really want. If we’re running a SaaS company, the mission is generally to grow. That means acquiring and retaining customers. So far, it’s probably pretty hard to argue with that basic premise. And generally speaking, we want our teams to put their energies into that mission. If it’s product, we want them focused on customer needs, feedback, and differentiation. If it’s customer success, we want them listening, communicating, educating, and nurturing relationships. If it’s sales and marketing, we want them attracting and converting ideal customers who will be likely to stick around. Time spent elsewhere represents a huge opportunity cost.

Aligning Incentives is Only Part of the Story

We should be aligning KPIs and OKRs to each team’s contribution to the greater good. And when we can show them how doing their parts bubbles up to higher-level goals, we’re more likely to reach those goals. 

So why is it then that we let so many unimportant things take away from that steely focus on results?

I always looked at operations as the way to keep the rest of the company from being distracted from their missions and from incurring too much opportunity cost. To me, it was ops’ job to put systems and policies in place that made it easier for everyone else to do their jobs. The worst thing to me was hearing that someone was spending their precious time doing work unrelated too their KPIs or OKRs. So we took this seriously. We tried to take the annoying, time-consuming side roads off the map. Yes, this was about productivity, but it was also about job satisfaction. Turns out most of us don’t really want to fill out forms for expense reimbursements. Or jump through silly hoops for PTO requests. Or hunt down a total stranger to talk through benefits questions.

Helping Teams Focus on What they Do Best

It’s also generally true that we hire people to do the things their best at. Salespeople are best at establishing and closing relationships, not billing. Customer success people are best at building relationships and communicating value, not searching through databases. Engineers are best at solving complex problems with elegant features, not building spreadsheets for expense reports.

So far this sounds like I’m advocating for systems, but I’m not. I want us thinking about what we’re teaching our teams if we’re asking them to spend time on things unrelated to what we really want them doing. It’s not important that their expense reimbursement conforms to a silly norm. It’s important that they took a prospect to dinner and closed the deal. It’s hard to celebrate the win and then somehow penalize the winner. So it’s not just as simple as incentivizing the right things, it’s also disincentivizing the wrong ones.

Opportunity Cost is Real

When we make unimportant things important, we make important things less important. Time is fixed and that opportunity cost is very, very real. Everything we ask our people to do with their time is a tradeoff for something else. I don’t want my best people wasting any of their time. In fact, I want them to understand that I’m obsessed with helping them waste as little of their time as possible.

Financially, this is a no-brainer. Whatever it costs to make investments in operations — driven by sensible policies and supported by streamlined systems — is far less than the epic opportunity cost of your rock stars wasting 10% of their time; contributing 10% less to company goals; and being more likely to flee your walls for a more hospitable home. Inefficiency — regardless of source — is expensive as hell.

If you’re a founder or leader of a growing SaaS company, all I ask is that you look objectively at what you ask your people to do and what the opportunity cost is of busy work. Consider empowering operations to make sure that unimportant things are as trivial in the day-to-day as they should be. Make it easy for people to do their jobs well. Reward them with friendly policies and processes that illustrate what’s really important.

Content by Beacon9 SaaS Business Advisory

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