QUARTERLY REVIEWS: MOVING FORWARD BY LOOKING BACK

QUARTERLY
OPERATING
REVIEWS:
Moving Your Business Forward
by Looking Back

TABLE OF CONTENTS

Foreword............................................................................................................................... 1

Understanding Operating Reviews:
What Are They and Why Are They Important?........................................................................... 2

Operating Reviews Defined.......................................................................................................2

The Benefits of Operating Reviews.............................................................................................3

Customizing Your Approach to Match Your Company ...................................................................5

Preparation, Execution, and Assessment: Key Steps to Conducting Successful Operating Reviews...... 6

6 Preparatory Practices That Will Improve Execution...................................................................6

A Few Basic Rules for Quarterly Operating Review Execution......................................................11

Properly Assessing Operating Review Performance....................................................................11

Common Operating Review Challenges and Solutions to Overcome Them.................................. 12

The Road Ahead: Checklists and Additional Resources to Get You Up and Running.................... 15

Checklist for the CEO ............................................................................................................16

Checklist for the CFO ............................................................................................................17

Checklist for the Unit Head Leading the Operating Review.........................................................18

Checklist for the Meeting Participants......................................................................................20

Checklist for the Facilitator.....................................................................................................21

Operating Review Assessment.................................................................................................22

Additional Resources..............................................................................................................26

FOREWORD

When your business was started, there were
a set of goals that were important
to your founders.
They wanted to create something exciting and meaningful that could impact or disrupt a particular market. They hoped
to build a highly effective, cohesive team and they aspired to grow the company efficiently and smartly, pivoting and
adjusting to respond to new opportunities or embrace new goals. If everything worked well, the company reached a level
of success that allowed it to grow.

As your company expanded, you hired more people and split the company into departments. You probably also hired
new operating heads for some of your departments as they continued to grow.

Many organizations “go sideways” at this point, as managers sometimes get stuck in the day-to-day execution of the
business and sometimes have too many goals, conflicting goals, the wrong goals, or no goals at all. They also may
have managers or employees who aren’t performing well and not even realize it. These issues lead to lower market
competitiveness, customer attrition, and the loss of their best employees.

Expansion-stage organizations need a new approach to ensuring that they have the right people and that they are
doing the right things the right way.

That’s why, instituting a quarterly operating review process — even though it takes time to assemble and conduct —
is critical, regardless of your company’s maturity. These regular reviews ultimately allow you to improve, refine, and
adjust executional performance, and equip you with the strategic direction and focus you need to achieve the goals
you set for your business.

Put simply, a quarterly operating review process, like the one we lay out in this eBook, is something you must have
in place if you are going to make the most of your company’s potential. As OpenView venture partner George Roberts
points out, given the option of a quarterly operating review or a quarterly board meeting, the operating review wins
every time. There’s no meeting that more consistently impacts the performance of a company.

“Quarterly Operating Reviews: Moving Your Business Forward by Looking Back” covers the basics of quarterly operat-
ing reviews, why they’re beneficial, how to prepare for them, and how to execute and assess each meeting. Addition-
ally, we’ve included a set of checklists that should help every person involved in quarterly operating reviews ensure
that they’ve done everything in their power to create successful meetings.

So, what are you waiting for? Let’s get started!

Scott Maxwell
Senior Managing Director and Founder
OpenView Venture Partners

Quarterly Operating Reviews: Moving Your Business Forward by Looking Back | 1

Understanding Operating Reviews:
What Are They and Why Are They Important?

Effective leaders maximize the performance of their
“Success isn’t a matter of
companies by developing great aspirations (including a chance, but rather a mat-
mission, vision, and values) and solid long-term goals.
They then rigorously execute against those goals while
ter of choice. This concept
continuously iterating on them over time. As a leader, really encapsulates why
your role is to guide this process at regular intervals
(weekly, monthly, quarterly, or annually), thereby help- having a clear strategic direction and
ing to ensure that you have a systematic approach to strategic plan with a focused imple-
realizing your goals and being successful.
mentation process in place is important.
Conducting quarterly operating reviews can get you
there by helping managers:
Business success isn’t going to happen
• Understand the current state of their company and by accident. You must look into the future
markets and create a plan for wherever you’re
• Identify and prioritize the best goals/initiatives for
trying to go.”
the following quarter (i.e., the goals that will expe-
dite your company’s progress toward meeting long- Erica Olsen, Co-founder and COO, M3 Planning,
taken from Strategic Planning Kit for Dummies
term goals)

Operating reviews are at the heart of integrating strategy OPERATING REVIEWS DEFINED
with operations and are both intuitively and analytically
derived. They also provide key stakeholders and outside Operating reviews are typically quarterly meetings
experts with a forum to examine and debate the cur- (although they can also be held weekly, bi-weekly,
rent state of your business as well as the top issues, monthly, semi-annually, or annually) that are used to
opportunities, and priorities going forward. Ultimately, set and prioritize operating unit-level goals for the fol-
they help you determine the more important initiatives lowing quarter.
to work on during the following quarter.
During operating review meetings, department heads:
“Quarterly Operating Reviews: Moving Your Business • Share key successes
Forward by Looking Back” is a guide to formalizing the • Describe the current state of their unit, markets,
process of conducting quarterly operating reviews and and goals
— more importantly — making the most out of them. It • Identify obstacles and impediments as well as
will show you how to guide your unit heads to prepare ways to overcome them
the right information for these meetings, how to have
• Suggest ideas for improvements
productive conversations during the reviews, and how to
• Solicit advice from others
assess the reviews so that you can continue to improve
the practice over time. • Discuss possible goals for the upcoming quarter


The overall objective is to develop a list of the best pos- THE BENEFITS OF OPERATING REVIEWS
sible goals for the following quarter based on the prep
work done for the meeting and the discussion the meet- From a corporate perspective and that of the CEO, estab-
ing produces. lishing a quarterly rhythm for operating reviews will help
you realize your most important long-term goals faster
While the time between operating reviews can vary, this and more effectively. The power of operating reviews
eBook focuses on quarterly operating reviews as part comes from their ability to:
of a quarterly management rhythm that consists of the
operating review itself plus five additional steps, all of • Align each operating unit’s quarterly goals with the
current state of your markets, other operating units,
which are conducted every three months:
and the company’s long-term priority goals
1. Quarterly Operating Reviews. The senior manage-
• Focus each operating unit on the most important
ment team and select outside advisors review an goals to accomplish the following quarter and mini-
operating unit’s performance, current state, lon- mize other activities that distract from the focal
ger-term goals, and possible goals for the unit for points
the following quarter. • Ensure that each unit is clear on its goals; has the
2. Prioritization. Senior management prioritizes the
appropriate resources, confidence, and conviction to
possible goals for the following quarter. realize those goals; and has taken responsibility for
achieving those goals
3. Planning. The unit team creates initial plans for

meeting prioritized goals, determines how many • Maximize the opportunity for each unit to accomplish
of them can be accomplished the following quar- its most important goals
ter, and determines how adjusting resources can
For department managers, operational reviews create an
impact the number of prioritized goals the unit
opportunity to:
accomplishes. The unit head then works with the
• Gain a clear perspective on where the department is
CEO and CFO to lock in the planned goals and
now and where it needs to go by stepping back from
available resources for the quarter.
day-to-day management activities to assess the unit
4. Execution. The unit team (and possibly others)
and its goals
executes the plans to meet the quarterly goals.
• Gather ideas and perspectives from other senior man-
5. Check. The unit team monitors the progress being
agers and outside advisors to help improve the list of
made against the goals. goals for the following quarter
6. Retrospectives. The unit team and other partici-
• Identify your most important goals and initiatives to
pants reflect on the goals, initiatives, activities, move them forward over the next 90 days
and results for the prior quarter and create a pri- • Ensure that your unit’s quarterly goals are aligned
oritized list of adjustments that the team proposes with the company’s most important long-term goals
to make the following quarter.
• Agree on the resource requirements and activities
from outside the department (e.g., other depart-
Integral to the quarterly management rhythm, operating
ments, outside advisors) that will be available to help
reviews enable managers to more thoughtfully assess
meet the goals
results and realign goals, strategies, staffing, and other
resources. The process keeps the executive team better Many of the business benefits of operating reviews
informed of each department’s activities, progress, goals, come from the work done to prepare for the meeting
and needs. It also ensures that department heads are itself. It’s often difficult for managers to step away from
accountable and responsible, and that all departments day-to-day business tasks and consider the unit from a
are aligned with the company’s strategic goals. broader perspective. Operating reviews help create this
discipline.


Additionally, businesses can benefit significantly by set-
ting aside time to bring their management teams, unit
How Can You Improve
heads, board members, and outside advisors together Market Clarity?
to share their unique experience and perspectives. With
quarterly operating reviews, each of these role players The answer is simple in theory, but difficult to
can voice their insight and help the company identify achieve in practice. Companies need strong, long-
new goals or opportunities that align with the business’s term senior management level support to improve
overall strategy. market clarity. There are four management prac-
tices that will significantly raise your probability
Another important benefit of operating reviews is that for success:
they create opportunities for the operating heads to hear
• Prioritization
from one another as well as from outside parties (board
• Collaboration
members and external advisors) whose unique experi-
ences with other companies and can be extremely useful. • Iteration
• Rigorous quarterly reviews at the senior
management level
Once an expansion-stage
Every quarter, your company’s market clarity team
software company raises needs to check its progress, reflect on the work
and results to date, and determine what the best
growth equity, it’s all about prioritized actions are to improve market clarity
in the following quarter. That work should then
execution — not capital.
be reviewed and discussed at the senior manage-
Quarterly reviews are all about improv- ment level, leading to final prioritized plans that
the senior management team can commit to.
ing, adjusting, and refining executional
The key discovery that OpenView has reaffirmed
performance. If I had to choose between over time is that companies can actually design
their growth by creating high market clarity. As
a board meeting or an operating review you penetrate and begin to own target segments,
to have each quarter with our portfolio you can use market clarity to increase and main-
tain your stranglehold on those segments.
companies, the operating review would
Of course, it’s only helpful if you maintain it. Market
always win. It’s the one meeting that clarity is not a one-time commitment. As your com-
pany grows and expands with new product offerings
consistently makes a difference in the and new target segments, your market clarity will
need to follow that same growth trajectory.
performance of the team.”
Scott Maxwell
George Roberts, Venture Partner, OpenView Venture Partners Senior Managing Director and Founder
OpenView Venture Partners


CUSTOMIZING YOUR APPROACH TO MATCH YOUR COMPANY

Operating review meetings must be designed to align with a company’s maturity in terms of size, management sophis-
tication, and development (i.e., startup, expansion-stage, or large growth-stage company).

As with all practices, too much process and structure creates bureaucracy, while too little can lead to chaos. The trick
is to achieve the optimal level of process and structure for your company’s current state and to then adjust it over time
as the company matures. For example:

An early stage company might have a single operating review meeting with the entire
team, including board members and external advisors, present to review the company’s
operations in their entirety. Early stage operating reviews might focus on product and
customer development, reviewing strategies at the same time that operations are
EARLY STAGE
being reviewed.
COMPANY
In other words, early in a company’s development, quarterly operating reviews may
serve as both an operating and a strategic review until the company matures to
the point where it is able to execute on annual strategic planning meetings. As the
company grows and matures, the team might add additional meetings to ensure that
other areas of the company are getting adequate focus and attention.

An expansion-stage company might have an operating review for each of the CEO’s
direct reports and include the senior management team and board of directors in
each meeting. As the company grows, it might substitute certain members of the
EXPANSION-STAGE board with specialized outside advisors for specific meetings to ensure that the team
COMPANY is getting the best idea.

A large growth-stage company might have an operating review for each of its major
functional areas and business units, and include certain members of the senior
management team and specialized outside advisors at each meeting.

LARGE GROWTH-STAGE The remainder of this eBook focuses on operational reviews for expansion-stage
COMPANY companies (generally companies with 20 to 300 employees). However, these
approaches can be customized to companies of any stage or maturity level. As with
any practice, there are many ways to execute operating reviews, so take OpenView’s
approach as a standard practice that can be customized into a best practice to meet
your particular needs.


Preparation, Execution, and Assessment: Key Steps
to Conducting Successful Operating Reviews

Now that you understand the essence of quarterly operating reviews and why they can improve your expansion-stage
business’s short- and long-term performance, it’s time to dive into how to actually prepare for, execute, and assess
your own review process.

This section provides a complete list of practices that will help you better prepare for your quarterly reviews, along with
some steps you need to take to execute and assess those reviews. Ultimately, this collective process will increase the
holistic value of your quarterly operating reviews and significantly boost the impact that they can have on your business.

Ready to get started?

6 PREPARATORY PRACTICES THAT WILL IMPROVE EXECUTION

Vince Lombardi once famously said that the will to win is not nearly as important as the will to prepare to win. In
other words, wanting to be successful at something — whether it’s football or business — is the easy part. Preparing
well enough to execute the drivers of that success is the real challenge. That’s why the six practices below can be the
difference between executing marginally helpful quarterly operating reviews and highly informative ones.

Don’t be alarmed if you haven’t completed all of these items before your first operating review — these practices
evolve together in an iterative manner. Focus on just getting started with the operating reviews on a quarterly basis
and develop these practices as you have time. Your goal should be to try to adjust and improve each of these prac-
tices, as well as your overall operating review practices, on a regular basis.

DEVELOP LONG-TERM, COMPANY-LEVEL from this practice and develop them before proceed-
1.
ASPIRATIONS AND GOALS ing. (For details on this process, check out OpenView’s
eBook, What Really Matters: A Guide to Defining and
Since one of the outcomes of quarterly operating reviews Realizing Your Company’s Aspirations.)
is to ensure you are aligned with long-term goals, you
need to make sure you’ve established those long-term Alternatively, you should at least set aside some time to
goals in the first place. Ideally, you’ll have done that develop and communicate three to five long-term goals
already and communicated your mission, vision, values, (milestones) so that you have something to align your
strategy, and annual goals for the company. You should quarterly goals to. This approach works particularly well
also ensure that all department managers have a clear for early stage companies that have not yet locked into a
understanding of those goals and that they’ve clearly specific product market and/or a specific customer seg-
conveyed them to your employees. ment. However, it can also be useful for early expansion-
stage companies that are not ready (for whatever reason)
If you don’t have your complete long-term aspirations to develop a complete set of long-term goals for the
and goals worked out, it might be good to step away company.


ENSURE EACH OPERATING UNIT UNDER- HAVE EACH OPERATING UNIT DEVELOP
2. 3.
STANDS ITS LONG-TERM GOALS AND ITS OPERATING SYSTEM FRAMEWORK
RESPONSIBILITIES

To complete this step, the CEO and CFO must lead the Each unit head (working with the CFO and, in some
charge together by: circumstances, the CEO and/or outside advisors) should
have an objective framework in place for the unit to
• Determining the long-term goals that each operating assess itself on a regular basis (weekly, monthly, and
unit head is responsible for. Ideally, each operating quarterly). Overall, there should be visible and well-
head owns one of the annual goals, though the goals communicated information available to all of the senior
may need to be divided differently (e.g., disaggregate managers, including:
certain annual goals into their functional components
and then assign them). Ensure that operating heads • The unit’s longer-term goals and, possibly, its aspira-
understand and have the skills and resources to tions
accomplish their goals, and that they are not so over- • A summary of the unit’s current quarterly goals and
burdened that they cannot accomplish them (two to measures against those goals
four key goals per manager is a good rule of thumb).
• Plans to achieve these goals, including the specific
• Ensuring that what it means to successfully complete tasks and associated deliverables
each goal is clearly defined. Whatever your definition • Current operating methodologies
of success is, it should be easily measurable so that
it’s crystal clear to everyone what achieving the goal • KPI results and targets
means. Sometimes, that entails having a measure • Analytics and drivers behind each gap in performance
(e.g., new customer bookings) and a target (e.g., $10 (updated periodically)
million). Other times this involves something that is • An organizational chart that identifies key gaps
more binary (e.g., hiring a top VP of Customer Service
• A unit calendar that helps everyone understand the
by a specific date).
key meetings and the overall approach to managing
• Requiring unit heads to understand the importance of the unit
quarterly operating reviews. A successful review pro- • Ongoing lists of issues and a list of possible goals for
cess will be difficult to implement if the unit heads the following quarter
aren’t giving adequate attention to the effort or don’t
• Required resources, if any, to achieve goals
truly understand their responsibilities.
• Anticipated impediments and plans to remove them
• Delivering draft presentations and other supporting
This information will help the unit during its weekly and
materials to the participants well in advance of each
monthly meetings and prove valuable as the unit head
operating review. The goal here is to make certain
prepares for quarterly operating reviews.
that ample analysis and thought have gone into devel-
oping any materials being shared at quarterly review
meetings. Pre-review meetings are a good venue to
4. SET AN AGENDA
ensure that one-on-one feedback and guidance are
given to functional managers.
The best operating reviews are separated into two sec-
• Making it clear that all unit heads must take responsi- tions: one that catches everyone up on the unit and
bility for their respective goals. It’s critical to establish the current state of the markets, and another where the
purpose, responsibility, and accountability through- conversation is focused on the unit’s future direction.
out the organization. Having all unit heads attend the
The first part is retrospective in nature; the manager up-
operating reviews establishes a broad understanding
dates everyone on the progress since the last operating
of the business, key dependencies, shared resource
review, reflecting on what worked and what didn’t, and why.
allocation issues, and shared objectives.


This part of the meeting serves as a forum to: ongoing performance reports and everyone is expected

• Remind everyone of the unit’s longer-term goals and to read and comment on them. In this case, the retro-
spective portion of the meeting can be very short and be
the goals that were set for the prior quarter
used to answer any questions the team has.
• Compare results against goals from the prior quarter

• Review the successes and failures of initiatives from The second part of the meeting is prospective in nature;
participants help the operating manager determine the
the last operating review
best possible goals for the following quarter. This part of
• Analyze KPI results for the previous quarter against
the meeting serves as a forum to:
short- and long-term targets
• Discuss the potential goals developed by the operat-
• Dive deeper into the KPIs that are off-target and dis- ing unit prior to the meeting
cuss possible causes for the gaps
• Brainstorm a list of potential initiatives going forward
• Examine the organizational chart
• Exchange a list of potential things to stop doing going
• Review assessments and/or capability maturity of the forward
unit, including:
• Prioritize (first cut with a rough cost/benefit) the goals
– The unit’s customer/market impact during the
for further review at a later prioritization meeting
previous quarter
– Methodologies/processes used by the depart- • Discuss the new resources that might be required to
ment, and the KPIs and targets for each meet the goals and the resources that will be freed
– People up through productivity improvements, as well as the
tasks that the unit will stop doing
– Organizing approaches
– Economic model KPIs and targets • Examine possible impediments to success and
approaches to removing them
• Discuss obstacles to improvement
• Determine a rough prioritization of the unit’s most
• Describe the current issues and opportunities in the
important goals
department and the list of ideas for improving them
During this part of the meeting, participants should
Some of the best companies spend very little or no time offer independent ideas to identify the complete set of
on the retrospective portion of the operating review. potential goals, debate the merits of each, and deter-
Instead, they regularly circulate the information in mine the short list of prioritized goals.

“Operating reviews are a crucial part of our management cadence because
they force us to focus strategically at least once a quarter, even if it is just for
an afternoon. The reality is, we often set strategic goals, and then as soon as
the planning meeting is over, we forget about them. With the rigor of a quarterly
operations review, not only are you forced to reflect on why you did or did not achieve those
goals, you have to do it in front of the rest of the management team and potentially even a
board member. It’s an amazing vehicle for focus and honesty.”
Pete Gombert, CEO, Balihoo


5. ASSIGN ROLES THREE EXECUTION ROLES

There are three primary roles for both the preparation 1. The unit head is responsible for leading the conversa-
for and execution of an operating reviews practice (this tion on his or her unit, including:
eBook contains several attachments that help each of the • Presenting the unit’s current state and proposed goals
people involved with the roles to initiate the practice): for the following quarter

THREE PREPARATION ROLES • Absorbing the meeting participants’ points of view,
and identifying the insights that will help the unit
1. The CEO is responsible for: perform better in the future
• Ensuring that the team is fully committed to the oper- • Facilitating a discussion around alternative goals and
ating reviews, that the unit has the right set of outside the overall prioritization of those goals
advisors, that the first set of KPIs for each operating
unit has been established, and that dashboards to 2. The meeting participants (CEO, CFO, other operating
report on the KPIs have been established heads, the board of directors, and outside experts) are
• Reviewing and commenting on draft presentations responsible for bringing a unique outside view to the
management team, including:
• Providing support for any necessary changes moving
forward • Asking penetrating questions

• Helping the unit heads identify better approaches for • Helping the unit heads identify better approaches for
assessing their units assessing their units and each unit’s strengths and
weaknesses
• Helping to identify each unit’s strengths and weak-
nesses • Bringing new practices and people to the attention
of the operating unit heads to help the units function
• Bringing new practices and people to the attention of
better
the unit heads to help the units function better
• Offering possible goals and helping to prioritize the
• Offering possible goals and helping to prioritize the
list of goals
list of goals prior to the meetings

3. The meeting facilitator is responsible for setting the
2. The CFO is responsible for:
tone by nurturing dynamic, constructive debate. Any of
• Ensuring that each operating unit understands its bud- a number of people can serve as facilitator, but ideally
get and has the resources it needs to meet its goals the facilitator is the only person playing that role, and is
• Educating unit heads about their unit’s economic not a unit head or a meeting participant.
models and long-term financial and operational goals;
In addition, it’s helpful to assign someone to handle the
how their units fit into the company’s overall eco-
typical administrative tasks associated with important
nomic model; and how their units are measured
meetings, including:
• Providing top-notch (and independent) objective
• Preparing and distributing meeting agendas
financial and operating metrics to the unit
• Informing participants of the time, date, and location
• Ensuring that the appropriate financial and opera-
of the meetings
tional control systems are in place
• Booking the rooms and arranging for the technology
3. The unit head is responsible for working with the needed as well as refreshments
CEO, CFO, and operating unit to develop the material • Updating the people presenting and preparing infor-
for the operating review. mation for the meeting
• Taking notes during the meetings


• Following up with individuals regarding action items The first operating review meetings tend to be longer.
that were agreed to at the meetings As the senior management team gains experience with
• Following up with participants and gathering feed- the rhythm, the preparation materials get better, and
back and assessments on how to improve each oper- the participants become more knowledgeable about
ating review meeting going forward each unit, the meetings will tend to become shorter.
Well-run units with managers who are fully prepared
• Preparing and distributing notes from the meetings
with the right material tend to have the shortest operat-
ing reviews, which last about one hour.

6. SCHEDULE THE REVIEWS INTO Operating reviews should be held at the beginning of
YOUR CALENDARS every quarter. A series of meetings (one for each unit)
can be scheduled over the course of one or more days,
A typical operating review will take one to three hours
preferably off-site.
of dedicated time depending on the preparation of the
material, the importance of the unit to the company’s Since many board members will participate in operating
current long-term goals, and the number of issues in reviews and the material from reviews will go into board
the unit. packages, it is helpful to schedule the operating reviews
directly before the company’s quarterly board meeting.

“Conducting quarterly business reviews is always a challenge
because expansion-stage companies are often understaffed and
overworked. The last thing one needs is another review. But this
type of thinking can be dangerous. The CEO needs to make sure
that these reviews are relevant and consistently done. Good reviews ensure that
your operating plans stay current.”
Michael Sharma, CEO, Exinda Networks


QUARTERLY REVIEWS: MOVING FORWARD BY LOOKING BACK

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