Entrepreneurial Operating System (EOS) meets PADRE/MADRE
As a Chief Operations Officer (COO) of a Software as a Service (SaaS) company, you are simultaneously an ER Doctor doing triage and a wellness coach helping the company survive and thrive. Life as a COO can seem like a game of Wack-a-Mole. There are too many problems to solve and too many "opportunities" to chase in a day or year. You need a rapid assessment and intervention model to know what is most important to direct the company's energy. This article will analyze two such systems - the Entrepreneurial Operating System (EOS) from the book Traction by Gino Wickman and the PADRE Operations framework from Zuora, and how they can be applied together in a SaaS company to optimize its growth and profitability.
PADRE Operations Framework
PADRE is a business model developed by Zuora to align SaaS business metrics with the customer's subscription journey to help companies measure the health of their subscription business model. The acronym PADRE stands for Pipeline, Acquisition, Deploy, Run, and Expand. A few years ago, I evolved the model into an operational framework for rapidly assessing friction points of the customer lifecycle for more consistent growth and maturity. By merging PADRE with EOS, you have a complete operational model for assessment, change management, and maturity. Let's begin with a summary of PADRE aka MADRE (because it is gender-neutral).
Pipeline/Marketing: Pipeline aka Marketing. How do you get raised hands from potential customers and engage them in your company?
Acquisition: This is your sales process. How successful are you at closing on new business and expanding logos and recurring revenue?
Deploy: How smooth is your process for onboarding new customers? How fast can customers get value from your software?
Retention: This involves measuring how many customers are renewing their subscriptions with the company. Key metrics include customer churn rate, renewal rate, and net promoter score (NPS).
Expand: The final metric is expansion. This involves measuring how many customers are expanding their subscriptions with the company. Key metrics include expansion revenue, expansion rate, and net revenue retention (NRR).
To understand where operations need to focus, you need a second axis for assessment:
Objectives
Processes
Metrics
Systems & Tools
Roles and Responsibilities
All of this is supported by the foundational departments of the three P's - Product, People/HR, and Profit/Finance.
To help the organization reach its potential, you need to meet it where it is. Forming an "as-is" map of PADRE is the first plot on the map so you can help the company become what it needs to be in the future.
Entrepreneurial Operating System (EOS)
Once you map PADRE and form a future state for the company, now you can use EOS to implement and monitor the changes along the way. By connecting its six core elements—vision, people, data, issues, processes, and traction—Entrepreneurial Operating System (EOS) helps businesses to overcome any challenge they face and to accomplish their goals. The basis of EOS is that companies can create a robust foundation for growth and maturity when these components are in harmony. With the right tools on hand along with effective methodologies, you'll be able to reach success more quickly!
Vision: The first component of EOS is vision. This involves defining the company's core values, purpose, and long-term goals. By setting a clear vision, companies can align their efforts and ensure everyone is working towards the same goal.
People: The second component is people. This involves attracting, hiring, and developing the right talent to execute the company's vision. Companies can maximize their potential and achieve their goals by having the right people in the right roles.
Data: The third component is data. This involves identifying and tracking key performance indicators (KPIs) to measure progress toward the company's goals. By having accurate and timely data, companies can make informed decisions and stay on track.
Issues: The fourth component is "issues." This involves identifying and solving problems that are preventing the company from achieving its goals. By prioritizing and addressing issues head-on, companies can minimize the impact of roadblocks and maintain momentum.
Processes: The fifth component is processes. This involves creating and refining systems and procedures to maximize efficiency and productivity. By having streamlined processes, companies can reduce waste and improve their bottom line.
Traction: The final component is traction. This involves executing the company's goals and achieving tangible results. By staying focused and committed, companies can build momentum and achieve long-term success.
Application of EOS and PADRE in a SaaS company
As a COO of a SaaS company, you can apply EOS and PADRE metrics to optimize growth and profitability. Here's how:
Define a clear vision: You would think this is obvious but I rarely see it documented, much less updated or well communicated, in companies. Start by defining a clear vision for your company. This should include your core values, purpose, and long-term goals. Make sure your vision is communicated clearly to your team, so everyone is aligned and working towards the same goal.
Perform a PADRE assessment: For each business function in the customer lifecycle, investigate whether each department has well-defined objectives, processes, metrics, systems & tools, roles, and responsibilities and that they are aligned across the functions. When you look at the key metrics for each department, it will be obvious where to start. Hint: I usually start from Deploy and work outward in both directions.
Address issues head-on: Use the EOS tools to identify and address any issues preventing your company from achieving its goals. This could include addressing internal communication issues, refining your processes, or improving your product offerings. Use the PADRE metrics to track the effectiveness of your solutions and make adjustments as needed.
Streamline your processes: Use the EOS tools to create streamlined processes that improve efficiency and productivity. This could include optimizing your sales process, refining your customer support processes, or improving your product development processes. Use the PADRE metrics to track the effectiveness of your processes and make adjustments as needed.
Focus on traction: Finally, focus on executing your vision and achieving tangible results. Use the EOS tools to stay focused and committed to your goals, and use the PADRE metrics to track your progress and make adjustments as needed. Celebrate your successes along the way, and use them to motivate your team to keep pushing forward.
In conclusion, implementing the Entrepreneurial Operating System and PADRE Operations Framework can help a COO of a SaaS company optimize growth and profitability. By defining a clear vision, hiring the right people, using data to make informed decisions, addressing issues head-on, streamlining processes, and focusing on traction, a SaaS company can achieve its goals and build long-term success. Use these tools to create a strong foundation for growth and profitability, and watch your company thrive.
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