Common Operating Review Challenges and Solutions to Overcome Them

May 11, 2012

Given the option of a quarterly operating review or a quarterly board meeting, the operating review wins every time. In my opinion, no other meeting has a higher level of consistent impact on a company’s performance.

Operating reviews are typically quarterly meetings (although they can also be held weekly, bi-weekly, monthly, semi-annually, or annually) that are used to set and prioritize operating unit-level goals for the following quarter.

During operating review meetings, department heads:

  • Share key successes
  • Describe the current state of their unit, markets, and goals
  • Identify obstacles and impediments as well as ways to overcome them
  • Suggest ideas for improvements
  • Solicit advice from others
  • Discuss possible goals for the upcoming quarter

The overall objective is to develop a list of the best possible goals (I always have my team identify and prioritize the top 3 so we don’t get bogged down by too many – after all, resources are limited and you can’t do everything) for the following quarter based on the prep work done for the meeting and the discussion the meeting produces. If you’ve prepared properly for your quarterly operating review meetings, executing them should be relatively straightforward. That said, any time you implement a new process, it is bound to hit a few bumps along the way. Here are some common issues that you may run into and tips for getting past them.

Lack of Commitment to the Reviews

Operating reviews can offer a significant competitive advantage (and economic results) to organizations that use them effectively, but they also consume resources. The CEO should set the tone with all participants that operating reviews are extremely important and need to be executed properly.

Lack of Explicit Long-term Goals

If you don’t have explicit long-term goals with measures and targets, it will be very difficult to create short-term ones. Many managers think their goals are obvious and therefore don’t explicitly state them. Then, when there’s a discussion about trying to make long-term goals explicit, it can quickly become clear that goals are misaligned. That’s why it’s so important to have explicit long-term goals so you know what you’re aiming for, even when those goals change over time.

Unit Heads Do Not Have A Systematic Operating Model — Or They Have a Model that Does Not Take Advantage of the Newest and Best Approaches

Many unit heads are department leads for the first time and have not developed their operating models. Others might have a lot of experience with various models, but do not take advantage of the newest and best approaches. It’s important to articulate your current operating model during the operating review meetings so that others in the meeting can share opportunities for improvement.

Unit Heads Spend Too Much (or Too Little) Time Preparing for the Reviews

Operating reviews should be an extension of the unit’s operating system and, if the unit is managed systematically, should not take a lot of preparation. Too much or too little preparation usually points to a lack of systematic management in the unit.

Too much preparation may also indicate that the manager views the review as an assessment of performance rather than a vehicle to identify the best goals going forward. This issue can be addressed by making sure the ground rules for the reviews are clear and that the conversation remains constructive.

Department Managers Enter Operating Reviews with Assumptions that Actually Reduce the Quality of Their Meetings

Managers tend to think they should understand all aspects of their function at all times. In reality, most managers are only familiar with a few operating approaches, and even then only in specific situations that may or may not be applicable to their current environment. This reality means managers can come to operating review meetings with specific answers in mind that are sub-optimal or with a recommendation that he or she needs to be talked out of.

The solution in this case is often for the CEO to take a more active role in helping the unit head set up his or her unit appropriately. The CEO may also want to reexamine whether the manager in charge is really capable of leading a large and complex unit. If he or she isn’t, the CEO should move this person to a more appropriate role and find someone else to head the unit.


Editor’s Note: For more information to help you overcome obstacles and successfully conduct your own quarterly operating review process, check out “Quarterly Operating Reviews: Moving Your Business Forward by Looking Back.”


Venture Partner

<strong>George Roberts</strong> is a Venture Partner at OpenView. He enjoys partnering with companies and helping them achieve their goals through strategy, focus and operational execution. From 1990 to 2003, George spent 13 years at Oracle Corporation, most recently having served as Executive Vice President of North American Sales. While at Oracle, George was responsible for over $1 billion in revenue and more than 2,000 employees, reporting directly to the company’s CEO and Chairman, Larry Ellison.