3 Simple Ways to Utilize a Fractional COO
Fractional COOs are a cost-effective way to improve the performance of your startup
Early stage companies often struggle to find a repeatable business model that can be expanded at scale.
In a lot of cases, the primary roadblocks come from a lack of expertise or operational experience within the company. This is where fractional COO expertise and services can help.
What is a fractional COO?
A fractional COO is an operations-focused senior level executive brought in on a part-time basis to strategize and execute on company operations and growth plans.
What are the benefits of bringing in a fractional COO executive?
The benefits of a fractional COO are numerous. One evident benefit is cost-related, as an early stage company, or a mid-sized company looking to re-organize, gets access to senior level expertise in operations management for a ‘fraction’ of what it would cost to bring someone on full time. Literally a fraction. The average cost of an executive COO is $300k-500k in major metro areas, while a fractional COO will cost between USD $3,000-20,000/month on a retainer basis, depending on the needs of the organization. By hiring a proven operator, a growing business can save on salary expenses and allocate funds in other key areas of the business, without compromising performance outcomes.
Another evident benefit is flexibility. A fractional COO can play a number of different roles in an organization. Usually, the operational priorities of the company determine the role played by the fractional executive.
It is the flexibility that I want to explore in this post because it is apparent to me that some level of misunderstanding persists regarding the different uses a fractional COO can bring to an organization.
Fractional COO Services
Here are three of the more common services provided by a fractional COO executive:
1. Operational Assessment and Alignment
Regardless of what ‘operations’ means in your business, the same basic concepts and principles apply to all industries. The fundamental questions behind operational assessment and alignment have to do with efficiency. Supply-chain networks, sales funnel management, internal communications, bookkeeping – every operational area is put under the ‘efficiency microscope’ by a senior level executive who knows what efficiency looks like, and can generate a roadmap to get there.
2. Executive Project Leadership
Sometimes a company needs assistance executing a specific, time-sensitive project. Rather than act irrationally by hiring a full-time COO to early, a company can bring a fractional COO into the fold to provide the expertise in a specific field the organization is lacking. Whether it’s transitioning from legacy software, preparing for an M&A deal, building out a repeatable sales process, or delivering on an investment strategy, a fractional COO will have the experience and know-how to collaborate seamlessly with the CEO while completing the time-sensitive task.
3. Interim COO
A company on the verge of hiring a full-time COO would be wise to start with an interim COO. There are clear cost benefits and infrastructural advantages to going the interim route first – not to mention the opportunity to “test drive” the role of COO in the organization. In the capacity of interim COO, a fractional executive will often play the role of ‘sounding board’ for the CEO while simultaneously building a viable growth roadmap for company employees to follow.
Rounding It Up
Access to executive-level talent on a budget is the kind of resource startups need in order to grow sustainably. Often times, an organization will get to a point where they could really benefit from executive leadership in key operational areas but lack the budget to bring someone in on a full-time basis. A fractional COO is the ideal solution to this budgetary constraint, as they provide the highest quality of leadership in a part-time capacity, driving results without weighing down the balance sheet.
ABOUT THE AUTHOR
Stephen Giese is Head of Morgan Hill Partners’ Minneapolis / St. Paul advisory and consulting businesses, working with client technology and tech-enabled companies and investors to help maximize value. Stephen has 20 + years experience working in senior management positions at technology-enabled companies, including Account Management, Global Sales Management, Sales and Marketing Strategy, as well as CEO and COO positions. With a particularly keen eye for sales strategy and operational management best practices, Stephen has a proven track record of unlocking value and propelling growth within a company.