Drive value and growth by focusing on specific policies, practices and habits within the business.
Paul Dippell
We’ve all heard some tried and true business aphorisms:
“In order to grow your business quickly, you have to sacrifice profit.”
“Say ‘yes’ to any sale that comes your way, even if it’s a lower monthly recurring revenue than you’d like. You can upgrade them later.”
“High profit comes at the expense of customer experience.”
The Operational Maturity Level model quantifiably disproves these common misconceptions. Solution providers don’t need to sacrifice profit for growth — quite the opposite. No matter the size or business model (managed service provider, value-added reseller, etc.), any solution provider can operate at a high operational maturity level and thus drive best-in-class profit and growth by focusing on and perfecting specific policies, practices and habits within their business.
In a nutshell, Operational Maturity Level (OML) measures a company’s ability to most efficiently and effectively build and execute a high-performing business plan. Higher profit, stock value, market differentiation, team accountability and retention and customer experience are all fruits of being at higher operational maturity. Your OML score indicates the degree to which your decisions, processes and actions are similar to those of the companies in your specific business model, who are in the highest profit and growth quartile.
Attaining higher operational maturity is possible for any solution provider. The benefits are clear. According to the Service Leadership Index, between 2008 and now, MSPs at OML 3.9 or higher (on the 1-5 OML scale) had, on average, 2.6 times higher bottom-line profit percent, than MSPs at OML 3.1. When marketing, sales, service, strategy and incentive compensation are properly aligned, growth, profit and scalability are – not easy but easier – to achieve. Teams are easier to manage and there is a clearer unique value proposition for clients.
We don’t need to elaborate much more on the benefits of getting to higher operational maturity, but we do know that it can be challenging for a solution provider to, first, identify where they land on the operational maturity scale, and also determine a strategy that will drive up their OML so they can start reaping the financial and operational benefits of the top performers.
The 5 Levels of Operational Maturity
The OML is determined by a solution provider’s ability to execute on an offset of traits that all high-performing solution providers master across strategy, sales, service, finance and incentive compensation. Each OML trait has a different ROI based on various factors, including the cost to implement, difficulty in implementing, risk if not implemented, speed of impact, impact on profit, the impact of quality and speed of implementation.
These are the five levels of operational maturity for solution providers from lowest to highest
- OML 1: Beginning – Low to negative financial performance and inconsistent service quality. They don’t know what they don’t know. Operations are largely trial and error. Little differentiation in the market.
- OML 2: Emerging – Improving financial performance and service quality, and starting to understand the basics of profit levers. Starting to realize what they don’t know. Few controls and little forward planning. Incentive compensation isn’t meaningful and/or is poorly aligned. Poor market differentiation.
- OML 3: Scaling – Median financial performance and service quality. Basic controls. Some forward budget planning, little attainment tracking. Incentive compensation is meaningful in scope but not tied to budget attainment. Beginning to stand out in terms of service quality and unique value.
- OML 4: Optimizing – High financial and service quality performance. Robust controls. Detailed forward budgeting and attainment tracking. Incentive compensation is meaningful in scope and tied to budget attainment. Strong market differentiation: market leader.
- OML 5: Innovating – Highest financial performance and highest value and quality services. The characteristics are similar to OML 4, but they also now extend capabilities to lines of business adjacent to IT. Very strong market differentiation.
The 5 Most Impactful Operational Maturity Traits
In my experience, there are also five traits that MSPs and VARs can focus on that provide the most leverage toward reaching greater performance. To demonstrate the differences between a low and high OML solution provider, let’s dig through each of these traits and analyze how …
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Low vs. High Operational Maturity: Can You Spot the Difference? - Channel Futures
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