Decentralised Operating Model: The way for SaaS Startups to get the S curve.

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Welcome to the 59th edition of The Growth Elements Newsletter. Every Monday, I write an essay on growth metrics & experiments and business case studies.

Today’s piece is for 5,100+ founders, operators, and leaders from businesses such as Shopify, Google, Sage, Hubspot, Zoho, RateGain, Zaggle, Servcorp, Apollo and more.

Happy Monday!

Is a Decentralized Operating Model the way for SaaS Startups to get the S curve?

SaaS startups between $1 mil to $10 mil in ARR face challenges in scaling their businesses.

Adopting a decentralised operating model can help achieve faster growth and operational efficiency.

𝐇𝐨𝐰 𝐝𝐨𝐞𝐬 𝐭𝐡𝐢𝐬 𝐦𝐨𝐝𝐞𝐥 𝐰𝐨𝐫𝐤?

► Concept: Each macro product is managed by a dedicated team led by a P&L owner who acts like a mini-CEO.

► Structure: Teams share a common infrastructure but operate independently to achieve specific targets related to profitability and growth.

𝐁𝐞𝐧𝐞𝐟𝐢𝐭𝐬

1. P&L owners concentrate on their product’s specific market needs, strategies and decision-making.

2. Running tons of dedicated growth experiments.

3. Shared infrastructure reduces duplication of efforts and costs.

4. Independent teams can quickly adapt to market changes.

5. Accountability and ownership help retain talent.

𝐈𝐦𝐩𝐥𝐞𝐦𝐞𝐧𝐭𝐚𝐭𝐢𝐨𝐧 𝐬𝐭𝐫𝐚𝐭𝐞𝐠𝐲

1. Assign P&L Ownership for each macro product.

2. They have the authority to make key decisions.

3. Profitability and growth targets for each P&L owner.

4. Shared technology stack and support to reduce costs.

5. Cross-selling macro products.

𝐄𝐱𝐚𝐦𝐩𝐥𝐞𝐬 𝐚𝐧𝐝 𝐜𝐚𝐬𝐞 𝐒𝐭𝐮𝐝𝐢𝐞𝐬

𝐄𝐱𝐚𝐦𝐩𝐥𝐞 1: 𝐒𝐚𝐚𝐒 𝐂𝐑𝐌 𝐂𝐨𝐦𝐩𝐚𝐧𝐲

• Product lines such as Sales automation, Customer service, and Marketing automation are each led by separate P&L owners.

• Sales automation serves as the scale builder, while marketing automation focuses on profit maximiser.

𝐄𝐱𝐚𝐦𝐩𝐥𝐞 2: 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐒𝐚𝐚𝐒 𝐏𝐥𝐚𝐭𝐟𝐨𝐫𝐦

• Independent teams manage various financial tools (e.g., budgeting, accounting, payroll).

• Payroll services drive scale due to high demand, whereas advanced accounting tools maximise profitability through premium pricing.

𝐅𝐢𝐧𝐚𝐥 𝐖𝐨𝐫𝐝𝐬

• SaaS startups can effectively manage and scale multiple products by adopting a decentralised operating model.

• It helps optimise for both growth and profitability.

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That's it for today's article! I hope you found this essay insightful.

Wishing you a productive week ahead!

I always appreciate you reading.

Thanks,
Chintankumar Maisuria