8. When and How to Start a Product Operations Team

This section of the course focuses on when and how to establish a Product Operations team in your organization. It's important to recognize that many companies already perform some aspects of Product Ops without having an official, centralized team. The decision to formalize a Product Operations team is a significant step that depends on several key factors.

Signals for Establishing a Product Operations Team

There are three main indicators that suggest it's time to consider formalizing a Product Operations team:

1. Number of Squads and Products: If your company has a large number of product teams (squads) and products, it might be time to centralize operations to ensure alignment and efficiency across these teams.

2. Projected Growth: Rapid company growth—especially if you're doubling in size each year—often outpaces the ability of existing processes to scale. This imbalance between growth and process sustainability is a strong signal that Product Operations could provide much-needed structure.

3. Product and Data Culture: If your organization struggles with data-driven decision-making or lacks mature product processes, establishing a Product Operations team can help embed a culture of product management excellence and data utilization.

VTEX Example

At VTEX, the growth of the Product Management team was explosive, expanding by 400% in one year (from 7 to 35 PMs). We also manage 9 products in various stages of maturity, with 30 squads working across these products. This created a high level of communication complexity, and the product culture was relatively new—historically, VTEX had been a company focused on engineering.

Given the rapid growth, complex product landscape, and need for stronger product culture, formalizing Product Operations became essential to maintaining alignment and ensuring processes scaled appropriately.

Scaling Product Operations: A Phased Approach

Product Operations usually begins organically within a startup environment. The product lead may naturally take responsibility for processes, while others with a data-driven mindset handle reporting. As companies scale, however, a more structured approach is needed.

Melissa Perri’s Recommendations

Melissa Perri, a well-known expert in Product Operations, suggests the following guidelines for scaling Product Ops:

• Early Stage: One dedicated person handling data is a good starting point.
• Scale-Up Stage: For every 70 people in the product organization (PMs, engineers, designers), you’ll need 2-3 Product Ops personnel, including someone to manage processes and another focused on data analysis.

At VTEX, we have slightly more Product Ops personnel than this recommendation, reflecting the rapid growth and increasing complexity we face.

Steps to Start a Product Operations Team

If you're ready to formalize a Product Operations team, here are the key steps:

1. Define Priorities

Start by identifying the primary priority for the team. Why do you need Product Operations, and what specific pain points are you trying to address? You may already have an intuitive sense of where to focus, but it helps to be clear about your objectives.

Two practical methods to define priorities:

• Survey: Conduct a survey with your product and growth teams to assess their alignment with current tools, processes, and data usage. This can help you identify gaps and prioritize accordingly.
• Future Thinking: Run a visioning exercise to imagine what an ideal week of work would look like in two years. This method helps teams think beyond current problems and identify future improvements that Product Operations could facilitate.

2. Allocate Budget and Define Roles

Once you’ve defined your priorities, the next step is to determine who will form the Product Operations team. There are three approaches:

• Part-time allocation: Assign a product manager (PM) part-time to Product Ops. This is cost-effective but risks diluting the impact if the PM is stretched too thin.
• Internal full-time hire: Reallocate an existing PM or other personnel to focus full-time on Product Ops. This ensures dedicated attention but may still be limited by the individual’s existing workload.
• External hire: Bring in someone from outside the company. This is the most expensive option but can bring fresh expertise, particularly if the person has experience scaling product teams.

3. Define the Role and Profile

Product Operations roles generally fall into two categories:

• Process-focused: Often filled by people with a background in consulting or general product management, focused on optimizing rituals and processes.
• Data-focused: People with a background in data analysis or development, who focus on metrics, dashboards, and data insights.

The specific profile you hire depends on the priority you’ve identified. If your focus is on improving data utilization, you’ll want someone with a strong data background. If it’s on streamlining processes, a more operations-oriented person would be ideal.

4. Communicate the Vision

Before launching the Product Operations team, it’s crucial to communicate the vision and purpose to the entire product organization. Clearly explain the goals of Product Ops, the initial project focus, and how it will help the team rather than create bureaucracy.

Encourage buy-in from the product team by explaining how Product Ops will support their work, not add to their burden. The first project should serve as an example to illustrate the value Product Ops will bring.

Starting Small and Growing

Start small and grow your Product Operations team gradually. In the early stages, only a few squads may use the processes or tools you implement. Over time, you’ll improve automation and extend your impact across the product organization.

The goal is to eventually have all your processes running smoothly and automatically, with full adoption across the team. But it’s essential to understand where you’re starting from and to be patient as you work toward that end goal.

This guide outlines the foundational steps for establishing a Product Operations team, providing a roadmap from recognizing the need for such a team to scaling its impact across your organization.