Success in any business depends a great deal on how well you manage the details. I like to say the "dollars are in the details." However, many business owners and managers are overwhelmed by the minutiae of daily business life. They haven't discovered where to focus attention to accomplish the most good for the least amount of time, effort and cost.
So, what details in your business operation are most critical to success? The simple answer: those that propel you to achieve your business goals and those that obstruct you from reaching your business goals. Let's focus on the latter.
Most operational details causing frustration and hindering results are not obvious; if they were, you could quickly fix them. So how do you uncover the obstacles, weak links, bottlenecks, waste and delay buried in your daily business processes? More importantly, how can you spend your valuable time solving the most important problems—the ones with the greatest impact on customer satisfaction and your bottom-line profit?
The Root Cause
With business problems, we often tend to focus on symptoms such as excessive product returns or unproductive of employees, and fail to discover the true source of the problem—the "root cause."
By definition, A root cause "is the most basic cause that can reasonably be identified, and that management has control to fix. The fix will prevent (or significantly reduce the likelihood of) the problem’s recurrence" (Mark Paradies, TapRoot).
In a business setting, the job of the Systems Thinker is to drill-down and pinpoint the exact step within a business process that is under-performing and preventing expected results. Drilling-down is like looking through a microscope to examine the details and discover the underlying cause.
Keep in mind, however, that a symptom may have more than one cause. For example, lack of sales conversions from a website (symptom) may be from an overpriced product, a confusing sales message, or too many "hoops" for the customer to jump through in the buying process (causes). In addition, a single cause can create more than one symptom. An untrained worker could cause customer complaints and frustrated co-workers.
Finding the root cause of business problems is a skill that must be mastered by all business owners and managers. Understanding the Theory of Constraints will help you do just that. Once the true cause—the root cause—of a business problem is identified and fixed, all other dependent systems and processes are simultaneously improved.
Vital Few vs Trivial Many
When picking business improvement projects, it is important to prioritize and focus efforts where they will do the best good and help you achieve fast results. A few targeted improvements can be leveraged to create significant benefits to your organization.
In their book, "Six Sigma for Dummies," the authors write:
"The law of the 'vital few versus the trivial many' comes from the work of early 20th century Italian sociologist and economist Vilfredo Pareto. You may also know his law as the 80-20 Rule, where twenty percent of the inputs in any system account for eighty percent of the influence on that system.
"Pareto determined mathematically that, while a great number of factors are connected to a given outcome, only a few carry the weight to change that outcome in a significant way. In a business, system, or process, a few key variables are the cause of most performance problems. When you look for leverage in business, you search for the minority of variables that provide the majority of power in solving problems in manufacturing, assembly, distribution, accounting, finance, customer service and so on.
"There are more factors, contingencies, and dynamics to manage than possible when trying to break through to new levels of performance and success. The natural tendency is to try and manage and control every detail, but this is a slippery slope. The trivial many will bury you in a pile of unnecessary cost, trouble, worries, wasted energy and valueless action. No one, and no company, has the luxury or reason to manage all the details. Instead, the right path is to manage only those that are critical to producing the outcomes you desire. Focus on the inputs that really matter. All the rest, leave alone unless they become significant" (Craig Gygi, Neil DeCarlo, Bruce Williams, 39).
Getting to Work
Focus on the vital few details that will give you the biggest bang for your buck. What systems and processes can you improve that will help you reach company goals? What can you fix to eliminate road blocks, waste and inefficiency? What improvements will provide the largest financial payoff? How can you reduce frustration for customers or employees? What tweaks can you make quickly and inexpensively?
Once you pinpoint the vital few areas to focus on—your priorities—the best way to drill down to the root cause is by asking the right questions to the right people—a 5-Whys Analysis.
And please don't forget, The Box Theory™ Way—software and methodology—is also the best tool around to help you identify the root cause of problems and elevate your business systems and processes for high-performance results.
The Next Step...
At the root of all business problems is some form of waste, either defects in products or services, or time-wasting delay. This is what causes customers to go to competitors. This is what raises cost and erodes profit. This is what ultimately drives owners out of business.
Every product, service or transaction-based business has two “factories” running simultaneously according to Jay Arthur, author of Small Business Guide to Six Sigma. The "Main Factory," where you focus most of your energy, produces goods and services for your customers.
The second factory is less noticeable. It is the "Fix-it Factory," which cleans up all the mistakes, rework, defects, breakage, returns, scrap and other problems of the Main Factory. This frustrating underbelly of the business primarily deals with waste and delay. Every business has a Fix-it Factory that requires people and financial resources. You might be surprised by the cost of running your Fix-it Factory!
Waste is Expensive
Most small-business owners do not face the brutal reality of waste in their business. However, experts estimate that the average small business has at least 3% waste (Jay Arthur). Many have more. Some have much more!
For a company with one million dollars in sales, 3% waste amounts to $30,000 in cost. This expense, however, is not paid out of revenue dollars, but is paid out of profit dollars! If the company’s net profit before taxes is expected to be 8%, or $80,000 dollars, 3% waste would reduce the profit to $50,000.
Stated another way, the company has to sell nearly $400,000 more to replace this $30,000 loss in order to achieve the desired profit level. (I don’t want to depress you, but it actually gets worse because there are additional costs in handling the waste.)
Do you realize what I just said? All wasted time and material come directly off the bottom line. In this example, waste of 3% of sales translates to nearly 40% in lost profit!
Mistakes are Prevalent
How often have you purchased a product or service and had something in the transaction go wrong? For the last ten years, I have been telling my wife that it seems like half of our purchases have one problem or another.
For example, several years ago our financial services company was teaching workshops to educate our customers on the development of effective business systems. In putting together our little workshop facility, I had to buy a variety of equipment, furniture and accessories. Here's what happened:
I purchased eight high-back chairs for the lobby that came with the wrong fabric. I had a wall-to-wall counter built that was one-eighth of an inch too long and had to be returned for trimming. Paint came off ceramic candy dishes when removing the price labels. I ordered new blinds for five windows. Four blinds arrived together, but the installer had to make a trip back to install the fifth blind. I bought special narrow conference room tables that came with the wrong style legs. The company graciously remade the tables, but this was particularly annoying because it delayed our kick-off date. In the second batch, one table had a large dent in the top. In addition, the skirting on the tables didn’t stay attached so we removed them altogether. The audio-visual person put the ceiling speakers in a different place than I requested. I didn't make him move them, but it always bugged me.
These common mistakes cost the vendors most or all the profit from my business. However, this is only part of the story. The Fix-it Factory erodes profit in another way. You see, I may never do business with some of these vendors again; they caused me too much pain. Worse yet, I may tell other people of my bad experience. You can see that the overall cost of 3% mistakes is enormous!
Walmart Gets It
Walmart is relentless at cutting waste from their business. For example, they have distribution centers as large as twenty-four football fields, with up to nineteen miles of conveyor belts. Many trucks are simultaneously loaded at the docks and dispatched to regional stores. Now get this! Wal-Mart measures the efficiency of their loading operation by how much space there is between boxes traveling down the conveyor belts. If the boxes are touching each other, the maximum number of boxes can be loaded. The space between the moving boxes is actually “waste” or inefficiency, and it increases the cost of every unit of product on the conveyor. This kind of attention to detail is what makes Wal-Mart so successful.
Waste and mistakes are a common occurrence. Every customer purchase has many choices, options and variables followed by a daunting trail of paperwork and computer processes. Consumer demand for new and improved products and services—change—puts pressure on maintaining quality. The turnover of people in the workforce reduces overall competence. Holy cow, no wonder so many mistakes are made! It’s not surprising that we go around frustrated with employees who we think have messed up, or mumble when customers take their business elsewhere.
Cut Waste to Survive and Prosper
The truth is that times have changed. To survive, the small-business owners of today must accomplish the seemingly impossible. They must squeeze out every possible defect and delay from their business. They must execute operations with exactness. Every part of their business must be systemized to reduce costs and eliminate customer dissatisfaction.
Here’s the deal. You—the business owner—are in control. It is up to you to create a “culture of discipline” (Jim Collins, Good-to-Great) and drive the waste out of your business. If it's not important to you, it won't be important to others. Make it a top priority!
Get started turning your business into a “house of order.” Develop effective business systems that will shut down the Fix-it Factory. Start working on the business and not just in the business (Michael Gerber, E-Myth Revisited). You can do it, and I am going to show you how!
The Next Step...
In the “Harry Potter” series, no witch or wizard dared to speak the name of evil Lord Voldemort. Why? Speaking his name gives him power.
Likewise, give a lamb or calf a name, and it becomes a pet. Give a group of ball players a name and they become a team. Give a good movie or piece of music a name and it will be remembered by millions of people through generations of time.
Naming something gives it identity, purpose and importance. Naming gives it POWER!
The Value of a Name
In a business, the name of a company, product, or even a web page URL can create great financial value. Some names become brands so powerful they take on a life of their own—Hershey bar, Kleenex, Xerox copy and iPad. (None but the newer iPad are even flagged by my spell-checker.)
In the accounting business of my former life, I “productized” an accounting service with a registered trademark name—the Profit Acceleration System®. Giving a good name to a business service immediately elevates its perceived value.
Name Your Business Systems
In the typical small and mid-size business, there is a lot of hustle and bustle as people scurry around getting work done. They are engaged in a variety of business activities that have grown out of a need to accomplish essential tasks—marketing and sales, customer service, hiring, order fulfillment, and so forth.
However, when you become a Systems Thinker, you begin to see your business activities as interrelated systems and subsystems; the essential building blocks of your business. Each business system has a specific purpose and is of greater or lesser importance to the goals of your organization. In addition, each is either performing as expected, or not producing the desired results.
W. Edwards Deming (Total Quality Management) said, “If you can’t describe a process, you don’t know anything about it." Giving a name to a business system or process is the first step to describing it.
Naming Gives Power
The moment you see your business activities as specific systems—AND THE MOMENT YOU NAME THEM—they become more powerful. Here’s why?
Once you name a system, you can:
- Recognize and refer to it as a unique entity with a specific identity and purpose.
- Give it an owner, someone who is accountable for its results.
- Create a team around it that takes delight in its achievements.
- Measure it to determine if it is producing as expected.
- Improve it by removing bottlenecks and weak links.
- Celebrate its success by recognizing and rewarding people.
- Value it as a true business asset.
Can You Name Your Business Systems?
Do you and your employees recognize your important business systems by name? For example, do you talk about how you can improve your Sales Lead Follow-up System, your New Customer Intake System, or your Employee Incentive System? Have you even thought about these types of activities as systems?
Does everyone in your company know which business systems they are part of or responsible for? Do they know every day how well their systems are performing, and what they might do to improve?
If your people aren’t connected to the performance of named business systems or processes, I guarantee you are not tapping into the potential power and profit these systems can generate..
So, go name your business systems. This simple act will raise consciousness, elevate performance, and give you a better business.
Remember: “Names have power” (Rick Riordan, “The Lightning Thief”).
The Next Step...
Years ago, I was struck by a statement that had a great impact on me, changed my entire approach to business, and ultimately became one of the driving forces behind my current Box Theory™ methodology and software.
Michael Gerber, author of E-Myth Revisited, said, “Business owners must spend time working on the business, not just in the business.”
Working on a business—or running a business—is an entirely different task than working a job in the business.
Shortly after hearing this profound statement, two young fellows walked into my office and wanted to teach me about time management. Among other things, they taught that the best use of my time was creating value in my business, and the second-best use of time was building relationships and sales opportunities.
The epiphany: Working on the business to create value for stakeholders, customers, and employees is the most important and best use of a business owner’s time.
I soon devoted an hour a day to improving my company operations. This eventually increased to four hours a day—any everything just got better. I got off the treadmill and became a “business engineer”— one who plans, constructs, or shrewdly manages an enterprise" (Online Dictionary).
I was transformed by this new thinking, and so was my business.
Running a Business
Here are a few things I’ve learned over the years about how to work on the business for best results.
Get Clarity of Purpose: Make sure you and all employees understand your mission, vision, strategy and goals so that everyone is pushing in the same direction. (Easily accomplished with Box Theory™ Software.) Working on the business means becoming clear about who you are, where you are going, and how you are going to get there.
Find Time for Learning: Spend some time every day in The Zone reading and learning, becoming an industry expert, considering feedback from customers and employees, and pondering your key performance indicators (KPI's). “There is no substitute for knowledge” (W. Edwards Deming, Total Quality Management). Working on the business means pursuing the knowledge and skills that give you an edge and keep your company on top.
Never Stop Improving: Continuous Improvement of business operations is the primary responsibility of business owners and managers. Run a regular business improvement workshop that focuses on developing better people, products, processes, and policies. Tap into a wealth of employee ideas. Small improvements over time will produce significant financial benefits. Working on the business means creating a culture of learning and improvement— a culture of excellence—where people love coming to work and perform at their best, even when you’re not around.
Increase Value to Customers: Innovate to make your products and services easier, better, faster and cheaper than the competition. WOW your customers and turn them into evangelists for your products and services. “See how much you can give for a dollar, instead of how little he can give for a dollar” (Henry Ford). Working on the business means figuring out how to provide so much value that you become the obvious choice of your target customer.
Elevate Your Employees: First, hire the right people. Then encourage learning and growth by asking them to take on new or higher responsibilities. Seek their help with important tasks and goals. Offer your people opportunities to acquire new skills or even attend a paid seminar. Challenge them to stretch their performance levels. And be sure to recognize and reward achievements! Remember: If your business isn't learning, you'll fall behind—and a business learns as its people learn. Working on the business means lifting people and deriving the maximum value from their increasing talents and experience.
Take Cost Out of Your Business: Profit is the life-blood of your business. Find ways to reduce ever-rising costs and preserve your margins, while maintaining value to customers. The secret to lowering costs is to make your products, services, and business processes better, faster and cheaper. And keep in mind the important principle of sales equivalency. Working on the business means applying pig-headed determination to get rid of the waste and inefficiency that increase operational costs.
Create High-Performance Business Systems and Processes: Your entire business is made up of systems and processes. You accomplish the six goals above by creating good business systems that consistently get desired results. There is no other way. The primary purpose of those business systems is to differentiate your company in the marketplace, and to help you excel at finding and keeping customers. Working on the business means spending time designing, developing, overseeing, monitoring and evaluating all of the systems and processes that make your organization run smoothly, create value, and generate profit.
Work On the Business More, In the Business Less
So, if you want to run a successful business, the above items will get you on right track. As your company grows you will spend more time working on your business and less time doing the pick and shovel work. And that’s when it starts to get fun!
The mission and purpose of Box Theory™ is to help business owners and managers work on their business in an intelligent and systematic way. It replaces guess work with proven principles and methods that get results. With the Box Theory™ Way, you know every day exactly what you can do to improve. With each new successful business system, the task gets easier and your rate of progress accelerates.
I know the challenge of small-business owners to carve out extra time to work on the business. Changing my work pattern to accommodate the process of business improvement was one of the hardest things I’ve had to do in my business career. Now, all I can say is, “I’M GLAD I DID IT”… AND YOU CAN DO IT TOO!
The Next Step...
“You are surrounded by simple, obvious solutions that can dramatically increase your income, power, influence and success. The problem is, you just don't see them” (Jay Abraham, marketing consultant).
Let’s talk about a simple strategy that will help you harvest an abundant crop of new ideas that are sure to motivate employees, give customers a better buying experience, and increase financial results and rewards.
Though perhaps unnoticed, the people around you possess a wealth of experience, talent, insight, and creative ideas that are just waiting for the right opportunity to be shared.
Sadly, many useful and innovative thoughts that could improve your business are never expressed. Why? You don’t have a system to tap into the collective intelligence of workers who are intimately involved with your business operations; this includes the average everyday folks that rarely speak up.
Everyone in your organization is potentially a problem-solver and an innovator. If you have an idea-rich culture of continuous learning and improvement, your employees are always thinking: "How can I do this easier, faster, better or less expensively.” Researcher Alan Robinson says ideas are "free" and employees will gladly make improvements as part of their job if the environment you create is right.”
So what kind of system can you create to harness the knowledge, imagination and renewable energy of your employees?
Some companies have tried putting up a suggestion box. Employees write suggestions on a form and drop them in a special box. Managers (sometimes) read the suggestions and implement the ones they think will work. However, suggestion boxes typically aren’t very effective. They allow anonymity leading to frivolous suggestions or mean-spirited remarks. They focus on problems but not necessarily solutions, and solutions are not always feasible. They often suggest more work for other people who are already busy, and thus no action is taken. And this old-style system usually doesn’t reward successful implementation and sustained results stemming from the suggestion. There is a better way!
Your Employee Involvement Program
Here are some ideas to implement a business system that will solicit real improvement ideas, generate enthusiasm from employees, and save or earn your company thousands of dollars over the coming year.
- To begin, let’s get rid of the “suggestion box” and replace it with a filing system by worker name. After all, we expect every person to submit many suggestions (see #2)—often small ones— over the course of a year. It’s also a good idea to review the employee’s file of suggested improvements during evaluations or other interviews.
- Next, how about giving the system a new name—something that emphasizes solutions instead of merely suggestions. You could call it the “business improvement program” or the “employee ideas program.” If those sound a little lame, have a brainstorming session or contest to name the system. Let me know what you come up with.
- The person with a new idea for a solution or improvement completes a brief form (get a sample form in The Zone) and hand delivers it to their supervisor or someone who could provide the time and resources needed. Good ideas might help with cost savings, productivity, process improvements, revenue-generation, and so forth. A brief plan to implement the proposal is also included. The merits of the idea are discussed, and an action plan generated.
- Ideally, the submitter of the new solution should be responsible for its implementation. Ownership increases the likelihood of success. Active participation by the submitter removes one of the major complaints with the old suggestion box: “I gave the company a good idea, but they didn’t do anything with it.” Lack of action kills the motivation of any improvement program.
- Always thank employees for their time, effort and feedback. Positive reinforcement will keep the good ideas flowing. Create a reward system for people whose ideas are successfully implemented. Frequent acknowledgment of small improvements is more effective than occasional recognition of a few. Consider a gift card, day of vacation, or tickets to a sporting event. When others see that good ideas are rewarded and appreciated, they will join in. If appropriate, give financial compensation, perhaps some when the solution is first implemented and the rest over time with proven results. The reward system helps the submitter maintain ownership and a vested interest in assuring that the new solution is understood, accepted, and practiced by everyone.
- If you want to create a little healthy competition, do something visible like posting a chart that shows the number of ideas submitted by each person, team or department. Be creative. Recognize winning ideas in your weekly Business Improvement Workshop. Celebrate achievements with something like a pizza party.
- Maintain a simple log of new ideas presented, the person’s name, and date implemented. This helps the supervisor know what is going on at a glance and allows for a frequent review of progress. Again, talk it up at the Business Improvement Workshop.
Never Stop Improving
Get connected with your knowledgeable, imaginative, inspired, resourceful, eager-to-contribute employees who are quietly working in their cubical or on a production line. Capitalize on this great hidden treasure you are already paying for.
Every little improvement—hundreds a year— will make your business better and better, until one day, you have a smooth-running, people-pleasing, money-making system!
P.S. - Get the "Business Improvement Suggestion Form" in The Zone.
The Next Step...
After World War II, business leaders in Japan developed a strategy to become more competitive and profitable. Since then, “Kaizen” (change for the better) is widely practiced in businesses around the world. It is commonly referred to as “Continuous Improvement.”
Kaizen is a deeply held belief that every day managers and staff can turn problems into opportunities and find ways to become better for customers, employees, vendors and stakeholders. It is a compelling desire to achieve operational excellence.
"Traditional Western philosophy may be summarized as, 'if it ain't broke, don't fix it.' The Kaizen philosophy is to 'do it better, make it better, and improve it even if it isn't broken, because if we don't, we can't compete with those who do'" (Steve Hudgik, Graphics Products, Inc.).
Continuous Improvement—Kaizen—is an idea whose time has come for the small to mid-size-business community!
So, What Exactly Is Kaizen?
Kaizen is the ongoing, systematic, incremental improvements in the way things are done. It is a relentless attempt to eliminate the unnecessary activities, delay, waste, and variation of business processes that add cost without adding value. Kaizen results in improved lead-time, efficiency, quality, productivity and customer loyalty.
The goals of Continuous Improvement are simple: 1) make things easier 2) better 3) faster and 4) cheaper” (Shigeo Shingo, pioneer of Lean Thinking). It is the new "best solution"—from the customer’s point of view (five customer types).
Watch Honda’s 30 second commercial that captures the spirit of Kaizen
Kaizen is a mindset and practice that encourage reflection, teamwork, standardization, mastery of the process, experimentation to find better ways, comparison to baseline accomplishments, incremental and ever-evolving change, and the ongoing improvement of results. It asks the simple question, “How can I do this better?” Kaizen is the everyday quest for perfection!
Masaaki lmai, father of Continuous Improvement, teaches, “Kaizen means ongoing improvement involving everybody, and without spending much money. You can't do Kaizen just once or twice and expect immediate results. You have to be in it for the long haul.”
Many larger companies have adopted one or more formal methodologies to achieve Continuous Improvement” (e.g., Six Sigma, Lean Thinking, or the Theory of Constraints). However, these powerful strategies are rarely considered by small business owners—a fact we hope to change!
Things Can Always Be Better
Daily improvement applies to every area of your business—a shorter lead-time attracts more customers, modified words on a web page induces more visitors to buy; bottled water in the reception area pleases guests; an improved business form or application reduces errors; a more compelling radio ad boosts sales leads; and so forth. There are hundreds or even thousands of possibilities for improving within every organization.
Below are 10 ways to help the philosophy of Kaizen—Continuous Improvement—take hold in your company.
- Start with Yourself – Many entrepreneurs are so busy “sawing” they have little time to step back, read, ponder, analyze, plan, and essentially “sharpen the saw.” Get connected with your numbers (leading and lagging indicators), and with customer, employee and vendor feedback. Read skill-based business books and articles. Spend time in the Zone working on your business (Michael Gerber). Seek ways to improve your own personal performance, and encourage those around you to do the same. Your company—people, products, and processes—will improve at the rate you improve. Lead by example!
- Involve Everyone – Kaizen is a strategy that involves every employee, from management to the cleaning crew. Hold business improvement workshops at the company, department or team level—perhaps even at the location of the business system you are attempting to improve. Challenge employees to routinely submit suggestions for positive change. “In Japanese companies, such as Toyota and Canon, a total of 60 to 70 suggestions per employee per year are written down, shared and implemented" (Steve Hudgik).
- Challenge the Status Quo – Throw out all your old fixed ideas on how to do things. Replace “sacred cows,” personal opinions, and “it’s the way we’ve always done it” with performance facts and data. Numbers are the language of improvement. Avoid the emotional traps of blaming people or making excuses that prevent you from discovering the real problem. Once you have established the new best way of doing something, stick with it until a better way is found. When confronting old ideas and traditions, apply the Rules of Engagement.
- Get Specific – The dollars—made or lost—are in the details of your business systems and processes. Drill down. Use a 5 Whys Analysis and keep asking “why” until you get to the root cause of the problem. Improve specific steps or components in your business systems and processes; there is no other way! Get defects to less than 1%. Cut lead-time in half. Do little things to WOW customers or employees. Pennies earned from small improvements add up fast.
- Keep It Simple and Inexpensive – Ideas for incremental improvements that bubble up from workers are usually easier to implement and less expensive. Like our friend MacGyver , apply creativity and craftiness before cash. Following the 80-20 Rule; do the twenty-percent of things that get you eighty-percent of improvement results. And do it NOW! Don’t wait to achieve perfection.
- Focus on the Right Things – Improve the core business systems that enable you to find and keep customers, and earn more money. Find ways to provide customers greater value and a better buying experience. Zero in on removing the obstacles, bottlenecks, and weak links in your business processes that slow lead-time, order completion, and collection of cash. Fast throughput of products and services produces happier customers and more profit. Remember: Quality plus speed equals low cost. Put emphasis on improving business systems that drive your Balanced Scorecard goals or that improve a line-item number on your financial statement.
- Provide Training – Kaizen involves setting performance standards for your business systems and processes and then continually improving those standards. Good training and supervision help employees to meet those standards on an on-going basis. Continuous Improvement requires ongoing development of your most important asset—PEOPLE! Tom Peters, business management author, teaches, "If your company is doing well, double your training budget; if your company is not doing well, quadruple it!” As process changes are made, face any resistance by employees head on—Listen-Thank-Consider-Decide.
- Look for Breakthroughs – Up to this point, we have focused on small incremental changes. However, Kaizen will sometimes produce breakthrough improvements—a moment to celebrate! What’s a breakthrough? Chet Holmes, sales and marketing guru, says, “Let me explain a breakthrough. It's when you find a method of doing something [system] that dramatically accelerates your ability to accomplish your goals (“The Ultimate Sales Machine”).
- Never Stop Improving – Stop immediately to fix quality or customer-related problems. Don’t let them accumulate for later handling. Reflect daily (in the Zone) on your opportunities for improvement and innovation. Make business improvement workshops a weekly habit. Implement a suggestion-box type of system that calls for employees to submit so many improvement ideas per month or year. And be sure to compensate them appropriately for implemented solutions. Just one improvement a day is 260 improvements a year!
- Get Box Theory Products – Forgive me if this seems a bit like a sales pitch. I seriously believe that applying the Box Theory™ Way and software tool is the most important thing you can do to get Continuous Improvement going in your company. It is a one-of-kind product based upon decades of proven principles—not too hard, not too basic, but just right for the small to mid-sized-business owner.
Continuous Improvement Forever
In Japan, Kaizen is a system of improvement that not only includes business but every aspect of personal life. Like Systems Thinking, it becomes second nature.
[fname], Continuous Improvement of people, products and processes should be the endless quest of entrepreneurs, business owners, and managers. Wouldn’t you agree?
In short, Continuous Improvement of common tasks produces an uncommon organization! Now, what improvement could you make today?
The Next Step...
President Woodrow Wilson said, “If you want to make enemies, try to change something.” Or it could be said, “Try to improve something.” This often has the same outcome.
Challenging the Status Quo
Creating a results-driven business culture—with discipline, measurement and accountability—can be a new way of doing things for many small business owners and their employees. Care must be taken that these elements do not discourage or even become threatening. When people work together—solving problems and sharing ideas—the exchange must be positive and motivating.
System development challenges the status quo. It puts the business under a microscope and exposes ugly blemishes. It questions long established traditions. It recognizes no “sacred cows.” The only goal is to find the best way of doing something. This scrutiny sometimes makes people feel nervous, threatened, angry, or frustrated.
When seeking truth, you must be prepared to face the brutal facts and emotions surrounding your current business practices and proposed solutions.
Most people involved in systems improvement want to make a positive contribution and arrive at the best solutions. So be careful not to put people under the microscope or blame them for performance problems, especially in an open meeting. Instead, focus on faulty business systems that prevent people from doing their best. (If a person is mismatched to the job, make the change as soon as possible.)
Look for the Best in People
In his book, "Results Rule!," Randy Pennington describes a Positive Performance™ management process based on the following core beliefs:
- "Individuals need to be treated with dignity and respect.
- Most people want to do a good job and will do so if given the opportunity and ability.
- The leader’s job is to create the environment for employees to succeed as individuals and as a group.
- Everyone is responsible for performing in a manner that helps the organization achieve results and build strong relationships.
- Treating individuals responsibly means that we earn the right to expect them to act responsibly."
During brainstorming and discussion, allow open dialog, inquiry, and free expression from all participants. Say to the group, "I am open to other points of view." Then listen carefully as employees or customers contribute ideas. When you convey appreciation for shared thoughts and feelings, people are more comfortable in expressing their views. Those who are passionate about their opinions (advocates) should not be stifled if they are communicating appropriately. In the end, business owners, leaders, or voting team members make the final decision.
The process is this: Listen-Thank-Consider-Decide.
Build Trust and Hope
Ann Bruce and James Pepitone give us "12 Cornerstones for Building Trust and Hope in an Organization”:
- Respect your followers.
- Watch how you say things.
- Communicate openly.
- Listen and don’t argue.
- Avoid zingers, digs and putdowns.
- Point out the positive.
- Appreciate what others have to say.
- Acknowledge that trust is a mutual exchange.
- Increase trust gradually.
- Be truthful with yourself.
- Show your human side"
I once worked with a business owner who communicated to his workers the attitude: “It’s my way or the highway.” His strong opinions shut down communication and the valuable suggestions and ideas of others.
It is best to arrive at system solutions based upon facts and not personal opinions. Be objective and unbiased; seek evidence, including business statistics, reports, surveys, and other forms of measurement. There is not a right or wrong solution until proven with results—hard data whenever possible. Listen to those with the “eyes of experience” (insiders) as well as those with the “fresh eyes of objectivity" (outsiders).
Encourage Continuous Learning and Improvement
By introducing change, you may be greeted with resistance, but more often, there is a sense of relief that improvement is coming. Don’t be afraid of change, but implement new business systems with care and patience. Your employees will appreciate it.
Remember: When you include employees in the system development process, you will get greater buy-in and support.
So, get all of your people to become Systems Thinkers. Set stretch goals based on your Balanced Scorecard objectives. Aim for tangible financial results. Assign accountability. Handle conflict. Involve team members in the decision-making process. Put your faith in data. Encourage continuous learning and improvement. Hold effective system improvement meetings. Unleash everyone’s potential. And celebrate success.
The Next Step...
What your customers and employees think of your company, and how much profit your company generates, are the result of small and simple things—mostly unnoticed—that go on every day in your business operation.
A Valuable Lesson
In 1849, a young merchant from Massachusetts was caught up in the excitement of the California gold rush. He sold everything he had to move west and seek his fortune. He was told the gold nuggets were so big that a person could hardly carry them.
The world’s largest Gold Nugget ever found.
Discovered in 1872 and is called the Holtermann Nugget.
It was 630lbs in weight.
Day after day, the young man dipped his pan into the river and came up empty. All he had was a growing pile of rocks to show for his efforts. Discouraged and broke, he was ready to quit. Then, late one afternoon, an old experienced prospector happened by and said to him, “That’s quite a pile of rocks you’ve got there, my boy.”
The young man responded, “There’s no gold in this river. I’m going back home.”
Walking to the pile of rocks, the old prospector said, “Oh, there is plenty of gold in this river. You just have to know where to find it.” He picked up two rocks and smashed them together. One of the rocks cracked open, revealing several flecks of gold that sparkled in the sunlight.
The young man noticed a bulging leather pouch tied around the prospector’s waist. He said, “I’m looking for gold nuggets like the ones in your bag, not just tiny flecks.”
The old prospector opened his pouch and extended it toward the young man. He looked inside, expecting to see a handful of large nuggets, but was shocked to see that the pouch was filled with thousands of tiny flecks of gold.
The old prospector said, “Son, it seems to me, you are so busy looking for large nuggets that you’ve missed filling your pouch with these precious gold flecks. The gradual accumulation of these little flecks has brought me great wealth.”
Discover the Gold Flecks in Your Business Processes
The tiny flecks of profit in your business are found at the detail level of your business operations. You may have to crack open and examine your business processes to find them. Small changes to eliminate waste—deviation, defects, and delay—will fill your pouch with the gold you seek. Daily innovation and improvements will gradually make you wealthy.
Remember: “By small and simple things are great things brought to pass."
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Occasionally, I like to ponder on the words of people who truly understand the “nuts and bolts” of business operations, and how to get exceptional results. I especially like statements that bring new insights to Systems Thinking. Below I have included a few quotations that might give you a big idea to improve your business.
“The most effective way to improve productivity is to eliminate [unnecessary] work” (Bill Conway, self-made billionaire), and similarly, “There is nothing so useless as doing efficiently that which should not be done at all” (Peter F. Drucker, management consultant and author).
“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency” (Bill Gates).
"Continuous improvement is not about the things you do well—that's work. Continuous improvement is about removing the things that get in the way of your work. The headaches, the things that slow you down, that’s what continuous improvement is all about” (Bruce Hamilton, continuous improvement educator).
“Where there is no standard, there can be no improvement. For these reasons, standards are the basis for both maintenance and improvement” (Masaaki Imai, father of continuous improvement).
“Four goals of improvement: 1) make things easier 2) better 3) faster and 4) cheaper” (Shigeo Shingo, pioneer of Lean Thinking).
“There are two reasons why we change. We learn enough that we want to, or we hurt enough that we have to” (Shigeo Shingo).
“A relentless barrage of ‘why’s’ (see 5-Whys Analysis) is the best way to prepare your mind to pierce the clouded veil of thinking caused by the status quo. Use it often” (Shigeo Shingo).
“You are surrounded by simple, obvious solutions that can dramatically increase your income, power, influence and success. The problem is, you just don't see them” (Jay Abraham, marketing consultant).
“The man who will use his skill and constructive imagination to see how much he can give for a dollar, instead of how little he can give for a dollar, is bound to succeed” (Henry Ford).
“Failure is only the opportunity to begin again more intelligently” (Henry Ford).
“If management is not removing the obstacle, management is the obstacle!” (Author unknown).
“If your business depends on you, you don’t own a business—you have a job! The business owner should be devoted to business development, not doing business” (Michael Gerber, E-Myth).
“Customers always seek the ‘best deal.’ They reward companies that serve them best and allow the others to fail. It is how the customer feels about your business as a whole that matters most. Everything about your business—advertising, cleanliness, return merchandise policy, courtesy and knowledge of employees, product selection, price, location, delivery time, and so forth—is what they are choosing. Your entire business is your product and it must shine throughout. When it does, YOU become the “best deal!” (Ron Carroll)
“Real waste lurks in places that don’t look like waste” (Shigeo Shingo).
“One thing you can’t recycle is wasted time” (Taiichi Ohno, considered father of Lean Manufacturing).
“Tell me and I will forget, show me and I may remember, involve me and I will understand” (Chinese Proverb).
“Reward those who Do, Train those who Can’t, Replace those who Won’t” (Henn’s Creed).
“In God we trust. All others, bring data” (W. Edwards Deming, Total Quality Management), and similarly, “Without data, it’s just an opinion!” (Author unknown)
One good idea—IMPLEMENTED—can put big bucks in your pocket. Which idea above can you leverage for greater success?
You can read some other thought-provoking statements about business systems and processes at www.BoxTheoryGold.com/quotes-about-business-systems.
The Next Step...
The Law of Cause and Effect governs all business outcomes. To change an effect or result you have to change the cause.
With that thought in mind, consider this profound statement by Rick Shefren, online marketing guru.
"Your business is perfectly designed for the results you are getting."
With all the plans, strategies, goals, innovations, business practices, and culture that make up your organization, you are getting exactly the results that your business systems and processes are currently capable of producing.
In addition, the amount of demand for your product or service accurately represents the perceived value you bring to the marketplace. And your bottom-line earnings are a precise reflection of how well you execute your business strategy.
In other words, in the free-enterprise system we pretty much get just what we deserve (discounting natural disasters, government intervention, and other things out of our control).
There is Only One Way to Improve Results
Two old sayings come to mind:
“If you always do what you’ve always done, you’ll always get what you’ve always got” (attributed to Mark Twain). And...
“The definition of insanity is to doing the same thing over and over again and expecting different results” (attributed to Albert Einstein).
The brutal fact is this: To get better results you must improve the design and execution of your business systems and processes—AT THE DETAIL LEVEL. There is no other way!
Once again, “your business [systems and processes] are perfectly designed for the results you are getting.” To get better resuts, keep on improving!
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