The Systems Thinker Blog

Business Improvement: Systemize Everything!

Posted byRon Carroll

In the Zone you are flooded with inspiration and ideas to improve your business. You have a vision of what the business is going to look like when it is "finished." You have written down specific goals. You are now ready to take steps to grow the perfect business. This is where the real fun begins.

As you look at your business through a microscope, you see it is made up of systems and subsystems. You realize that smooth-running systems create a smooth-running business. You conclude that your business will operate best when there is harmonious and orderly interaction between its vital systems. Business systems are the building blocks for creating the perfect business, one that runs itself efficiently and profitably. Let's explore this further.

Smooth-running business systems

Systems are the solution to problems

All businesses have challenges that can create frustration for business owners and customers. A frustrating condition exists when there is a specific, recurring problem over which the business owner feels little or no control. Have you ever thought:

  • "My cash flow is stressing me out."
  • "I can't seem to hire good people."
  • "Our quality needs improvement."
  • "Employees are wasting time."
  • "I don't get enough sales leads."
  • "Profits are down."

These undesirable patterns can be eliminated by simply installing effective business systems. Systems are the logical and practical solutions to your business problems and they are just waiting to be discovered.

What exactly is a system? An effective system is a procedure, process, method, or course of action that produces a consistent and measurable result.

Every business has informal systems but that informality is the reason for much of the inefficiency and frustration. Pricing systems, hiring systems, lead generation systems, quality control systems, and every other loosey-goosey, informal system can change with the whims of people and will not consistently produce the desired outcome. When systems are set up properly and well documented, they remove all of the guesswork and deliver a specific, measurable result every time.

Effective systems also enable the business to run itself profitably without the hands-on involvement of the business owner.

Systems are the “Magic formula” for success

Businesses often struggle with profit margins when there is continuous change in the delivery of products or services. Routine systems and procedures enhance profitability. Once the system is defined, money is made when ordinary people learn to do it fast and do it well. Generalized solutions, seat-of-the-pants operations, "human nature," and everything left to chance is replaced with detailed procedures, performance standards, and accountability. Technology, as painful as it often is, can be a great ally.

The organization chart, which visually describes the structure, leadership, and relationships within the organization, is the most fundamental business system. All other systems fall somewhere within the specified job functions on this organizational chart. For example, a lead generation system would fall under the job function of "marketing."

Good business systems increase efficiency, accomplish objectives, and give customers what they want every single time. They are the solution to frustrations, wasted resources, poor performance, and other business problems. While the right people are critical to an organization, a mature business has fully-developed systems and is systems-dependent rather than people-dependent. The time and cost to create a system is repaid many times over. Systems must be simple, in writing, and easily understood by operators to be effective.

Start creating systems today

Many systems are no more than a form or a checklist. Some are more complex. Systems are often modified and improved, but always provide the best-known way of getting the job done. Remember, all new systems require owners and employees to have the "will" to implement change and stick with the new method of doing things.

There are three stages to developing an effective system.

Stage 1 - Design the System. Identify from business information, personal frustration, or customer dissatisfaction the areas of the business that need improvement. Defining the problem and its causes will often point to the system solution. Describe what the new system will look like and what effect it will have on the organization. Estimate the costs and benefits of the new system and decide if you have the "will" (time, financial resources, and determination) to see the development process through to completion.

Stage 2 - Develop the System. Innovate new procedures, processes, or methods to solve problems and accomplish objectives. Innovations are the "best-known way of doing things" and should be simple, repeatable, and customer-driven. The completed system should contain all definitions, policies, detailed procedures, forms, management reports, and every component necessary for an employee to operate the system with exactness. For a business system to be effective, it must be documented!

Stage 3 - Deploy the System. Implement the documented system. Eliminate employee discretion, "the enemy of order, standardization and quality" (Theodore Levitt, Marketing For Business Growth). Perform the task or procedure the same way every time, or until innovation improves it. Measure the impact of each system innovation on your business and its effectiveness over time. Assign clear responsibility and accountability for the performance of the system.

This sounds like a lot of work. It is! But it is the essential process for growing the perfect business. Some systems will take hours, some days, and some weeks to implement. You'll have a dozen or so critical systems and many small subsystems. Accounting and marketing are the two granddaddy systems that drive the business. If you spend regular time in the Zone, you will get the task accomplished sooner than you might imagine.

When you think about it, this is why you got into business in the first place — to build a business that you could sell, franchise, or hire someone to run for you. A business built on systems is the only way to do it. Each system in place is one more step toward a business that works profitably and leads you to financial and personal freedom.

Become a Systems Thinker. Step back and look at your business as a world of integrated systems. Identify weaknesses. Get in the Zone and start designing new or improved systems today! Once you begin Systems Thinking, ideas will flow into your mind 24/7. Have a notebook to write them down.

Take a look at your accounting system first. It plays a critical role in your business. Its importance cannot be overstated. Your next step is to get in control of the “numbers.”

Step 3: Manage by the Numbers
Back to Table of Contents: 10 Easy Steps to Grow the Perfect Business

 

 

 

 

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Tags: Systems Thinker, Business Systems, Innovation