Business Systems and Processes.

The Systems Thinker Blog

Most Small Business Owners Don’t Get It!

If small-business owners could learn this one principle, it would dramatically improve every aspect of their business. If they could do this one thing well, everything else would fall into place.

Principle

Because my antenna is up, I hear the word “systems” frequently used by business owners, news commentators, and in casual conversation. Everyone has a general idea of what a system is. Few people really understand what makes a good business system—one that gets predictable, desirable and measurable results.

Every business problem you have—every frustration you feel in your gut—you can trace to a weak, under-performing system or process. Is your profit margin too low? Do you have a lot of employee turnover? Do customers complain or even take their business elsewhere? Do you see waste of time or get aggravated with poor-quality work? Do you have insufficient sales? Or do you have trouble getting orders shipped fast enough?

Many business owners or managers think their problems come from people who don’t perform well in their job. They often get angry, rant, and make unreasonable demands—trying somehow to force better performance. That never works for long.

The truth is this: most problems are not the fault of people but the result of faulty business systems or processes. It is YOUR responsibility to put good systems in place. If you read this blog and say, “I already understand the importance of systems,” and afterwards do nothing further to develop this master skill, then you will be among the high percentage of business owners who never really get it, and likely go out of business.

In our challenging times, when every penny counts, it is imperative that you do one thing well—master the techniques and principles for creating effective business systems and processes that repeatedly deliver expected results. There is no other way!

 

Every Crisis in Your Business is a System Breakdown!

Have you noticed that our country is in a state of crisis! Government, business and family systems are breaking down at an unprecedented rate. Every failure or crisis in your organization can also be traced to the breakdown of a system. However, there is good news!

After the devastation of Hurricane Katrina, the front cover of Time Magazine read “SYSTEM FAILURE.” In my opinion, no city or government could handle such an assault on its puny, ineffective and unproven systems for responding to a natural disaster of this magnitude. I don’t think this was any one person’s fault—not even President Bush. It would be very expensive to create systems everywhere that can accommodate worst-case scenarios.

System Failure Hurricane Katrina

Following Katrina, the people of New Orleans had one of two choices. They could build a new city thirty miles inland to avoid the impact of such hurricanes (the smart move). Or, they could rebuild the current city with new and improved systems—infrastructure and emergency response plans—to accommodate future hurricanes of similar or larger size (a very expensive solution).

In your business, there are also systems—usually unnoticed—that are in the process of breaking down. One day, you will experience a crisis—a system failure like the bridge that collapsed without warning in Minneapolis in the summer of 2008.

What is the weak point of your business? Innovative products? Marketing and sales? Quality control? Timely shipping? These and many other system problems could be your eventual downfall unless process improvement is a regular part of your business operations.

When a critical business system hits a crisis point—can no longer perform adequately—you could choose to close down the business and walk away. However, if you want to continue in business your response must be to re-order the system to a higher level. That is, you must improve the system so that it can produce more sales, achieve better quality, or effectively handle a heavier load.

Like the bionic man, you have to make your business system or process better, stronger, faster. You have to elevate your weakest system to achieve the desired result, and then go do the same with the next weakest system, and so on, until you become a remarkable company!

 

Make Your Small Business a “Fast” Business!

Efficient business systems and processes can put more money in your pocket, but increasing the speed of a process may not be what you think!

When it comes to business operations, the RIGHT speed is most important. Very often, the right speed means FAST! In a recent TV ad, Comcast invites business owners to “make your small business a fast business.”

Lengthen Your Stride
Photo: by flickrfavorites on flickr

Every small-business owner should seek to deliver products and services as fast as required to exceed customer expectations and to be a market leader.

To customers, fast sometimes means “on schedule,” or “by a deadline,” but it always means, “I want it when I want it.”

The Internet has become popular in part because most products are shipped the same day or within one business day. A few years ago, a construction company in my area built a house from the ground up in twenty-four hours. A company that could build a house in even thirty days would become a market leader!

Speed in business systems and processes, however, does not usually mean that workers have to work faster; they can only work so fast without creating quality problems.

Delay is the Speed Killer

Your greatest impact on speed will come by reducing the wasted time—delay—that exists in most of your business processes.

Take notice of the work going on in your operation. Get rid of the idle time that things are just sitting around waiting to be worked on! Are in-baskets full? Are widgets stacked on a pallet to be processed later? Are customers anxious for you to get to their order?

By eliminating delay and improving efficiency, you will have happier customers and more profit at the end of the month.

For some advanced ideas, check out 7 Strategies to Boost Process Speed.

When a System Failure Can Kill People!

When our business systems are bad, we usually just lose money or customers. However, a front-page news story a few years ago illustrated how poor business systems or processes can sometimes kill people.

Nine individuals died, and hundreds were hospitalized by peanut butter containing a deadly form of salmonella.  The company, King Nut, sold their product to schools, nursing homes and hospitals in ten states.

Procuct Recall

The consequence of this serious quality control problem was death and injuring to unsuspecting customers. It could also have meant the death of King Nut. 

From the customer’s viewpoint, certain things are “critical to quality” (CTQ). You must meet these customer CTQ specifications or expectations precisely or you will lose their business. Healthy food is always going to be critical to quality. Consequently, I predict that many of the schools, nursing homes and hospitals will not buy from King Nut again.

A spokesperson for the company said, “We just want everyone to know that safety is our highest priority.” It may be. Mistakes happen. However, to the customer, King Nut’s booboo may fall under the category of “unpardonable sin.”

A news analyst said the solution to the problem is to hire more FDA inspectors. As a Systems Thinker, you know that it’s always better to catch quality problems immediately at the source, not at a later inspection of accumulated inventory, or worse, after customers have had a bad experience. Instead of hiring more inspectors, King Nut and others should improve its internal systems to catch food contamination earlier in the process.

(Update: In June of 2015, King Nut received a level 2 certification for Safe Quality Food (SQF) by NSF International, a very high rating that took years to achieve. Congratulations!)

More recently in my backyard, an employee of Dickey’s Barbecue Pit confused oven cleaner (lye) with sugar in making its sweet tea for customers. A retired teacher drank a sip and complained that it tasted like acid. In minutes, she was on her way to the hospital in critical condition and almost died. The woman required surgery to repair deep, ulcerated burns covering the upper esophagus.

Do you have any business systems or processes that need closer attention to quality? Don’t take chances. Save yourself a lot of money and grief by building quality into every business system and process.

 

Cut Costs with this Simple System!

Little things in your business are robbing you of profit and sending customers to your competition. With one simple idea, you can create happier customers and rid yourself of unnecessary waste.

When I am wearing my “customer hat,” I often get frustrated with the companies I’m trying to do business with. Far too many things go wrong as I engage with their business processes for selling and delivering products or services. The time and rework to get things right is an unnecessary hassle that discourages me from buying again or recommending the company to others.

Wrong Wrong Wrong

Deliveries or services are often late. Parts to assemble are missing. Products are flawed. Merchandise is not properly labeled or priced. Counts are inaccurate. Stores and restrooms are dirty. Clerks are uninformed or untrained, and so on. I remarked to my wife a few years ago that it seemed like 50% of the things we bought had one problem or another. Mistakes cost business owners dearly in lost customers and lost profit, but they are daily occurrences we have all come to accept and expect.

Recently, I threw up my hands in exasperation because Comcast aborted their second attempt to install my home television service—a simple problem they could have avoided with a little better preparation. They will make at least three trips to my house to get the job done—no profit and an unhappy customer. How’s that for a lose-lose proposition? (I eventually switched to Dish TV.)

Nearly every week last summer, my lawn service company cut off sprinkler heads, left the gate open, and didn’t blow the grass clippings from the driveway. I told them of the problems, but the workers were inclined to forget from week to week. So, every year or two I have hired a new company, unfortunately with similar results. The owners of these businesses must wonder why their customers come and go.

The Power of the Checklist

If you are a Systems Thinker, you can put more money in your pocket every year by doing one simple thing—one system improvement. Have workers review and complete a checklist for each customer—the routine items and the special instructions. For example, close the gates—√ check. Blow the grass clippings off the driveway—√ check. Mow around the sprinkler head in the west corner of the backyard—√ check.

Checklists can prevent mistakes in every type of business.

You would be amazed by how many problems are solved, how many things are done right, and how many customers stick around when your workers use a simple checklist to ensure consistent quality. And the power of a checklist doubles when they sign their name and turn it in for review by their supervisor.

Systems Thinkers leverage little things like checklists to produce big results.

A few well-placed checklists can save you a lot of grief and lost profit. Go add some system checklists to your operating procedures right now, and you’ll immediately see things get better.

Oh, and by the way, Box Theory™ Software has a built-in checklist creator, one of its many valuable tools for developing better business systems and processes.

Improve the World—One System at a Time.

This crazy, mixed-up world is, in fact, highly ordered, consisting of countless interrelated and interdependent systems. Our success at anything—family, business, or personal pursuits—comes in understanding and managing the underlying systems that govern results. Only by applying established principles, laws, and best practices can we elevate those systems to improve our world, our work, and our families.

Consider this: everything you and I do is part of one system or another—whether we recognize it or not! Family systems help us to earn money, manage the household, teach children, and accomplish personal goals. Business systems are created to find customers, make products, perform services, collect money, and so forth.

Your phone is a system. Your golf swing is a system. Your language is a system. You depend on the postal system, highway systems, and the twelve amazing systems in your body.

Everything is a system!

Human Body Systems

Some of our personal and business systems are well-planned and efficiently accomplish their objectives; others are haphazard, seat-of-the-pants solutions that bring problems and disappointment. Simply put, if you understand the principles for creating good systems, you have the power to accomplish anything; you can consistently get the results you desire in any endeavor. And truthfully, there is no other way!

The purpose of this blog is to improve the world, one system at a time. Pretty ambitious, I know. But if not us, who? If not now, when? In this blog, we’ll talk about everyday problems, with emphasis on business operations. We’ll discuss how a “Systems Thinker” goes about making a better world, and making money along the way. Come join me. Your experience and insights are invaluable to our discussion.

Just Retired
Gone Fishing
Your Lucky Day

It's time for me to focus on other things. Many hours and dollars have gone into my software and written materials over the last fourteen years. Now it's time to give back. This is not a gimmick. There is nothing to buy. I give it all to you for free. If you use the software and apply the principles, you can create a remarkable company. See Below. Have fun!

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Welcome to the #1 website for helping owners of small to midsize businesses create customer-pleasing, waste-removing, profit-boosting business systems and processes.

Michael Gerber, "E-Myth"

Michael Gerber

"Organize around business functions, not people. Build systems within each business function. Let systems run the business and people run the systems. People come and go but the systems remain constant."

W. Edwards Deming, Total Quality Management

W. Edwards Deming

"If you can't describe what you are doing as a process, you don't know what you're doing. . . . 94% of all failure is a result of the system, not people."
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