The Systems Thinker Blog

What is a Process Improvement Manager and Why You Need One?

Posted byRon Carroll

It is essential that someone in your company is responsible for sales. Somebody needs to do the accounting or bookkeeping. Someone oversees hiring, customer service, and order fulfillment. No matter what industry you are in, or the size of company you have, YOU—or assigned employees—perform these and other basic business functions.

However, there is one essential job position that is rarely talked about and almost always ignored by entrepreneurs and small-business owners.

Laura’s Bad Experience

Consider this email—and cry for help—I received from a frustrated newsletter subscriber. Laura was the only person in her company to recognize this rarely thought about but important job responsibility. Could she be one of your employees?

Help is Needed for Bad Business Processes

Laura wrote:

“I can't take it anymore! Chaos, pure unadulterated chaos. You could imagine myself (with the personality of a dragon) sitting down to convince owners we have to sort out all the tasks that people do into a logical workflow!  So I created a Business Systems Department with the understanding they would know what it meant... uhmmmm no. I thought I was absolutely alone in the world until my assistant found your web site. Ahhhhh ...  there are people out there that actually think the way I do! I work for a company that is in denial. I want to work for a company that believes in having good systems. 

“I am honestly tired of trying to convince this company that they should invest in their Business Systems, Best Practices, etc. If chaos is not enough to make them reconsider, if poor employee morale is not enough to make them reconsider... Well, you can quote me as a crazy lady who thought she could make a difference and become an asset to the company because I love this crazy world of Business Systems thinking... Anyhow, sorry for the long winded email but BOY that felt good to get it off my chest!” (This was about 25% of the actual email.)

The Invisible Job

Whether you have thought about it or not, your entire business operation is carried out with the help of systems and processes that come about formally or haphazardly through the years. These business systems are the way in which work gets done, and they are the building blocks of your organization. Their effectiveness determines your profitability and success.

Your systems and processes might include lead generation, sales conversion, production, order fulfillment, customer service, accounting, purchasing, hiring, and many others unique to your company.

So, what is a business system or process? Consider this down-to-earth definition:

A business system is a “recipe” for consistently getting a predetermined and desired result. The ingredients of a good business recipe may include materials, people, data, forms, checklists, tools, equipment, software, and so forth. The precisely followed step-by-step instructions, or procedure, ensure that the expected result is achieved every single time.  Great recipes for getting routine work done in an efficient and effective way increase customer loyalty, employee performance, profitability, and growth.

 Create Favorite Business Recipes

So, who in your company is responsible for developing, monitoring, and maintaining the business processes that make your company run smoothly and profitably—even when you’re not around? Who in your company understands the underlying principles for creating effective systems and processes? Who in your company wears the hat of the “Process Improvement Manager”? Is it YOU, or someone else?

Wait, What? A Process Improvement Manager?

In a small business, the owner is the first “Systems Czar” (Philip Beyer) and usually begins documenting processes so that he or she fully understands how the business operates from start to finish.

Whether it is YOU, a manager or employee (full or part-time, and not necessarily a new hire), someone in your company needs to fill the essential role of a “Process Improvement Manager.” This person’s responsibility is to maintain efficiency and quality in the workplace. They evaluate current business practices, looking for ways to improve productivity and customer service, reduce costs, and make the best use of company resources.

Specifically, the process-improvement person develops, monitors, and elevates the performance of the company’s vital business systems and processes. Ongoing system development is the key to continuous learning, growth, and improvement of individuals and organizations.

A Process Improvement Manager is something of a “business engineer.” He or she is both logical and creative, able to identify and diagnose problems and find low-cost and innovative solutions. As you implement effective systems and processes, your company will stand out in a competitive marketplace, give customers a great buying experience, and improve operational quality and efficiency for a healthy profit margin.

Become a Business Engineer

So, What Exactly Does A Process Improvement Manager Do?

1. Develop and Reinforce “Best Practices”

While most people in a company see the business operation in terms of departments, functions, and activities, the Process Improvement Manager is focused on how efficiently and effectively the work is being completed. This person sees the details beneath the surface, where dollars are earned or lost, and operational success is determined. The Process Improvement Manager has a vested interest in:

Best practices
Cause and effect
Root-cause of problems
Performance standards and goals
Measured results and data
Employee motivation, training, teamwork, and incentives
Improvement and innovation
Getting the right people in jobs
Promoting growth and development of workers
Increasing quality and efficiency of business processes
Eliminating bottlenecks, mistakes, delay and rework
Lowering costs

 Persue Best Practices

The Process Improvement Manager is always asking “WHY?”  Why do we do this task at all? Why do we do it this way? Why are things not getting done on time? Why are there excessive mistakes or rework? Why are customers or employees unhappy?  Why are we not reaching our goals?

“A relentless barrage of ‘why’s’ is the best way to pierce the clouded veil of thinking caused by the status quo. Use it often” (Shigeo Shingo, Toyota Lean Manufacturing).

The Process Improvement Manager seeks to find the best way to get the work of the organization accomplished with the highest quality and the lowest possible cost.

(“Management is doing things right; leadership is doing the right things” — Peter Drucker, renowned business consultant and author).

2. Apply the Master Skill

"If you can't describe what you are doing as a process, you don't know what you're doing" (W. Edwards Deming, Total Quality Management).

All best-practices are arrived at by refining and improving daily operations, the company’s core business systems and processes. This is the primary focus of the Process Improvement Manager. His or her mandate is to create a smooth-running and profitable organization by taking the unwanted deviation, defects, and delay out of work processes. It is to ensure that customers are happy and desired results are consistently achieved. 

W. Edwards Deming also said, “94% of all failure is a result of the system ... not people. A manager of people needs to understand … that the performance of anyone is governed largely by the system that he works in, the responsibility of management” (Total Quality Management).

 Create Effective Business Systems

Effective business processes significantly reduce sub-standard performance, wasted resources, customer dissatisfaction, employee turnover, excessive costs, weak sales growth, inadequate cash flow, low profit margins, and daily frustration.

Your ability to create and refine the vital systems and processes of your organization is what I call the “Master Skill.” All business functions—marketing, finance, and operations—fall within the scope of this single skill mastery.

Most companies have one or two exceptional business systems that separate it from the competition. What innovative and remarkable business process makes your company stand out "like a purple cow in a field of brown cows"? (Seth Godin, Purple Cow)

(“No institution can possibly survive if it needs geniuses or supermen to [run] it. It must be organized in such a way [with effective systems and processes] as to be able to get along [with] average human beings” — Peter Drucker).


3. Recognize and Solve Problems

A two-word definition for “business” is “problem solving.” The Process Improvement Manager asks, “What problems do we need to address? What parts of our organization could improve? What obstacles do we need to overcome? What invisible termites are eating away at our customer loyalty or profit? Any core business activity that is falling short of its purpose or goals is a problem to be solved.

Business problems are usually observed up-close as mistakes, scrap or rework, delay or missed deadlines, excessive costs, and people having an unpleasant working or buying experience. Repetitive problems are made apparent by financial statements, performance reports, customer or worker feedback, and expressed complaints, frustration, or even opposing viewpoints.

Systems Thinking makes problems more transparent and solutions more obvious. A well-framed statement of the problem by the Process Improvement Manager will often provide immediate ideas for change. Data—the brutal facts—influence and direct all improvement efforts.

 Seek Ideas for Improvement

The Process Improvement Manager is always looking for the simplest and least-expensive way to solve a problem or improve a process—to take waste out of the business. Any problem-solving efforts may include prioritizing projects, budgeting for upfront costs (e.g., a new piece of equipment), and determining the ongoing operational costs of the new or improved system. It is often helpful to calculate the return on investment (ROI) by completing a cost-benefit analysis.

The Process Improvement Manager chooses the system-improvement projects that are the easiest to implement, or have the greatest financial impact, or that support company goals, or that will remove a weak-link, bottleneck, or frustration from business operations. They target a completion date and get buy-in, authorization, and financial support of decision makers before beginning a project. Focus plus prioritization equal fast results.

Care must also be taken when deploying any new system or process and training the people involved. Good preparation will reduce resistance to change. Workers who do not recognize the better way of doing things will produce a new set of problems.

(“If you want something good, you have to stop doing something bad” — Peter Drucker).

4. Encourage Learning and Growth in People

The best Process Improvement Managers are constantly learning, and they promote learning and growth in others. Whether by experience, mentors, books, performance reports, or feedback from customers or workers, they are always looking for clues, evidence, data, ideas, and strategies to get work done in a more efficient and effective way. They continually seek excellence in business operations.

Although change is constant, the Process Improvement Manager always has an eye fixed on the long-term mission and goals of the organization.

 Inspire Learning and Growth

Knowledge is fleeting unless it is incorporated into behavior, into “best practices.” It is said that knowledge is power, but the real power to improve a business only comes when knowledge is applied to a specific system or process. The Process Improvement Manager tinkers with the procedure or the system components until the people and the process are getting acceptable results. Patience and persistence through obstacles and challenges yield a big payoff.

While workers do the “cooking and serving," the Process Improvement Manager’s job is to step back, study, ponder, analyze, evaluate, plan, test, and keep improving the company’s unique and valuable business “recipes.”

(“The purpose of information is not knowledge. It is being able to take the right action” — Peter Drucker).

5. Hold Business Improvement Workshops                 

The Process Improvement Manager is on the move, working with others to elevate business operations. He or she does not try to solve every problem independently, but to become immersed in business processes, observe what is working and what is not, learn from those who have hands-on knowledge, and consider what improvements would yield better results.

The best way to benefit from the collective wisdom and experience of those involved in day-to-day operations is to “work ON the business” (Michael Gerber, “E-Myth”) in a weekly business improvement workshop.

During this one-hour meeting, the Process Improvement Manager, team leader, or other manager guides a discussion on specific business activities, systems, processes, or policies that need improvement. They whiteboard the process and consider each step along with the components or “ingredients” required for its success (e.g., materials, tools, checklists, etc.).

Hold Business Improvement Workshops

Those attending the workshop counsel together to achieve consensus on best solutions and practices. The leader reinforces the vision, strategy and goals of the organization, and gets buy-in and support for doing things in a new and better way.

Keep in mind that deployment of a changed system or process requires careful orchestration of people, resources, and timing. It is important to get a new system off to a good start.

Every little improvement uncovered in a business improvement workshop will serve to transform your company into a smooth-running, customer-pleasing, money-making business system! One-hour a week is all it takes!

(“Most discussions or decision making assume that only senior executives make decisions or that only senior executives' decisions matter. This is a dangerous mistake” — Peter Drucker).

6. Document “the Way We Do Things Here"

I repeat W. Edwards Deming: “If you can’t describe what you are doing as a process, you don’t know what you are doing.” To which Michael Gerber adds: “If it’s not in writing, it’s not a system!” (“E-Myth Revisited”).

The Process Improvement Manager oversees the documentation of core business systems and processes and keeps them updated when changes and innovation occur. His or her job is to understand and describe in writing the best way to accomplish the routine work of the organization. However, documentation must be better than just a dust-gathering operations manual.

Write Policies and Procedures

Preparing written systems and processes is the proper way to establish desirable work patterns and habits. These detailed “recipes” are of value to train new employees, and as ongoing references for experienced workers. They describe the required system components (ingredients) and the best procedure to follow.

This important “how-to” information remains constant, not haphazardly passed along by word-of-mouth or changed as people come and go from the job.

When processes are written and accessible to workers, less supervision is required. If a business is replicated or sold, documented business operations are of immense worth to those starting new.

(“Unless commitment is made [in writing], there are only promises and hopes... but no [action] plans” — (Peter Drucker).


7. Get the Right People, Leaders, and Teams

The Process Improvement Manager is not the Human-Resource Manager. However, he or she recognizes that people are the most important (and expensive) component of most business operations.

Therefore, the Process Improvement Manager is concerned with 1) how jobs are defined (job descriptions), 2) company policies that affect workers, 3) fitting the right person to the job, 4) making sure people understand their responsibilities and are properly trained, 5) establishing team leaders and teamwork for increased productivity, 6) meeting performance standards and goals, and 7) promoting accountability and work incentives. All of these items affect performance—the quality, efficiency, and cost of doing business.

Get the Right People

Though often unnoticed, workers possess a variety of experience, talent, insights, and creative ideas that are just waiting for the right opportunity to be shared. A good Process Improvement Manager cultivates relationships and is always listening for useful suggestions and bold ideas to improve business processes. They love to give credit, recognize contributions and exceptional achievement, and celebrate success. Getting thought-leaders and exemplary workers behind a new idea will encourage others to follow.

Continuous and unrelenting effort to improve systems and processes is the only way to develop excellence in people and organizations.

“Reward those who Do, Train those who Can’t, Replace those who Won’t” (Henn’s Creed). The Process Improvement Manager is interested in two major factors that affect how workers perform—Desire and Capability. They find ways to elevate both.

(“Only three things happen naturally in organizations: friction, confusion, and under-performance. Everything else requires leadership. … The key [is] to … look for people's potential and spend time developing it” — Peter Drucker).


8. Speak Numbers, the Language of Improvement

“Without data, you're just another person with an opinion” (W. Edwards Deming).

The Process Improvement Manager relies heavily on data or numbers in their pursuit of truth and best practices. Their personal success is largely determined by the company’s ability to show measurable improvement of its core business activities. Numbers are the language of improvement.

However, the daily work of the Process Improvement Manager is not just to focus on outcomes, but instead to improve the behaviors and processes that lead to better outcomes or numbers.

Many operational problems are revealed in performance reports or financial statements such as the balance sheet or the profit and loss statement. These numerical indicators will point to weak or faulty business processes.

The Process Improvement Manager is interested in common business measures, including performance standards and goals, break-even points, and the key numbers that drive the success of the organization. Knowing the sometimes-dreadful facts is essential to making effective changes.

Workers also excel when they receive frequent performance feedback, and by always knowing where they stand in relation to established goals or standards. Properly viewed, numbers provide the critical foundation for all business intelligence.

Speak Numbers, the Language of Improvement

"You cannot manage what you cannot measure" (Peter Drucker). "Anything that can be measured can be improved" (Michael Dell, Dell Computers). When performance is measured and reported, the rate of improvement accelerates" (Thomas S. Monson, business and religious leader).

The time and effort of the Process Improvement Manager is a financial investment that must have a beneficial return. This is accomplished by focusing on the systems and processes that improve the customer experience and reduce costs (waste). The larger the company, the greater the opportunity there is for financial gains.

Before beginning any improvement project, the Process Improvement Manager determines the initial cost of implementation as well as the annual recurring costs. A preliminary analysis may include a budget, expected savings or earnings, and the estimated payback period.

Owners or managers approve new projects before proceeding and receive regular status updates, especially the good news of financial gains. Well-designed and executed business systems pay for themselves many times over.

(“Leadership is defined by results not attributes. … Checking the results of a decision against its expectations shows executives what their strengths are, where they need to improve, and where they lack knowledge or information” — Peter Drucker).


9. Never Stop Improving and Innovating

Kaizen, a Japanese term for continuous improvement, is the ongoing, systematic, incremental improvement in the way things are done. It is a relentless attempt to eliminate the unnecessary business activities, delay, waste, and variation within processes that add cost without adding value. Kaizen results in improved lead-time, efficiency, quality, productivity and customer loyalty. 

Every organization has unlimited possibilities for improvements that lead to happier customers and higher profits. The Process Improvement Manager is focused on bettering people, products and processes, turning problems into opportunities, and achieving operational excellence in a never-ending quest for perfection.

Most improvements in an organization come from ongoing innovation to its internal systems and processes (e.g., reducing errors or cycle time). Some improvements are incremental—tweaking what already works. However, breakthrough improvements can dramatically elevate the customer or worker experience and reduce operational costs in a BIG WAY.

Seek Continuous Improvement

“The goals of a Process Improvement Manager are simple: 1) make things easier 2) better 3) faster and 4) cheaper” (Shigeo Shingo, pioneer of Lean Thinking). They continually ask, “How can we do this better? How can we raise the standard?”

Daily improvement is accomplished by measuring and monitoring core business activities and providing constant feedback to workers and managers. Suggestion boxes, done the right way, and business improvement workshops (discussed above), are also sources for new ideas and input from workers.

Improvement methodologies such as Six Sigma, Lean Thinking, and the Theory of Constraints provide big-league principles and strategies for even the smallest of companies (see “Four Improvements Methods You Should Know About"). Small daily improvements—hundreds each year—are the key to extraordinary long-term results.

(“Knowledge has to be improved, challenged, and increased constantly, or it vanishes. … Not to innovate is the single largest reason for the decline of existing organizations” — Peter Drucker). 


10. Inspire a Culture of Excellence

The Process Improvement Manager has great influence on the culture of the business, and culture drives results more than any other factor.

Develop a Culture of Excellence

"An organization's purpose and goals set the direction. Measures focus the energy on the outcomes. Processes create habits, and habits drive the culture. You can teach skills and concepts. You can even create momentum (and a few smiles) through inspiration. But investing in skills and inspiration is a waste of money if there are not processes to reinforce your purpose and principles. The creation and continuous refinement of work processes is a mandatory practice in the Results Rule! organization, regardless of the industry" (Randy Pennington, “Results Rule!”).

The Process Improvement Manager—owner or employee—is responsible to help the company break through to a high-performance culture, a culture of discipline, a culture of excellence. This is the natural consequence of creating effective business systems and processes. There is no other way!

 (“Culture eats strategy for breakfast” — Peter Drucker).

 Nate’s Amazing Experience

Ten years ago, a young man sat quietly in one of my workshops. He was an entry-level employee of an attending customer. Little did I know how much he was paying attention, and that he caught the vision far beyond the business owner he was working for. Years later, and unexpectedly, I received an email from Nate. In part, he wrote:

"I am now working for a fortune 1,000 company and am currently in the business intelligence sector, and I am a Business Process Engineer. I go in, evaluate, look for waste, streamline processes and identify projects. I am then tasked with implementation, setting up control reports, forecasting results, and mapping out potential financial gains. I have been in the job for four months now and things are going so well they are throwing all kinds of projects at me that span many departments. I gained trust quickly and pretty much have a free rein. I have already identified over $10 million in gains from process improvements that I am putting in place.”

The Process Improvement Manager

Nate made a career of process improvement and landed a great job with a big company. However, the principles that guide his work are much the same for companies of every size. YOU CAN AND SHOULD DO THIS FOR YOUR COMPANY! As with Nate, the payoff can be quite substantial.

Laura (quoted above) and Nate, have had very different experiences in the companies they work for. All customers and employees, including yours, have similar feelings, one way or the other. Is your company organized, systemized, smooth-running, efficient, and profitable, or is it seat-of-the-pants, frustrating to do business with, and struggling to make money? Perhaps it is in between, but could it use some improvements?

Again, Who is Your "Business Systems Czar”?

The primary purpose of a Process Improvement Manager is to help engineer a remarkable business operation. This person has proven leadership and communication skills (oral and written), is a problem-solver with sound business understanding, works well with people and teams, and is performance driven.

The Process Improvement Manager spends most of their day designing, developing, overseeing, monitoring and evaluating the systems and processes that help an organization effectively find and keep customers, run an efficient and profitable operation, and differentiate itself in a crowded marketplace. 

Workers run the systems, and systems run the business. People may come and go, but the systems and processes remain constant. (see Michael Gerber, “E-Myth Revisited”). Like a fine restaurant, the key to success is developing and executing the precise and proven “recipes.”

(Oh, and by the way, the Process Improvement Manager should also document the “recipe” for their own role and improvement activities.)


Why Should People Want to Do Business with You?

Customers and employees alike want to work for or do business with the best companies. In a competitive marketplace, expectations are rising.

“Customers … are demanding from companies in many industries a radical overhaul of business processes. Intuitive interfaces, around-the-clock availability, real-time fulfillment, personalized treatment, consistency [across locations], and zero errors—this is the world to which customers have become increasingly accustomed. It’s more than a superior user [or buying] experience, however; when companies get it right, they can also offer more competitive prices because of lower costs, better operational controls, and less risk.” (Shahar Markovitch and Paul Willmott, McKinsey & Company).

So, just like sales, accounting, and customer service—essential business functions—you also need someone to develop and refine the business processes that are humming along every day in your large or small organization.

Incremental and occasionally breakthrough improvements will dramatically increase your customer loyalty, employee performance, profitability, and growth. There is no other way!

(“The best way to predict the future is to create it” — Peter Drucker).

P.S. - Download and print this article for your reference or to give your designated Process Improvement Manager. Go through the article and highlight everything your company can and should do. (Owners of small businesses will be surprised by the possibilities.) These ten principles will get you off to a great start! (Click Here to Download Printable PDF File)

The Next Step...

Tags: Business Leader, Culture, Improvement, Business Systems, People

Business Systems: 10 Vital Things You Need to Know

Posted byRon Carroll

Recently, I visited a customer in Houston Texas who owns a chain of ten auto repair stores. By every measure, Shane has a very well-run and prosperous company. He is no longer involved in the daily routines because he has excellent and trusted managers, and first-class business operations. However, Shane wants his company to become even better; he wants to improve on his success.

Auto Repair Company with Great Business Ssystems

After visiting some of Shane’s busy stores, I was reminded of a statement made by a marketing professional a few years ago. He said:

"One of our favorite clients is an auto repair shop that regularly puts three to four competitors out of business every year. His business operations are run so flawlessly, his marketing is so compelling, and his customer satisfaction is so high, customers are irresistibly drawn in and drawn back time after time. They are helpless. In their minds (and in reality), they would be STUPID to go anywhere else to get their cars fixed" (Rick Harshaw, Monopolize Your Marketplace).

Shane was eager to refine his company's daily operations, but new to my Box Theory™ Way. As I began to explain, he had a sudden epiphany and shouted, “YOU’RE TELLING ME THAT I CAN CREATE A SCHEMATIC OF MY BUSINESS, AND LIKE MY AUTO TECHNICIANS, I CAN VIEW THE DETAILS OF MY PROCEDURES AND PROCESSES TO PINPOINT AND SOLVE PROBLEMS.” “Uh, yes,” I responded. “I suppose you could look at it that way.” He actually had a brilliant insight that I had never thought about before.

What is a Business System?

I was inspired by Shane’ observation and now want to tell you why I am such a zealot about creating carefully designed and implemented business systems and processes. I hope you too will want to develop a business model so compelling that customers would think themselves “STUPID” to go anywhere else.

Before we start, keep in mind this helpful definition:

A business system is a procedure, process, method, or course of action designed to achieve a specific and predetermined result. Like a recipe, its component parts and interrelated steps work together for a desired outcome. Creating effective business systems is the only way to attain results that are consistent, measurable, benefit customers and workers, and yield an expected profit.

We are speaking now of people systems, not mechanical or electrical systems. For example, they might include lead generation, customer service, production, order fulfillment, purchasing, inventory management, hiring, training, and many others unique to your company. These systems are the daily hum of business activities that determine the success and profitability of your company.

Good Business Systems Run By Good People


10 Things to Ponder

Will you take a moment to consider ten vital principles that may help you and your staff run a more trouble-free, results-driven, and prosperous enterprise?

  1. Good systems are needed in EVERY ORGANIZATION, including YOURS.

    Effective business systems and processes are vital to product-based, service-based, and non-profit companies of every size and in every industry. They are important to the office, the workshop, the factory or the retail store. The critical purposes of your business systems are not just to get organized or systemized, but to consistently attract and retain customers, eliminate waste and inefficiency, and set your company apart in a crowded marketplace. (The only enduring businesses are those with awesome systems and processes! How would you grade yours?)

  2. Business systems are the essential BUILDING BLOCKS of your company.

    Systems and processes are how your employees get routine work done. Unfortunately, in many small businesses, they are improvised as people come and go. Every business owner and entrepreneur can become a “business engineer,” and learn the Master Skill of developing powerful systems and processes. All business functions—marketing, finance, and operations—fall within the scope of this single skill mastery. As Michael Gerber (E-Myth) said, “the business owner must work ON the business, not just IN the business.” Whether by hands-on or overseeing others, you can work ON your business in an intelligent and systematic way by creating valuable systems that continually please customers and accomplish objectives. This is one of your key responsibilities and a best-use of your time. (Decide today to build your business on a foundation of remarkable systems and processes. There is no other way!)

    Business Systems are Your Building Blocks
  1. Cost-effective systems LOWER COSTS and enable you to give customers the BEST DEAL.

    Competition can be formidable. The customer is always looking for the “best deal,” which is sometimes the lowest price, but is always acceptable quality, promptness, value, and a good buying experience. The quality and efficiency of your business processes will largely determine your operating costs and your ability to profitably compete. You can count on exceptional business systems to give you the marketing advantage of being better, faster, cheaper and smarter than rival companies. (With regard to business processes, Quality + Speed = Low Cost. Do not forget that formula!)

  2. System building is the ART AND SCIENCE of developing “BEST PRACTICES” for your company.

    The art of system design comes from your unique vision, creative approach to problem solving, and desire to differentiate yourself in the marketplace. The science comes by applying the Law of Cause and Effect and the simple but amazing improvement methods found in Six Sigma, Lean Thinking, and The Theory of Constraints. A systemized approach to running a business includes a focus on process, system components, people, quality, speed, and measurement. (Business systems are literally the “recipes” for best practices to get work done throughout your organization.)

Creating Business Systems is Both an Art and a Science

  1. Quality systems and processes SOLVE PROBLEMS and foster a CULTURE OF EXCELLENCE.

    Systems Thinking will literally make your business transparent, allowing you to clearly see the root-cause of problems and their obvious solutions. Quickly eliminate customer complaints, operational waste, mediocre performance, worker turnover, unnecessary costs, poor cash flow, slow sales growth, small profit margins, and daily frustration. You can establish a culture of discipline and excellence with smooth-running business systems, performance feedback to workers, and the empowering motivation of accountability. (Documented business processes provide a “visual schematic” for problem solving, innovating, and creating a result-driven culture. And, it is soooo easy to do!)

  2. Good business systems turn ORDINARY PEOPLE into EXTRAORDINARY PERFORMERS.

    Established systems and processes are your most valuable business asset when they can continually produce the results you seek. People are the most important components within those working processes. As people come and go, the systems remain constant. Ordinary people can produce results far above their pay grade if they operate in well-designed and effective systems. Good business systems reduce mistakes, waste, and rework, and allow workers to capably perform higher-level tasks. (When problems do happen, blame the system before blaming people, and perhaps blame yourself for the faulty system.)

Good Business Systems Help People Perform Better

  1. Achieve CONTINUOUS IMPROVEMENT with a PROCESS IMPROVEMENT MANAGER.

    Whether it is you, a manager or employee (full or part time, and not necessarily a new hire), someone needs to wear the hat of a “Process Improvement Manager.” This person’s role within the company is to maintain efficiency and quality in the work setting. They evaluate current business practices, looking for ways to improve customer service and productivity, reduce costs, and make the best use of the business's resources. Specifically, the process improvement person will develop, refine, and monitor the performance of the company’s vital systems and processes. Ongoing system development promotes continuous learning, growth, and improvement of individuals and organizations. (Innovation at the system level drives all business progress. The primary vehicle for innovation and improvement is the weekly Business Improvement Workshop.)

  2. SYSTEMS THINKING and BUSINESS IMPROVEMENT WORKSHOPS elevate people, products, and processes.

    The Business Improvement Workshop is a one hour per week meeting focused on solving identified problems, refining business practices, and advancing the organization. This brief council meeting improves people, products and processes by encouraging critical thinking, problem solving, innovation, engagement, buy-in, and team spirit. For busy owners, the weekly workshop is an important crossroad for relationship building and steady business improvement; there is no better use of time for managers or staff. (Small weekly improvements throughout the year add up to happier customers and employees, and incrementally larger profit.)

Hold Regular Business Improvement Workshops

  1. Exceptional business systems and processes are necessary to START, GROW, FIX, REPLICATE, or RETIRE.

    Start - Effective business systems are the only way to plan, organize, and structure a new business that runs smoothly and impresses customers right from the start.

    Grow – Well-executed systems and processes provide a methodical and consistent way—the best way—to dramatically grow your business and to skillfully manage the special challenges of growth and expansion.

    Fix – Improved business systems cut the waste, inefficiencies, and fat out of your organization (e.g., mistakes, lost time, and rework). Your well-oiled and cost-efficient business operation will delight customers and employees, and put more money into the pockets of stakeholders, including YOU!

    Replicate - Once you create your moneymaking “system”—and document the successful way you do things—it is easy to franchise or replicate your business model in other market locations (especially with Box Theory™ Software).

    Retire – Become free of the daily grind. Turn your entire business into a self-running system that provides consistent results day after day, even when you’re not around. Let someone manage the business for you or sell it for top dollar. The true value and selling potential of your company is found in the maturity of its systems and processes—their ability to consistently produce desired results.

    (No matter what stage of business you are at, or what you want to do to get better, creating quality systems and processes is the only solution. There is no other way!)

  2. Effective business systems PAY FOR THEMSELVES over and over again.

    "If you need a new process and don't install it, you pay for it without getting it." (Ken Stork, former president Association of Manufacturing Excellence). Please believe me when I say, “Good Systems are worth it!” And the larger your company, the greater the potential benefit. The question is not whether you should create business systems, but what new system or process improvements will have the most immediate financial impact. YOU have your hand on the lever of cash flow and profit, so go ahead and turn it up! A small investment to upgrade your operational processes is “the gift to customers, employees, and owners that keeps on giving.” (The financial benefit of high-performance business systems far exceeds their cost of development, and the payoff is often immediate and dramatic.)

A Systematized Business is a Money Making Machine

  1. BONUS TIP: BOX THEORY™ Software will BENEFIT YOU in FOUR WAYS.

    Look, I’m not big on sales hype, but I’ve spent a lot of time and money to create a powerful software program for building remarkable business systems and processes. (It is like the QuickBooks of business systems.) This low-cost product will 1) turn you into an effective Systems Thinker and developer, 2) provide all the tools you need to accomplish this mission-critical task, 3) cut your system development time and cost in half, and 4) trust me, it will raise your business IQ by 80 points—OVERNIGHT! (Learning the Box Theory™ Way could be one of the most important decisions of your business career!)

“Systems are the Solution” (AT&T)

Shortly after returning home from my trip to Texas, I needed to get new tires on my Toyota Highlander. While waiting for the installation, I learned that Discount Tires has opened over nine-hundred stores in the United States since 1960. Now that’s a pretty impressive example of a business operation “run so flawlessly, with marketing systems so compelling, and customer satisfaction so high,” that it could be replicated—and profits multiplied—without end.

I think I would be STUPID to build a business any other way! How about you?

Business systems are the most misunderstood and undervalued tools of entrepreneurs, small-business owners, and managers. If you are not giving up close and personal attention to the processes that drive the day-in and day-out results of your company, I invite you to take the next step to learn more about this most fundamental and indispensable business activity.

Just complete the short form on this page and you’ll be on your way—no money required, nor strings attached. I promise: this eye-opening and free information will get your juices flowing. If I can help you in any way, call me on my cell phone, Ron Carroll, at 801-225-9140, or email me at BoxTheoryGold@gmail.com.

The Next Step...

Tags: Business Systems, Getting Started, Culture, Improvement, Systems Thinker

Business Leadership: Six Ways to Increase Worker Desire and Capability

Posted byRon Carroll

Are you a leader? Do you have enough “juice” to accomplish important things through other people?

Leadership is not about who we say we are. It’s not about who we want to be. It’s not a popularity contest. It’s not about our position as owner or manager, or about the title on our business card. It’s none of these things.

“Leadership is . . . about impact, influence and inspiration. Impact involves getting results, influence is about spreading the passion you have for your work, and you have to inspire team-mates and customers. . . . Leadership is to derive power . . . not from your position but from your competence, effectiveness, relationships, excellence, innovation and ethics” (Robin S. Sharma, best-selling author on leadership).

Leadership is about creating a vision, influencing attitudes and behaviors, building capability, and moving people enthusiastically toward worthy goals.

In business, it’s all about our power to develop people, products, and processes that give customers what they want, retain the best employees, produce a healthy profit, and grow a lasting enterprise.

More specifically, our role is to establish clear, compelling and frequently measured objectives, identify the vital few (see 80-20 Rule) behaviors or processes that impact those objectives, and finally, bring about the desire and capability of people to achieve those objectives.

So, how do we do that? How do we systematically create immediate, effective, and lasting change?

Consider the following six ways to elevate the desire and capability of your workforce to carry out the vital behaviors and processes of your business.

Desire and Capability

Three Ways to Increase Desire or Motivation

  1. Make it About Them – What gets you motivated? Apply the Golden Rule and provide the kind of business culture YOU would thrive in. Make work—the vital behaviors and essential processes of your operation—pleasurable, rewarding and even fun. Turn work into a game and keep score.

    Replace control with choice—even the choice to say no. Replace orders and dictates with dialog and questions. (To ask is to teach, to tell is to preach.) Replace the blaming of people with finding the root cause of negative behavior or poor performance in faulty business systems. Develop your team by giving them the freedom to fail, and the chance to learn from the things they experience.

    Compensate fairly, but remember that people work harder and even sacrifice for a cause or a vision, when they feel they are making a difference, when the mind and the heart are engaged. Focus on the personal success of your employees—learning, skill development, and career growth. (“Help thy brother’s boat across the water, and lo, thine own has reached the shore” - Scottish proverb.)

  2. Provide Social Support and Example – How do you respond to praise or criticism, acceptance or rejection, approval or disapproval? Words count, including your approval or disapproval of managers and team members. Social influence—the desire to be recognized, valued, and connected to others—has an immense persuasive power.

    Here is the best part: it only takes the presence of one capable and exemplary person on a team to significantly affect how others will act. And if that individual is willing to sacrifice personally—proving how important the task or goal is—their credibility is even greater, and others will naturally raise their game. Find your opinion leaders or exemplary workers and get them onboard with the behavior or process you are trying to implement. Remember, the power of the message is determined by the power of the messenger.

    And one more thing: when people work together, they either encourage one another, try to impress one another, or even compete with one another, all of which improve performance. Once employees hold each other accountable for following vital behaviors or business processes, you’ve got incredible social support and a motivated team.

  3. Boost Enthusiasm with Incentives – Would well-deserved incentives, rewards, or recognition get you motivated? I think so. However, incentives are effective only after you have succeeded with personal motivation and social support (the first two above). Incentives do not work if people don’t want to do the work or don’t see the value of doing it. In addition, rewards don’t improve performance very much if people already like what they are doing and are doing it well (they are self-motivated).

    Tie rewards to the desired behaviors and results you want repeated. Make sure they are given quickly, and that they are appreciated. (Christmas bonuses are not a good way to reward people; if they are smaller than previous years, negative feelings often result.)

    Keep in mind that symbolic incentives or rewards are often more important than the actual face value (e.g., Employee-of-the-Month plaque; a personal note of appreciation).

    (I once got my young children to perform chores and other work tasks during the summer months by presenting them with colorful beads at a morning recognition ceremony for accomplishments the prior day. The coveted “good-deed bead” was given for performing a kind act. This amazing and highly effective reward system came from my experience with the Boy Scouts.)

    Reward effort and small improvements, not just big successes. Recognize behaviors that support valued processes, knowing that if you reward the actual steps people follow, results take care of themselves. And be generous with praise at all stages of progress.

Three Ways to Increase Capability

  1. Build Personal Skill and Proficiency – Do your people have the ability to do what you ask? Motivational tactics—like those described above—are futile and even cause resentment if people are not capable of performing or getting the results you expect. They must have the will and the skill. Goals have to be realistic and achievable, or you are doomed from the outset.

    The repetition of behavior or processes—with frequent feedback—builds capability and confidence. Rather than focusing on results, concentrate on developing skills and creating effective business systems and processes.

    You can help people become more skillful and productive by making complex tasks simpler, breaking big processes into several smaller processes (the Box Theory™ Way), turning vague direction into clear and specific instructions, and making distasteful or boring tasks pleasant. These strategies will cause quality and efficiency to go up, and costs to go down.

    Telling people to “suck it up," and "try harder” doesn’t work. Change the process so that people will naturally do better, and success is inevitable.

  2. Create Synergy with Teamwork – Do you believe teamwork is essential in any great business endeavor? Diverse intellects, talents, experience, and capabilities often enable a group of people to work smarter and perform better than any one person within the group. Ideas and resources are shared, and workers collaborate to help one another accomplish common goals. As in sports, put each person on the team in a position where they can add the most value. For example, the higher-skilled and more expensive accountant is probably not the right person to process accounts payable.

    As mentioned earlier, when people work together and talk about how to reach goals, improve performance, and solve problems, and when they offer encouragement and hold each other accountable, just step back and smile. You’ve got an extraordinary team that will become incrementally stronger with each passing day.

    Put capable teams into first-rate business systems and processes, and you will create a culture of excellence, where people perform to their best ability even when you’re not around.

  3. Supercharge Your Business Environment with Effective Systems and Processes – Do you provide a workplace that is conducive to high-quality and efficient work? Are you more likely to find fault with people before taking a close look at the environment or process they are working in?

    It is much easier to change business processes than it is to change people. Start looking at your work layout, distance people walk, tools, machinery and equipment, clutter, distractions, unnecessary movement, complexity, downtime and start-stop workflow (system busters). Find ways to change the physical world to support the behavior you want. For example, move the printer or buy another printer so people don’t have to walk as far. Clean up your operation and get organized so it doesn’t take as long to find things (see Lean 5S).

    Don’t merely make good behavior desirable; make it certain with well-designed business systems and processes. Ordinary people put into exceptional systems will produce extraordinary results, and at a much lower cost. With Box Theory™ Software, an $8-10/hour college student can do work worth $100 per hour, and that’s no baloney!

    Look and listen. Take notice of the physical surroundings, but also listen carefully. From a factory office I once worked in, I could accurately predict the day's production level by the pace of repeated sounds made by people and equipment. When the sound of staple guns going off or the whir of a wood moulder slowed, I walked out to take a look. Because money was coming out of my pocket, I quickly noticed when there was a disruption to productivity.

    Provide visual cues, examples, checklists, quality materials and supplies, the best tools, safety guards, and so forth. Make it not only easy to do the right thing, but almost impossible to do the wrong thing (see Poka Yoke). Put people who work on the same team in close proximity. Replace employee discretion and vague procedures with clear policies and supporting business systems. Change the subtle features within your work environment that are causing misbehavior, sputtering processes, and diminished results.

You Now Have the Juice to Make It Happen

There are a lot of ideas described above to increase employee motivation and capability. Start with what makes sense for your business—what would have the greatest impact and be the easiest to implement.

Apply as many of the six major strategies above as possible, experimenting to discover what works best within each. Diagnose the root cause of your problems carefully before prescribing a remedy (see 5-Whys Analysis). Ask what process weakness or perverse incentive is causing negative behavior or barriers to success. Observe and measure the impact or your changes, learn from the results, and keep refining to make things better.

Remember: making good things happen requires personal desire and capability. Be bold. Start applying these principles today and you will soon have the “juice” to elevate your company by providing greater value to stakeholders, customers, and employees.

 

The Next Step...

Tags: People, Improvement, Culture

10 SIMPLE ACTS to Increase Customer Loyalty, Profitability and Growth

Posted byRon Carroll

The average business owner is always on the run, trying to do everything in his or her power to keep up, solve problems, please people, pay the bills and make a little profit—to survive, grow and prosper. 

In our fast-paced and complex world, many voices are calling out for our attention, advising us where to go and what to do to achieve success. We hope for a breakthrough idea that will propel us to the “next level,” but we’re not always sure what investment of our time, effort, and money will provide the biggest payoff.

However, many of the best ways to improve a company are found in doing small, simple, and inexpensive things that can have a significant positive impact on employees, customers and our business results.

Small but Simple Things

How to Improve a Business

Here are t SIMPLE ACTS that will elevate your business and put more money in your pocket.

  1. The SIMPLE ACT of smiling, showing kindness, or expressing gratitude will lift everyone you come in contact with, engender loyalty, and elevate employee performance.
     
  2. The SIMPLE ACT of creating checklists—to ensure procedures are precisely followed—will reduce the number of mistakes people make, and the unnecessary waste of time and materials.
     
  3. The SIMPLE ACT of measuring a business process and providing your workers frequent feedback will increase motivation and productivity.
     
  4. The SIMPLE ACT of applying a 5-Whys Analysis will help you quickly uncover the root cause of many business problems.
     
  5. The SIMPLE ACT of getting your operation cleaned up and organized will impress customers, increase efficiency, and boost profit. Make your business shine!

  6. The SIMPLE ACT of assigning ownership to business systems, processes, or activities—and making team leaders accountable for their results—will dramatically elevate your business performance.
     
  7. The SIMPLE ACT of identifying and monitoring key performance indicators (KPIs) will cause you to focus attention on the areas of your business that matter most.
     
  8. The SIMPLE ACT of asking your employees about persistent problems, bottlenecks, and ways to improve—tapping into their ideas and insights—can reveal many opportunities for innovation and cost reduction.
     
  9. The SIMPLE ACT of implementing the WOW Factor in your business operation will help you attract and keep good customers and valuable employees.
     
  10. The SIMPLE ACT of holding a weekly business improvement workshop will eventually give you a world-class organization.


One More Simple Act

Finally, the SIMPLE ACT of reading “Box Theory™: Double Your Profit with High-Performance Systems and Processes” and becoming a Systems Thinker will raise your business I.Q. by 80 points—overnight!

Forgive me for this little sales pitch; I don’t do it often. However, I truly believe that applying the Box Theory™ Way (eCourse, all-in-one software, and Business Systems Academy) is the most important thing you can do to have a smooth-running business that attracts customers, retains the best employees, and generates a healthy profit.

Remember: by small and SIMPLE ACTS are great things brought to pass!

The Next Step...

Tags: Improvement, Efficiency/Speed

Business Turnaround: 10 Threats that Can Kill Your Business!

Posted byRon Carroll

Many business owners wait too long before facing the brutal facts that their business is in trouble. Then they discover—like a bug in a flushed toilet—it’s nearly impossible to escape the downward spiral.

Downward Spiral

We begin our business filled with hope and optimism. Before long, forces start into motion to test our grit. Getting sufficient sales and good employees is harder than expected. We face government regulations, slumping economies, cost increases from vendors, customers who pay slow or not at all, cash flow headaches, burdensome paperwork, tax pressures, unproductive workers, stiff competition, obsolete inventory, and constant customer demand for new and better products. (It wears me about just thinking about it.)

However, this is the profession we chose; the above challenges come with the territory. So, we suck it up, we adapt, we improve, and we work diligently to overcome the unrelenting forces trying to put us out of business.

Furthermore, not all problems we encounter are equal. Some have the power to kill our business if we fail to remedy those threats without delay. Our survival depends upon it!

Below are ten business killers that, if not addressed, can bring about the big flush and send your business spinning out of control and down the proverbial drain.

Sales Killers

  • Killer #1 Low Market Demand  – Your business and revenue model break down quickly when people aren’t very interested in buying your products or services. Perhaps your offering doesn’t solve problems or reduce pain as well as expected. Maybe it is getting old or outdated—running out of steam. Your message could be unappealing and doesn’t attract interest. Customers may be staying away because you don’t have a great reputation for delivering on your promise. Whatever it is, without sufficient product demand, you really don’t have a business.

    I remember when Blockbuster Video closed their last store—demand for rented movies moved to Netflix and digital delivery.  Question: What is causing the lack of demand for your product or service, and can you fix it?
     
  • Killer #2 Hard to Reach Target Market – Are you having difficulty finding an easy and cost-effective way to get your message in front of your ideal customers? Maybe they don’t have obvious hangouts for you to find them, or there isn’t an effortless way for them to find you. Do you have a bad physical location? Are you not easily found on the Internet? Could too much competitive noise be drowning out your message?  Is your reach to prospective customers about as effective as a billboard in the desert? 

    Business philosopher Jim Rohn teaches how to be a master communicator: "First, have something good to say. Second, say it well. And third, say it often." I repeat: Do you have a clear and cost-effective channel to deliver your message often to large numbers of people in your target market? If not, can you fix it?
     
  • Killer #3 Superior Competition – Your potential customers are always looking for the best deal, not necessarily the lowest price. If your competitors are bigger, better located, have superior products or services, provide better customer care, shorter lead-times, more knowledgeable sales people, and so forth, you will lose business. It’s hard to get customers to beat down the door if you are second best, unless you do it like Avis Car Rental.

    “The phrase
    We Try Harder’ has gone down in advertising history as one of the longest-lasting and respected taglines (50 years). The origination of the slogan was not to create a cute, gimmick, but instead it was a business philosophy that every Avis employee adhered to. ‘We Try Harder’ helped Avis earn a reputation as one of the most admired businesses in the world.”

    You don’t have to be the biggest, but you must strive to make your business so good that people would be crazy to buy from anyone else. What can you do to inspire this kind of loyalty?
     
  • Killer #4 Undifferentiated Strategy – In this day and age, you have to stand out like “purple cow in a field of brown cows” (Seth Godin). You must constantly promote your unique selling proposition (USP)—your main selling advantage. Perhaps you can be better, faster or cheaper than your competition, or you can provide “killer customer care.” 

    What makes some of the big boys stand out: UPS (logistics), COSTCO (value), Amazon (convenience/ease), Coldstone Ice Cream (quality) or Wal-Mart (low price). What compels YOU to buy from specific stores in your area? Follow the successful strategies of others.

    You must have some way of doing business that makes the customer remember their experience, feel that
    WOW thing, and tell their friends. If you are like everybody else, then it is only luck that that determines your sales. What makes your business strategy —your game plan— a winner? Can you adjust your strategy to dominate a niche market?

Cash Flow and Profit Killers

  • Killer #5 Not Managing by the Numbers – If you aren’t sure how well your company is performing or why you are losing money, you have a serious problem.  It is critical that you understand your leading and lagging indicators, the numbers that tell you where to focus your business improvement efforts.  Maybe you are in denial about what the numbers reveal. Remember, the longer you wait to address the problem, the worse things get and the harder it is to recover. If necessary, find  someone to help you understand what the numbers on your financial statements are trying to tell you.

    In 1891, a British scientist named William Thompson, also known as Lord Kelvin, said, “When you can measure what you are speaking about, and express it in numbers, you know something about it. But when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind.” 

    Are you aware of the 
    numerical clues that expose the problem areas of your business operation? When you find the under-performing systems or processes that are causing those numbers, can you fix them?
     
  • Killer #6 Inadequate Margins – There are very few problems in an established business that can’t be solved with good margins—gross margin, operating margin, and net profit margin.  Avoid the temptation to be the lowest price in town unless you have a legitimate cost advantage or operate on a very high-volume business model. Instead, focus on giving your customers the best overall value and buying experience.

    To improve margins, you have to raise your prices, reduce the cost of your products and services, and/or lower your overhead expenses. Which solution is best for you to increase operating margins? Without adequate margins, you’re just working hard
    for the fun of it.
     
  • Killer #7 Insufficient Working Capital – If not remedied, cash flow cancer is a deadly disease that will eventually kill any business. You have to have enough money to buy goods, cover payroll, and meet your monthly financial obligations. Borrowing money to do this is a bad idea if you have not resolved the underlying business killers discussed above. However, borrowing can be OK to support growth when you have good profit margins.  As you dig out of a cash hole, consider the tips in this article, “A Business System When the Wolf is At the Door.

    Caution:
    Beware of excessive inventory and accounts receivable that suck cash and make you feel poor even when you are earning a nice profit. Do you know where all your profit has gone? What can you do to move more of it into working capital? If you have little or no profit, you better focus on lack of sales and/or insufficient margins—PRONTO!

Business Operations Killers

  • Killer #8 Lack of Innovation – If you are not coming up with new ideas for improved products, services, and business processes, you will be left behind. Your company will become stale, undifferentiated in your target market, and ho-hum boring.  Competitors that are innovating will surge ahead. Innovation is essential to stay on top.

    Business expert, Peter Drucker teaches, “A business has two purposes: marketing and innovation.”

    What new things could you do to draw more attention, serve customers better, and create higher quality and more efficient business operations? You have endless opportunities. Make innovation a part of your daily routine.
     
  • Killer #9 Weak Business Systems – Without good business systems and processes, you have a disorganized, seat-of-the pants operation that is frequently in crisis mode (every crisis is a system breakdown). Putting out fires is your daily routine. There is never-ending frustration for customers and employees. It’s time to end the madness. What grade would you give your business systems?

    Good systems will increase sales, customer loyalty, advantage over competitors, and profit margins. They are essential to a smooth-running and prosperous enterprise. Every business turnaround I have been involved with required drilling down into the operations to find ineffective systems and processes with excessive
    mistakes, inefficiency and waste.

    In a mature company with adequate product demand, reducing waste is the key to rescuing the business. What core systems in your organization drive its economic engine? What improvements could you quickly make? 
    Where might you turn for help?

  • Killer #10 Uninformed or Ineffective Management – Poor management can drag your business down in a hurry. You have to “get the right people on the bus and the wrong people off the bus” (Jim Collins, “Good to Great”).

    You need people who are Systems Thinkers (a learned skill), results-oriented, and who can help you create a culture of excellence.

    Furthermore, managers must be in-the-know about the challenges your company is facing. Tap into their unique talents and insights. And remember: good managers get the best possible results with the least amount of resources.

    Finally, a frequent cause for business failure is that owners and managers do not create
    business systems and processes to effectively carry out the mission, strategy and goals of their organization. Do you currently have top-notch people? Are YOU an effective leader?

Turning Your Business Around

When an established business enters hard times, it has a lot more staying-power than might be expected. I have seen companies struggle for years before going out of business or turning themselves around. They are able to live off of the good-will they have earned with vendors, customers and employees. They find needed cash from shrinking inventories and accounts receivable. They get support and softened terms from banks and vendors.

Struggling business owners who exhibit high integrity, courage to face the truth about their challenges, and who forge ahead with pig-headed determination, are often able to swim upstream to safety. And everyone will be cheering them on!

However, you can’t just hope for a better day. You must have a game-plan to solve the killer problems we’ve talked about. You have to get real, and get going—AND THE FASTER THE BETTER!

In my experience, most attention should be focused on either of two things, getting more high-margin sales or eliminating inefficiency and waste. Simply put, you have to focus on the right things, drill down into the details of your business systems and processes, identify the weak links, bottlenecks, obstacles and problems, and fix them. (See some examples of this.)

Hiring the right turnaround consultant might be helpful, but it is usually expensive and not always the best solution. Paying out more money that you cannot afford also adds to your burden and risk.

You know your business better than anyone else. Maybe YOU can do it! Becoming a Systems Thinker and following correct principles is the key to success. If you do it yourself—with your team— you will be forever stronger from the experience. You will become the master of your own fate.

 

The Next Step...

Tags: General Business, Improvement, Business Leader, System Failure

Problem Solving: Zero In on the Root Cause and the Vital Few

Posted byRon Carroll

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.

Focus on most important details

 
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 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 provide 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...

Tags: Systems Thinker, Improvement, Laws/Principles

Business Improvement: Shut Down Your Fix-it Factory!

Posted byRon Carroll

At the root of most 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 just as planned.

The second factory is less noticeable. It is the "Fix-it Factory," which cleans up all the mistakes, rework, breakage, returns, scrap and other problems of the Main Factory. This dark underbelly of the business primarily deals with defects and delay. Every business has a Fix-it Factory that consumes human and financial resources. You might be surprised by the cost of running your Fix-it Factory!

Shut down 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 to handle the waste.)

Do you realize what I just said? Every waste of time or material comes directly off your 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 and rocesses. 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 arrived 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 of the 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 aggravation. Worse yet, I may tell other people of my bad experience. It is apparent that the overall cost of 3%-mistakes can be quite 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! Walmart 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 Walmart so successful.

Mistakes and waste are a common occurrence in every company. The typical customer-purchase has many choices, options and variables, amidst a complex array of promises, processes, and paperwork. Consumer demand for new and improved products and services—never-ending 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 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, small-business owners of today must accomplish the seemingly impossible. They must squeeze out every possible defect and delay from their business operations. They must execute with consistency and 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!

I invite you to begin turning your business into a “house of order.” Develop effective business systems and processes 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 will show you how!

 

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Tags: Improvement, Quality, Efficiency/Speed, Cost Cutting

Improve Your Business Systems: 7 Ways Naming Gives Power!

Posted byRon Carroll

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, such as the Hershey bar, Kleenex, Xerox copies and the iPhone.
 
In the accounting business of my former life, I “productized” an accounting service with a registered trademark name—the Profit Acceleration System®. Giving an imaginative, compelling, and unforgettable name to a business service immediately elevates its perceived value.

Name Your Business Systems

In the typical small and midsize 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, as 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. (Your lead generation system is probably more important than your custodial system.) In addition, each system or process is either performing as expected, or not producing the desired results.

The simple point: W. Edwards Deming (Total Quality Management) remarked, “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.

Name Tag for Business System

Once you name a system, you can:

  1. Distinguish it as a unique business function with a specific identity and purpose.
  2. Give it an owner, someone who is accountable for its results.
  3. Create a team around it that takes delight in its achievements.
  4. Measure it to determine if it is producing as expected.
  5. Improve it by removing bottlenecks and weak links.
  6. Celebrate its success with recognition and rewards.
  7. Value it as a true business asset.

What are Your Core 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 or Onboarding System, or your Employee Incentive System? Have you even thought about these types of activities as business 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 put a name on each of your core business systems. This simple act will raise consciousness, elevate performance, and give you a better-run company.

And Remember: “Names have power” (Rick Riordan, “The Lightning Thief”).

 

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Tags: Systems Thinker, Business Systems, Improvement

Work ON the Business: 7 Tips to Do It Right!

Posted byRon Carroll

Years ago, I was struck by a statement that had a great impact on me. In fact, it 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.”

 Running a business

Working on a business—or running a business—is an entirely different task than working a "job" within 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 said the best use of my time as a business owner was creating value in my company. The second-best use of my time was building relationships and creating 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's operations. This eventually increased to four hours a day—and 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 company.

Running a Business

Here are a few things I’ve learned over the years about how to get the best results when working on the business.

  1. 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.

  2. 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.

  3. Never Stop Improving: Continuous Improvement of business operations is the primary responsibility of business owners and managers. Hold 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.

  4. 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 company. “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.

  5. Elevate Your Employees: First, hire the right people. Then encourage learning and growth by asking them to take on new or greater responsibilities. Seek their help with important tasks and goals. Offer your people opportunities to acquire new skills—perhaps attend a paid seminar. Challenge them to stretch their performance levels. And be sure to recognize and reward achievement! 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.

  6. Take Cost Out of Your Business: Profit is the life-blood of your enterprise. Find ways to reduce ever-rising costs and preserve your margins, while maintaining the value given 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.

  7. Create High-Performance Business Systems and Processes: Your entire organization is made up of systems and processes. You can accomplish the six objectives 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 the systems and processes that make your organization run smoothly, create value, and generate profit.

Work On the Business More and In the Business Less

So, if you want to run a successful business, the above strategies will get you on the right track. As your company grows, you will spend more time working on your business and less time doing the pick and shovel labor in the business.

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 or process, the task gets easier and your rate of progress accelerates.

I know the challenge small-business owners have in finding extra time to work on their 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!

 

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Tags: Business Systems, General Business, Improvement, Business Leader

Better Than a Suggestion Box: Tap into a Wealth of Employee Ideas!

Posted byRon Carroll

“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.

Business Improvement Ideas

An Untapped Asset

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 company are never expressed. Why? You don’t have a business system to tap into the collective intelligence of workers who are intimately involved with your daily operations; this includes the "average" 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?

The Outdated Suggestion Box

Some companies have tried a “suggestion box.” Employees write ideas or recommendations on a form and put them in a labeled drop-box. Managers read the suggestions (sometimes) 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 offered are not always feasible. Employees often propose more work for other people who are already busy, and thus no action is taken. Finally, this old-style system usually doesn’t reward successful implementation and sustained results stemming from the suggestion.

There is a better way!               (Photo: Bright Ideas Campaign)

Employee Improvements

Ideas for Improvement

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.

  1. 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—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 performance evaluations or other interviews.

  2. Next, give 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-for-improvement 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.

  3. 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 customer satisfaction, cost savings, productivity, process improvement, 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.

  4. 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.

  5. 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 the many small improvements is more effective than occasional recognition of a few big ones. Consider giving a vacation day, tickets to a sporting event, or a gift card. When others see that good ideas are rewarded and appreciated, they will join in. If appropriate, give financial compensation, partial 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.

  6. 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 perhaps a pizza party.

  7. 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 your 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.

 

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Tags: People, Improvement, Innovation, System Example