The Systems Thinker Blog

Murphy’s Law: How to Crush Murphy with Better Business Systems

Posted byRon Carroll

On the eighth day, God said, "O.K. Murphy, you take over!

We all smile when reminded of Murphy’s Law. Who hasn’t been a victim? The stories people tell are funny in hindsight, not so humorous when they are happening. The most common variations of Murphy’s Law include:

  • If anything can go wrong, it will.
  • Left to themselves, things tend to go from bad to worse.
  • Everything goes wrong all at once.
  • Things are damaged in direct proportion to their value.
  • It is impossible to make anything foolproof because fools are so ingenious.

When I was showing my house to some very interested buyers a few years ago, a rare microburst struck and rain overwhelmed the roof gutters. It left large unnatural ponds around the house. The excuse, “this has never happened before (I promise),” didn’t help much.

Before retiring, I almost made a fortune with significant ownership in a profitable start-up oil refinery. As Murphy would have it, a small fire developed in a critical area that closed the refinery down for an extended period. Cash ran out, and we were forced to sell to a vulture capital group anxious to take advantage of our misfortune.

Recently, a videographer told me she was shooting the bride’s vows in a backyard wedding when a low-flying plane killed the once-in-a-life-time sound track. Don’t you hate it when that happens?

Murphy's Law

Everyone has an encounter with Mr. Murphy at some time, especially when things matter most. Have you ever uttered the words, “give me a break” (or worse), when the unlikely happens, or when you encounter “a series of unfortunate events”?

Maybe you’ve experienced a few of these:

  • The item you are looking for is always in the last place you look.
  • Machines that are broken will work perfectly when the repairman arrives.
  • A dropped item falls in the least accessible place.
  • Whatever line or lane you get in will be the slowest, especially if you are in a hurry.
  • Any time you put an item in a "safe place," it will never be seen again.

Murphy’s Impact on Your Business

Of course, Murphy ’s Law isn’t really real because it supposes that inanimate objects have “will” or that the universe is plotting against us (I’m trying to be logical here, but sometimes I do think they are out to get me).

In your business, you likely see Murphy’s Law at play. The truth is—borrowing from the Pareto Principle—about 20% of the things that go wrong in your daily operations are random occurrences that you can’t do much about. Stuff just happens in our imperfect world.  However, 80% of the things that go wrong—often attributed to Murphy’s Law—are within your ability to control! (see “10 Reasons Why Your Business Systems Fail”)

Now, you could “eat one live toad in the morning so that nothing worse will happen to you the rest of the day,” or you could take steps to eliminate frustration and lower the painful cost of Murphy’s mischief and mayhem.

The Antidote to Murphy’s Law

Unfortunately, if you don’t have a thoroughly systemized business, things are going wrong all the time. They’re often not noticed, ignored, excused, or explained away. Maybe fixing the problem gets added to your to-do list or New Year’s resolutions, only to eventually disappear off the radar.

The cost of repeated operational mishaps is usually not even considered. After all, to error is human. It’s just part of doing business, normal, to be expected, part of life—C'est la vie!

But hey, besides being your passion, did you get into business to make money or what?

In a competitive marketplace, you have to reduce errors, mistakes, waste, and rework to a minimum. Your success—and take-home-pay—depend upon your ability to manage operational details and protect your company from Murphy’s persistent assault on customer satisfaction, employee morale, and business profit.

Without good business systems and processes, you are the hopeless victim of Mr. Murphy’s minions and their dastardly deeds.

  • If anything can't go wrong, it will anyway.
  • If there is a worse time for something to go wrong, it will happen then.
  • You never run out of things that can go wrong.
  • If anything can go wrong, it will happen to the crankiest person.
  • If everything seems to be going well, you have obviously overlooked something.

The Box Theory™ Way

With the Box Theory™ Way, you don’t blame fate or people, not even Murphy. You look first at your systems for getting work done. Things go wrong due to one of six basic causes: human, process, policy, equipment, materials, or environment. The question is:  what can you do—what business systems can you create or improve—that will put an end to the recurring problems?

For example:

  • Do you have checklists to ensure work gets done right every time?
  • What is your system to monitor and maintain equipment?
  • What is your routine for teaching and reinforcing safety measures?
  • What is your backup system for computer files, critical processes, and emergencies?
  • What is your procedure to monitor and control the quality of your business activities (to shut down the fix-it factory)?
  • What is your practice to turn customer problems into opportunities that WOW?
  • What is your business system to train people and help them become proficient at their jobs?

Murphy’s Law (if anything can go wrong, it will) and the Law of Unintended Consequences (actions have effects that are unanticipated or unintended) are crushed by the Law of Cause and Effect (things happen for a reason).  Once you look for the underlying cause of a problem, you can implement measures to improve or control the result.

YOU are in command of your fate. YOU determine how many mistakes, errors, or problems are acceptable.  The average small or midsize business allows 3% waste—far too much. You should strive for less than one percent (see Six Sigma).

For example, one error in a hundred opportunities should be the standard for invoices processed, widgets made, goods shipped, and services performed (simple with Box Theory Gold Software). Murphy’s influence will all but vanish when your business systems and processes are running smoothly.

So, In Conclusion

If you still want Murphy as a silent business partner, then plan for stress, frustration, and lackluster earnings.

However, my recommendation is to replace Murphy’s Law with laws from the Systems Thinker.

  • Effective systems and processes are the essential building block of a successful and profitable business.
  • Creating good business systems is the practical application of laws, principles and best practices—the Master Skill of the entrepreneur.
  • Constant improvement of business processes is the key to customer loyalty, profitability, and growth.
  • The true value of a business is found in the maturity of its business systems and processes—their ability to consistently produce desired results.
  • And last but not least, the Box Theory™ Way is the best way to build an organization of excellence.

 I invite you to learn more...

 

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Tags: Laws/Principles, System Failure

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.

 

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

Improving Business Systems Can Reverse Cash Flow Cancer!

Posted byRon Carroll

In my business career, I’ve experienced cash-flow problems several times and have suffered vicariously with many of my accounting clients. Not having enough money to pay bills, hire people, or add equipment can be very distressing. However, the extra cash you need to properly run your business is available—if you know where to look. Don’t let a chronic cash shortage put your business on life support!

Diagnose Cash Flow Problems

Inadequate cash flow is usually the result of weak business systems or processes that fail to produce a profit or that keep working capital tied up too long. However, it is more than just a symptom of under-performing systems. Like a cancer, insufficient cash flow leads to a breakdown of one system after another until it eventually kills the business.

A Symptom and a Cause

Inadequate cash flow is both a symptom and a cause of system breakdowns.

Poor cash flow is a symptom of:

  • Unprofitable operations.
  • Inadequate margins; break-even is reached too late in the month.
  • A pricing system that doesn’t recognize true costs, or competes on low price.
  • Labor expense that is high due to worker inefficiencies.
  • Excessive waste, defects, product returns, or rework.
  • Slow collection of money owed; noncollectable bad debt.
  • Poor inventory management (too much inventory/slow turns/obsolescence).
  • Business growth and expansion that exceed financial resources.

Poor cash flow causes further system breakdowns because:

  • Owners divert business development time to cash-management headaches.
  • Important systems are scaled down or eliminated such as marketing, product development, or accounting.
  • Money is borrowed at high interest rates, further eroding of profits.
  • Heavy system busters are introduced such as start-stop work-flow, downtime, unpleasant work environment, and so forth.
  • Worker motivation drops, along with personal and system performance.
  • Employees quit, especially if payroll is delayed; less-experienced people replace them.
  • Owners can no longer hire the best people and the right people.
  • Credibility is lost with vendors, bringing tightened terms (C.O.D) and soured relationships.
  • A growing buzz in the marketplace labels the company, “in trouble.”

Diagnose the Root Cause—And Fast!

It is not uncommon for business owners to mortgage the farm, borrow money from relatives, get a bank loan, or take some other drastic measure to keep the sick patient alive. (Our family once sold a rental house to meet one payroll). However, if owners and managers do not diagnose the root cause of cash-flow problems, it is likely the patient will continue to weaken and eventually die anyway. The longer you wait to begin the healing process, the more difficult the cure becomes.

When poor cash flow causes enough system failures that the business can no longer attract customers or keep them happy, the organization will go into cardiac arrest!

If your company is experiencing slow cash flow, under-performing business systems are the culprit. Could the ailing system be in marketing? collections? pricing? inventory management? operations?

The strong medicine of daily improvement to your vital business systems and processes will soon have you in the pink. Don’t delay another day!

 

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Tags: Business Systems, Improvement, Financial Systems, System Failure

Are You Smarter Than Your Business Systems?

Posted byRon Carroll

We can all learn a lesson from the British Petroleum (BP) oil disaster that occurred in 2005. A news report said that alarms on the oil rig sounded a warning of the buildup of combustible gasses. A manager thought something was wrong with the warning system and shut down the alarm. He didn’t want the loud noise to wake sleeping workers. When the rig exploded, everyone was unprepared and fifteen lives were lost.

Oil Rix Explosion

Business systems are created, in large part, to avoid big problems. Policies, procedures, checklists and so forth are designed to prevent bad things from happening.

However, business owners and managers sometimes use their authority to override or circumvent an established system, as was the case with BP. Many tragic and costly events in our world can be traced to a system failure of some kind, often caused by people who mean well.

On a smaller scale, the same thing can happen to your business!

Stick with the System!

In one company I worked with, an office manager was frustrated because the business owner routinely asked her to break company rules or shortcut their time-honored systems and processes.

I hate to admit it, but I once overrode a system policy by allowing a personal friend to place an order without going through the normal credit approval. It cost my company $25,000 when he couldn’t pay. I hate it when that happens!

When people are rushed to get things done, they sometimes skip important steps within a business process. Recently, I learned of a hurried accountant that skipped a final checklist procedure before mailing paychecks to employees in a distant city. He saved five minutes. However, a little mistake he could have avoided using the checklist caused a group of checks to be inaccurate. Re-doing and re-mailing the checks had a cost, but nothing compared to the angry employees who got their corrected checks two days late.

On a happier note, a business owner’s son came home from military service and went to work for his father. The son let the HR department know that he expected immediate benefits even though the company policy required a three-month waiting period. This dilemma of the owner/father created a buzz around the office. What would Daddy do? He stuck to the system policy and told his son that he would need to wait the three months. Good for him!

Everyone is Watching!

Once you create a business system or process (with accompanying policies), it pays to follow it precisely until it is improved. If you are the owner, all eyes are on you to see if you lead by example. If you do, you will earn the trust and respect of your people.

However, sometimes you do have to make a judgment call when it comes to breaking rules. We don’t live in a perfect world. But remember, good business systems are often called “best practices” for a reason. Consistency translates to happy customers, productive employees, reduced waste, and a better all-around company.

 

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Tags: Business Systems, System Failure

Six Problems That Can Sabotage Your Business Systems!

Posted byRon Carroll

As previously discussed, the Law of Cause and Effect says that everything happens for a reason; for every effect, there is a specific cause. Outcomes in a business organization—good or bad—are traceable to a series of identifiable causes.

Looking closer for business problems

Six Sources of Business Problems

When looking at your operations, nearly all frustrations and problems stem from six basic sources that you should be able to spot and remedy.

  1. Human – A person is not a good fit for the job, not skilled or properly trained, not motivated, or perhaps doesn’t get along with their supervisor or peers.

  2. Process – The business system or process is poorly designed, communicated, or executed. Half-baked systems always produce inferior results until they eventually fail.

  3. Policy – You have a company policy that hinders performance. For example, over-ambitious production goals cause hurry and sloppiness. A policy not to take checks or credit cards causes a loss of sales.

  4. Equipment – Machinery or equipment is outdated, slow, or worn-out, causing downtime or excessive waste.

  5. Materials – Low-quality materials cause inefficiency, rework, or customer complaints.

  6. Environment – The work environment is not conducive to high-productivity—too hot or cold, dangerous, cluttered and disorganized, stressful, and so forth.

Each of these general causes of poor performance provides a starting point for getting to the root cause. Identify your problem. Ask employees or customers for their perspective. Then fix the step or component in the business system that will correct the problem.

Common Sense

A few years ago, I tried to help a struggling family get a past-due mortgage payment made. I told the bank representative that I wanted to make a payment on their behalf over the phone. The representative said she couldn’t take the money because my name was not on the loan. I won’t judge the bank because there may be issues I don’t understand, but can you imagine a company policy that won’t let you take past-due money?

A water faucet leaking one drop per second wastes over 2000 gallons in a year. In the same way, a bad policy, a faulty piece of equipment, a messy work environment, an ineffective business system, low-quality materials, or the wrong person in a job can also waste many dollars.  

Sometimes your business problems are easy to spot, but often they require a little digging. A 5-Whys Analysis can be very useful to uncover less-obvious root causes.

And keep this in mind: the good results in your business also have specific causes. Identify your reasons for success and apply them to other areas of your operation. As they say, “run with your strengths.”

 

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Tags: Business Systems, Improvement, Laws/Principles, System Failure

Business Systems are Your Remedy for Frustration!

Posted byRon Carroll

Recently, I sat near a man and two women in a Subway Restaurant who were having a business lunch together. Their voices and their blood pressure were raised. I’m sure the people around could hear everything they were saying. It was pretty much a rant about their boss and work environment. With each stated frustration, I couldn’t help identifying the faulty business system that was the root cause (the burden of a Systems Thinker).

Frustrated Man

The business owner is apparently unaware of the incredible frustration his or her employees are experiencing. My guess is that customers have similar feelings. Although the owner may be oblivious to the cause of the problems, he or she likely has a sense that things aren’t going well.

Frustration usually hits me in the gut first; I feel it before I think about it. How about you?

A Symptom of Deeper Problems

Feelings of frustration happen to some degree in every organization; however, this reaction is merely a symptom of deeper business problems—problems that cost money, drive away customers and employees, and create a negative company culture. An undercurrent of constant frustration is the sign of a sick company.

Frustration exists when there are recurring events over which you feel little or no control. Control can be restored—and undesirable patterns eliminated—by installing effective business systems. How many of the problems, obstacles or frustrations listed below do you have?

  • Your customers complain, don't re-order, or drift to competitors.
  • There is too much inefficiency, waste, rework or returns.
  • You can't seem to hire or keep good people.
  • Workers aren't productive or motivated; labor costs are high.
  • You don't have accurate or timely financial information.
  • You don't know your true costs; profit is lower than expected.
  • Accounts receivable collections are slow.
  • Your cash flow is poor, hard to manage, and stressful.
  • You don't have enough working capital for new people, equipment or inventory.
  • Your advertising isn't working; sales are down.
  • Your business environment is disorganized, untidy, or chaotic.
  • You're the only one who can do the work right.

Find the Cure

These and other frustrating problems take hard-earned money out of your pocket every day. Amazingly, they all reflect the same underlying problem—a problem you can cure!

Running a business is not easy, but constant frustration takes away all the fun and satisfaction. Frustration and its accompanying side effects—ulcers and headaches, anger, blaming, and low employee morale—is a business cancer that can only be cured with systems therapy.

What is the greatest frustration you have with your business operation? Go ask employees or customers what frustrates them about your company? Face the brutal facts and then create high-performance business systems to cure the patient.

There is no other way!

 

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Tags: Business Systems, Culture, System Failure

With Business Systems, Cheaters Never Prosper!

Posted byRon Carroll

When I was a kid on the school playground, I sometimes heard the chant, "Cheaters never prosper!" In business, cheaters often get the upper hand for a moment, but never for long. Violations of true principles and laws always exact a price. The natural consequences can be swift and dramatic, or more subtle such as damage to personal character and reputation.

One of the great experiences of life is to associate with people of noble character; they are unwavering in good times and bad. When they become Systems Thinkers, they seek to build their business—and business systemsupon the same principles of integrity. Let me explain.

Build your business with integrity

Create Honest Business Systems

Billionaire and philanthropist John Huntsman titled his book, "Winners Never Cheat."

Low-grade, half-baked, seat-of-the-pants business systems that do not incorporate sound principles are a form of cheating—expecting to get good results without paying the price. Substandard business systems and processes are destined to falter as are the people who create and operate them.

Sadly, government thinks they can cheat and get away with it. For example, many countries create money out of thin air by merely running their printing presses. This is done to compensate for bad policies, reckless spending, greed, and corruption. You and I (and our children) will eventually pay the price because, like they say, “there is no free lunch.”

Arian Forrest Nevin, J.D., author of "National Economy: The Way to Abundance," said this about the U.S. financial system:

"The economy continues to decline solely because the money and economic system are not properly understood and structured. If we had the proper systems and a correct understanding of the relationship between money and physical wealth, the economy would immediately begin to improve.

"Economists like to pretend that the economy is like the weather, sometimes good and sometimes bad. There are bad spots we just have to endure. Why? There is no physical reason. Our ability to work and produce has not changed at all. The dishonest money system causes economic instability resulting in cycles of boom and bust. The simple solution to the problems caused by the dishonest money system is an honest money system" (emphasis added).

In government, we need honest people who follow sound economic policies to create systems and processes that produce consistently good financial results. We need an "honest money system!"

Good Systems Build Trust

In business, you and I need the same thing—systems built with integrity. No cheating of customers, employees, or even yourself. The Golden Rule is a standard: do unto customers and employees as you would have them do unto you. Create business systems that serve well—THAT BUILD TRUST!

Customers buy from those they trust. Employees like to work for those they trust. Business systems and processes that are steady, reliable, and produce good results are one of the best ways to build that confidence and trust. Think about it!

Doing things right is not always easy, but it is always right. Perfection may be out of reach; however, if we strive to learn true principles and apply them with integrity, we will be giving our best and earning the trust of those that matter most—a good way to go!

 

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Tags: Business Systems, Laws/Principles, System Example, System Failure

The Upside of a Business System Breakdown!

Posted byRon Carroll

You can't turn on the news without hearing the word "system" thrown around, mostly related to the breakdown of systems in business and government.

Vehicles are recalled due to faulty component parts. Oil and chemical spills damage the ecosystem. Terrorists get through airport security even when their name is on a no-fly list. Financial systems around the world are in crisis.

When will it ever end? . . . IT WON"T.

If left alone, systems are in a constant state of breaking down; they decline, decay, and deteriorate. It is Nature's way.

Natural forest fires rid the land of dead trees and wood on the forest floor. Heat from the fire immediately germinates buried seeds, and soon a new forest begins to fill the land.

Forest Fire

The cycle of life—birth to death—not only occurs in nature but there are similar patterns in business, including yours.

In the first few months of the 2008 U.S. financial crisis, sixty-eight banks failed and many small businesses closed their doors. As harsh as it sounds, this is a natural purging of the weakest elements of our economic system.

Companies with inferior products, policies, processes, or management cannot withstand the financial stresses. Companies with better business processes (or who get a bailout because they are "too big to fail") are able to weather the storms.

In tough times, only the fittest survive, those companies that work daily on building strong and durable business systems and processes.

System Breakdowns Can Be Good

The upside of a system breakdown is that before the system fails completely, innovation can elevate it to a new and better way, a higher level of performance.

In the future, we expect to see vehicles of better quality, policies, technologies, and processes that prevent man-caused disasters, terrorists who are unable to breach security, and economic disasters that are averted. (This assumes that we learn from our mistakes—governments don't always seem to.)

In your company, customer complaints, low employee morale, poor cash flow, and so forth can always be traced to the breakdown of established business systems.

A crisis, in fact, is a system change trying to take place. It is a scream for help. Reorganizing and reordering the system to a higher level is the only solution to prevent an eventual crash.

Caution: It is human nature when things are generally going well not to notice a breakdown that is occurring by small degrees.

Business systems and processes that are continuously monitored, measured, and improved break down much less often. When they do, the cause is usually beyond the business owner's control.

The System Thinker's Edge

Systems Thinkers have a distinct advantage. They understand how things work at the detail level. They see trouble in the early stages. They make timely course corrections. While they can't prevent every problem, they can minimize harm and overcome setbacks more effectively and faster than most everyone else.

Do you have any broken business systems or processes that are causing you to lose customers and money? Fix them while in the early stages, and save yourself a lot of grief later on!

 

The Next Step...

Tags: Systems Thinker, Business Systems, Innovation, System Failure

Lessons from 14-Year-Old Systems Thinkers!

Posted byRon Carroll

Recently, I drove I-15 north to Salt Lake City with a group of Boy Scouts to attend one of their high school hockey games. During the hour-long ride, I decided to have a teaching moment about business systems (I can't help myself). I asked the boys to look at the billboard ads along the way and tell me what they thought. In a matter of seconds, they were saying things like:

"I couldn't read the ad because the words were too small."
"I only had time to read half the billboard before we passed it."
"I didn't understand what the ad was trying to say."
"I read the ad but missed the name of the company doing the advertising."

Billboard Ad
© Some Photo rights reserved by Woodlands Ad Agency
 
The responses from the boys would be typical of most drivers and potential customers encountering the same ads. Some billboards were effective, but most fell short of their intended purpose. Try this simple observation sometime when you're on the highway.

Don't Waste Your Money

A few years ago, I was sitting in a marketing meeting with a group of people who were planning a billboard advertisement. The owner of the business looked up and said, "There are a lot of rules that apply to billboard ads; for example, you should use no more than eight words." Then he added, "But I can't say what I want to say in eight words, so we're using about fifteen."

He might just as well have said, "We've decided to break the rules and waste our money."

A billboard is a business system for attracting new customers. If it is done properly, results will follow. If not, there is a colossal waste of money. The same applies to every system or process in your business operation.

I don't know what billboards cost these days, but years ago they were about $1000-$2000 per month in our area. As I drove down the highway with the boys, it was obvious that many thousands of dollars were being thrown away because people didn't make sure that every component of their billboard system—message, font, colors, image—was doing its job.

If you are going to break the rules, there will be a consequence (cause and effect), and you will have an under-performing system. I ask you, what value is there in an ad than can't be read or understood? And by the way, if you don't measure how many leads the ad generates, how will you ever know if you have a problem?

Become a Systems Thinker

In a matter of a few minutes, the boys began making suggestions to improve the billboard ads—larger or more legible fonts, fewer words, more contrast, catchy images, keeping it simple, night lighting, and so forth. Without realizing it, these boys were becoming Systems Thinkers. Imagine—at age fourteen!

I did a quick search on the Internet and found numerous articles on the "best practices" for billboard advertising. You may not use this form of lead generation. You may not even care about this topic at all, but there is something you should care about.

The Systems Thinker sees the world in terms of functional or dysfunctional systems; they see things with clarity and in detail. They understand that applying true principles and best practices—the rules—is the surest way to get good results. They know that every step and component of a process has some effect upon the outcome. Creating effective business systems—using best known principles and practices—is the secret to success in all business endeavors.

So take it from a group of Teenage Ninja System Thinkers. Follow the rules. Pay attention to the details. Do it right. And don't waste your money.

 

The Next Step...

Tags: Systems Thinker, Business Systems, Laws/Principles, System Example, System Failure

A Small Business Built By Adversity!

Posted byRon Carroll

After forty-five years, I can say the life of an entrepreneur—the life you and I chose—is rarely easy.

The moment we begin our enterprise, unrelenting forces start into motion to drive us out of business. We face slumping economies, cost increases, customers who don't pay their bills, government red tape, high taxes, unproductive employees, competition, obsolete inventory, cash-flow headaches, constant demand for new and better products, and a myriad of other challenges.

If this doesn't describe your business, and things are going pretty well now, just wait! Changing business cycles guarantee that you too will one day have most of these "character-building" experiences. Adversity will likely become your constant companion!

Overcoming Adversity - Wheelchair Climber

The Greatest Challenge for Many

In a slumping economy—or even when the economy is good—one of the great challenges of small-business owners is acquiring and retaining loyal customers. The statement in the movie Field of Dreams, "If you build it, they will come," just ain't so for most of us.

The brutal reality is that most people don't want your product or service, don't have the money to buy it, or aren't even interested in hearing about it. If they won't pay the price you need to sell it for, you don't have a market. If they won't take the time to listen to your pitch, you are invisible to them. If they listen but aren't impressed, you can say good-bye to that sale.

Among those few who might consider your product or service, most will never have your offer enter their conscious mind. The advertising noise is so loud, the communication barriers so high, the competition so stiff, and the choices so many, that the odds of you getting the business are pretty unfavorable!

However, you must learn how to weather the storms of hardship, misfortune, and adversity, because they never end—thankfully. Yes, thankfully! You see, the very process of overcoming hard times is the process that will enable you to build a lasting enterprise. It is a process that will help you discover the extraordinary character that is within you!

J.C. Penny said, "I would never have amounted to anything were it not for adversity. I was forced to come up the hard way."

Three Important Truths

Truth #1: Small-business owners who persist with courage and determination are a class of heroes in this country—providing wealth and opportunities for millions. I, for one, feel that we should give all the support we can to these unsung heroes—AND THAT INCLUDES YOU!

Truth #2: The entrepreneurial endeavor takes vision, discipline, and perseverance. It is plain hard work, and precious few things come easily. Growing a successful business is like the movie star who becomes "an overnight success" after twenty years. A favorite quote of mine from Jim Collins, author of Good to Great, describes the way it happens for most of us.

"The best companies never transform to greatness in 'one fell swoop.' There is no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment. Sustainable transformations [to greatness] follow a predictable pattern of build-up and breakthrough. Like pushing on a giant heavy flywheel, it takes a lot of effort to get the thing moving at all, but with persistent pushing in a consistent direction over a long period of time, the flywheel builds momentum, eventually hitting a point of breakthrough."

Truth #3: This transformation to greatness requires steady dedication to developing of effective business systems and processes. These same systems also help you withstand setbacks, pull out of slumps, and endure never-ending adversity on your upward climb to success.

Systems Thinkers are quick to adapt to changing and challenging circumstances. Why? Because they have a better understanding of how things work, and why they stopped working. They know how to zero-in on a problem with laser precision, and then fix it.

A Business That Lasts

The best-run companies are always in demand—even during difficult times. Marginal companies—those without good business systems and processes (including marketing and sales systems)—come and go. During rapid growth periods, seat-of-the-pants operations and jerry-rigged business systems fail under stress. This is an underlying reason many small businesses fail!

I want to help you develop a company that will endure. The application of true principles—system-building principles—is the best way, and the only way, to do it right.

Begin today to build a business that not only survives, but is healthy and prosperous during challenging days ahead!

 

The Next Step...

Tags: Systems Thinker, Business Systems, System Failure