“Twelve Pillars to Support Your Business Success”

Pillar Five – Processes & Systems

What we discuss in Pillar Five:

Creative destruction, looking for better ways
Systemise
Humanise
Leverage
Team Projects
Build Value
Manage more effectively

Let’s start with a quote from www.druckerinstitute.com

Peter F. Drucker was a writer, professor, management consultant and self-described “social ecologist,” who explored the way human beings organize themselves and interact much the way an ecologist would observe and analyse the biological world.

Hailed by BusinessWeek as “the man who invented management,” Drucker directly influenced a huge number of leaders from a wide range of organizations across all sectors of society. Among the many: General Electric, IBM, Intel, Procter & Gamble, Girl Scouts of the USA, The Salvation Army, Red Cross, United Farm Workers and several presidential administrations.

Drucker’s 39 books, along with his countless scholarly and popular articles, predicted many of the major developments of the late 20th century, including privatization and decentralization, the rise of Japan to economic world power, the decisive importance of marketing and innovation, and the emergence of the information society with its necessity of lifelong learning. In the late 1950s, Drucker coined the term “knowledge worker,” and he spent the rest of his life examining an age in which an unprecedented number of people use their brains more than their backs.

“Entrepreneurship rests on a theory of economy and society. The theory sees change as normal and indeed as healthy. And it sees the major task in society – and especially in the economy – as doing something different rather than doing better what is already being done. That is basically what say, two hundred years ago, meant when he coined the term entrepreneur. It was intended as a manifesto and as a declaration of dissent: the entrepreneur upsets and disorganizes.

As Joseph Schumpeter formulated it, his task is “creative destruction”

Peter F. Drucker, Innovation and Entrepreneurship: Practice and Principles

I love the term “Creative Destruction”. There are dozens of interpretations of this management theory on the web and I would encourage you to read up.

This is what it means to me…….“How can we review the way we are doing something and do it better”? It is not about change for change sake.

The process of either creating or improving the way a business does something is another pillar to operating a successful growing business. Yet many businesses I meet have no processes at all and if they do, team members do not follow them or the processes have never been updated.

I also hear regularly “it’s always different so we can’t have a process”.

Why do you want processes and systems in your business?

To save you time and increase productivity.
To save $$$ and improve profitability.
They make training new team members much more efficient.
They are a benchmark to ensure individuals are fairly judged on their performance.
Customer service is improved via a consistent approach.
To help you stand out from your competitors and support your USP.
They can be reviewed and improved as technology changes, further increasing productivity.
AND here’s the big one…Effective process and systems make your business more valuable. It’s very hard to buy what is in someone’s head. Much easier to spend $$$’s on an Operations Manuel.

Let’s go back to “it’s always different so we can’t have a process” or “you don’t understand”. Well, yes I do understand. In most businesses the process and system of making sales, despatching goods, managing team members, producing products, accepting deliveries, reviewing competition, ordering supplies, storing inventory, etc., etc., etc. can be broken down into steps that the people carrying out these roles can follow.

If this was not the case, McDonalds would have to be run by adults…not sixteen years olds with little experience. If processes were not developed, the Apollo 13 Astronauts would not have been rescued (have a look at the movie), car makers would make very poor vehicles, shelves in retail stores would be empty and you could never expect to have the same job done the same way. In short, life would be chaos.

Processes create leverage allowing your business to do more with less. Constantly looking for better ways to create greater efficiencies is good business practice.

The average small to medium business does not fully utilise the power of having effective processes because they are too busy to develop them, when in fact they would be less busy with systems and processes. They would also be less stressed and their business would be more valuable.

What areas of your business would benefit from improved and documented processes? Let’s develop a quick list:

Opening and closing procedure – you could then delegate to a team member.
Phone answering – simple but very important in most businesses.
Cleaning process – who does ensure your business is clean?
Cash and credit card handling – enabling others to know what mistakes to look for.
Having your business “ready for business” – ready to serve customers consistently.
Accounts Payable and Accounts Receivable – good financial control is critical.
Sales Process both internal and external – too many sales people are just told to sell, not how to sell.
Marketing – review results consistently and know what return is being achieved.
Stock despatch, stock receipt, stock replenishment – slow deliveries or out of stocks damage service.
Production processes are critical to ensure consistency.
Customer Service, complaints handling, refund/exchange policy, follow up.
Team member reward and recognition to engage the team.

There are of course millions of individual processes and I’m sure that in your business there are many areas that you could improve by simply having a documented process on how it should be done.

How to develop a process improvement plan in your business

This book is not meant to make your life overly complicated. If you look on the web there are dozens of Process Improvement Plans that seem overly complex and suited for businesses that are larger than those targeted at in this book. So here is my version:

1. Identify the areas of need, usually those parts of your business that always seem to be an issue or cause problems.

2. Prioritise the areas to be addressed and timelines for when these should be completed.

3. Delegate responsibility to the person who is to review the process. If you have a team focused on the issues, appoint a leader.

4. Allocate time when the individual or team will focus on the improvement.

5. Communicate to the wider company that the process is being reviewed and their input is welcome.

6. Set benchmarks to track the progress of the improvement.

7. When the process is ready for implementation, test it if possible before full rollout. Maybe run the old and new concurrently.

8. Train the team members who will operate the process and communicate to those who will be impacted by the change.

9. Once the process is in place and operating, review it on a regular basis.

10. Be prepared to modify if necessary but do not change it as a response to every comment you receive…sometimes people resist change.

11. It may be practical to offer a reward for the productivity savings achieved.

As an example I worked with a business that wanted to reduce warehousing costs by 15%. They sent the parameters for process improvement and challenged the warehouse team to develop processes that would reduce costs. When the 15% saving was realised the saving was shared among the team. A win for the company and the team members. What could you do in your business?

12. Set a time, say in 12 months, to revisit the process for further improvement.

Processes should be documented and technology allows companies to document effectively in many ways. You can write a manual and put it on the shelf for people to read. You could voice record, make a video or use a computer interface to make the process available and shareable across your business. Being creative, having a little fun can make what can be a dry subject more accessible and enjoyable to team members and therefore more memorable.

Sometimes it’s necessary to BREAK WITH, BREAK APART, BREAK UP or creatively destroy your processes to make your business more effective, efficient and more valuable.

You have now put in place processes that assist you and your team to efficiently operate 90% of your day to day business. However like all businesses there are exceptions to every rule, something always comes out of left field. What do you do, how do you “process” the exceptions?

You have “systemised” the day to day, it’s now time to “humanise” the exceptions.

This simply means that you empower the appropriate members of your team to fix issues that fall outside the day to day. A customers calls with a request outside the norm, a delivery is late, an item is unexpectedly out of stock, a pricing error is made, a customer is disappointed…the list of exceptions is long and may be unique to your business.

Issues will always occur and training your team to know how to respond is the key. Often referring back to your company values provides the key to the response. As an example, if a value is “Building long-term relationships with client” customer service issues are typically more easily solved. If “Respect for the safety of all” is a value, WHS issues are quickly addressed.

Therefore “Systemise the routine, humanise the exception and use the values as a benchmark”.

In summary robust systems and processes improve productivity, profit and make your business more valuable. They allow you to better manage the individual performance of your team and other stakeholders because now you will manage the process, not manage the person. Processes and Systems allow you to leverage your business and do more with less plus they will contribute to making your life as a business owner less stressful. Who wouldn’t like less stress?