Do Your Systems Support Customers Getting Consistent Excellent Service? Every business has systems, whether they are written down or not. But what is a System?
Systems are defined in the dictionary as:
“a set of principles or procedures according to which something is done; an organized scheme or method”.
A process is defined as:
“a conceptual sequence of events that enables a people in a business to do what they do”
A process is simply any input that is changed into an output. A system is a set of processes that work together to complete a complex whole.
Systems are not just IT! Information technologies are the tools that can be used to effectively operate and automate routine and repetitive processes. Advances in Artificial Intelligence and Machine Learning are allowing businesses to reduce the impact of the Human Factor (errors or inconsistency caused by varying levels of competence or boredom).
Systems in the context of Your Profit Score refer to processes, procedures and methods of working that allow a consistent high quality of delivery for repetitive or repeatable tasks or decision-making. Some are automated and once set up can be set in motion following certain triggers.
Some are tasks and guidelines for human operation, making sure that each task is designed to give the same outcome regardless of who delivers it.
The benefit of “systems`’ is that you as the business owner can extend your influence and reach by showing others how to do increasingly complex tasks so that you can get on with more complex or higher level tasks. Building a set of processes and written procedures allows you to scale your business more effectively without reducing quality.
Processes allow teams of specialists to work more effectively together and improve efficiency.
There are three types of process:
- Management processes
- Operational processes
- Support Processes
Each has a different function and they all work in a hierarchy.
Management processes focus on planning and are strategic. For example if a strategy is agreed to develop a new product, the management process would be the planning to organise how the product will be developed and then the routes and timescale to market.
Operational processes are the tasks and steps required to delivery your core product / service delivery. This will include everything from taking the order, manufacture or preparation of services though to final delivery and after care.
Support processes are all the activities required to make the other processes as friction free as possible. For example, taking on new staff, making payments to suppliers, making sure IT works etc.
How to Get Your Systems Started
Processes are usually written as Standard Operating Procedures and have a consistent format. They are designed to be easily understood, teaching and optimising specific activities through all the steps required to complete a particular task.
In the first instance simply writing down what you currently do in a set of circumstances is the start to getting processes in place. It always has to start with something.
The next step is optimising the written instructions, testing them to see if they delivery the preferred outcome.
Processes invariably solve problems!
And the solution isn’t always technology, sometimes it’s as simple as a checklist on a piece of paper. The mantra “Keep is Simple” should be engaged here. The more clear the steps in a process are, the more likely it will be complied with.
Disasters happen because of ignorance and ineptitude – established processes and workflows reduce both. So why don’t all companies put them together? It’s not difficult!
It’s just not that attractive an activity!
Yet it could save your business thousands £££. The company could become much more scalable. And performance can be tracked so you know when you are going off the rails!
Once there are processes in place, even poor ones, you can start optimising them to improve efficiency, giving customers a better experience and outcome, creating more profitability.
Bad processes lead to bad results.
Good management processes don’t just look at organising people and resources for strategic goals. Management processes map out company activities and align with strategy.
It’s the role of management processes to review, analyse and understand the day to day work, making sure that the steps in tasks are clear, understandable and optimised to lead to the required results.
As a business owner, you may be thinking “As if I don’t have enough to do”. Doing it all yourself would be a mistake! Empowering your team to put processes together and test each other’s output is a great way of getting tasks documented AND allowing development of a culture where anyone can ask:
“Is there a better way?”
Creating the process is only the first step – regular review and iterative improvements are required to keep on top of errors, deviations and the introduction of assisting technologies.
Well optimised business procedures save time and money, impacting the bottom line with a compound effect if more than one step in a process is less efficient. Poorly understood or implemented processes cost businesses in the hidden costs of inefficiency.
Processes should be available to all your team – and they should be tested regularly.
A workplace wide job exchange, even for one day a year, is a great way of getting people to see and experience other’s roles in the company AND see the processes with a fresh set of eyes.
Baroness Karen Brady has implemented job exchanges in West Ham United Football Club – everyone swaps roles for a day at least twice a year. Every new starter spends a day with her, where they can see for themselves what her job as CEO entails. The players work in the shop or the ticket office. Every member of the entire company engages with other departments, so they all learn to appreciate the important of all the people’s roles. Despite the sizable difference in pay between the players and other staff, each cannot survive without the other.
What difference do systems make?
“If you change the way you look at things, the things you look at change”
The difference between optimizing your processes and not bothering is the difference between having an office full of people shrugging, saying “That’s not my job” or “I don’t know” verses having an office full of enthusiasts who actively engage with each other to deliver excellence across all the companies activities.
There are 5 essential questions to ask when putting processes together:
- What is the goal or desired outcome of this process?
- When does the process begin and end?
- What activities move the process forward?
- What departments and/or employees are involved?
- What information is being transferred between steps?
No process starts off perfect but the idea is to get as close as possible.
If you are starting from scratch and in the early days of your business you may want to ask:
“What would the best (insert your industry / product / service) in the world look like?”
Then make sure you are ONLY including the activities that add value and NOTHING else!
BOOK RECOMMENDATION: The Checklist Manifesto by Atul Gawande
Atul Gawande declares that avoidable failures are common because of the volume and complexity of our knowledge. He makes a compelling argument for the checklist, which he believes to be the most promising method available in surmounting failure. Gawande explains how breaking down complex, high pressure tasks into small steps can radically improve everything from airline safety to heart surgery survival rates. The Checklist Manifesto shows how the simplest of ideas could transform how we operate in almost any field.
Systems Case Study – Satellites!
A Russian based software company was developing a number of maritime tools to aide and improve performance in commercial shipping. This included 3D maritime charts and auto-navigation equipment. The 6 shareholders / directors of the company were all former military naval commanders and were keen to use their resources to develop a wide range of other products and partnerships. Each having a technical background and all of them were truly entrepreneurial – there were new ideas being brainstormed daily. It was an exciting place to work!
There was an absence of consistent processes, planning or any structure. Creativity was king, with so many new ideas being explored there was no shortage of Research and Development (R&D) projects. As a result the business frequently struggled with cash flow problems.
Most projects were started without the consideration of what resources were needed to complete them or if they were commercially viable. There were a lot of vanity projects!
It was difficult to see which ideas were commercially viable. The lack of discipline threatened to destroy the company despite its skilled and highly motivated workforce. Keeping the business focuses on completing projects with commercial revenue potential was a constant challenge!
Each of the business owners had a sizable network of connections with other ex-military technical personnel creating frequent lucrative partnership opportunities.
One potential partnership happened when a former colleague demonstrated a new super-portable satellite phone. This was in the late 1990’s when mobile phones were becoming increasingly popular but needed an extensive terrestrial cellular network to support their use.
Russia’s vast geographic reach made an extensive network economically unviable but at the same time, it’s vast natural resources were beginning to be exploited by the new breed of Oligarch. The demand for flexible communication was highly valued.
The new phone was contained in a small suitcase the size of a laptop bag and required the case to be opened and a mini-satellite dish unfolded to connect to the orbiting satellite in space. The satellite phone equipment could be used in remote locations without a terrestrial cellular network, as long as it had access to the satellites in space.
Quite by coincidence, the directors knew a former colleague who was operating the Sputnik programme – the largest satellite system in the world at the time. This would resolve the satellite access and allow the phones to be sold as part of a package. Without further ado, buyers were found for the first 20 phones and hooked up to a short airtime agreement with Sputnik – generating $1m in cash.
At a time when the company was experiencing some of the hardest cash challenges, this injection of cash was much needed. However, the phones and the airtime were not formally contracted which meant that when the satellite time was switched off, the customers were left with expensive equipment that was rendered useless. There was no mechanism or process for them to sign up (and pay) for more air time.
There was no contract to pay for the initial airtime – it had been a hand shake and “we’ll sort it out later”! The original contact at Sputnik had left and the new management had no idea that there had been a deal at all. Nothing was in writing.
Much of the cash had been utilised in the many development projects without considering that the phones needed to be paid for – no formal invoice had been passed to the finance team, who were unaware of the structure of the deal.
All of a sudden 20 previously happy customers were now very dissatisfied and there was no easy way to settle their problems. What could have been a potential cash cow turned into a dog’s dinner of a mess that took an inordinate amount of management time to resolve, leaving the company in an even worse cash flow situation than before.
Swinging from one cash flow crisis to another because of lack of clarity on what was important, what generated revenue and how projects were commercially appraised was causing so much stress in the organisation that, after the Sputnik fiasco, the Directors decided to develop some basic system tools.
- Standard operating procedures for day to day operations;
- A new project assessment which identified time, cash and resources required for each new idea, including commercial appraisal of product viability;
- Project planning tools for the implementation of each new product.
- Introduction of a Productivity management tool to allow the measurement of time on each project (timesheet management).
Once implemented and monitored they were able to make more astute and timely commercial decisions on product development and investments. The company grew from a small niche player, constantly on it’s knees from lack of cash, into a highly capitalised, global giant in the field of maritime and transport technology.
Systems Case Study – Too Many Cooks
Building a successful business the first time, with no cash and a new idea that hasn’t been market tested, generally means you learn from all your mistakes and by doing things yourself. To then return to the same industry and do it all again – but with better funding – should mean you do it quicker and easier. And that was definitely the case for one business owner in the South West of England.
Without the constraints of tight cash flow, building a second business on the basis of the lessons learned from the 1st was indeed easier – and the growth was quicker. The original business had always been run on a boot strap basis. It had remained a small manageable company where the business owner was making all the decisions. When the business was sold to a major national company, the new owners were the ones who installed processes and aligned the acquired business with their own business culture.
The 2nd generation business grew exponentially, and, in the absence of clearly defined processes and procedures, the number of personnel was significantly higher than it should have been. Having taken such a lead in the first business, the business owner did not want to have day to day responsibility for the company and hired some managers who had some management experience but little leadership.
Whilst the business owner wanted to take a more back seat approach this time around, he didn’t make any provision for his new management team to make decisions – becoming the sole point of authority in the company.
The new management team had all previously worked in large established organisation where the processes were already in place, embedded and very structured. This left the team disengaged and unempowered. A blame culture developed which manifested itself in constant checking of other peoples’ work.
This took more people and time and the business was operating at a much lower profitability than it should have been.
By the time I got involved the business was employing more than 4 times the number of people that it needed to operate efficiently. The IT systems were bespoke and built around the convenience of the IT department‘s ability to support the staff and customers. There was no mutual trust between departments or for external suppliers. A failure to manage basic professional relationships internally meant that the business operated in silos, often with physical barriers and separation between departments.
The double challenge of building effective systems from the ground up AND establishing trust between the different departments felt a little overwhelming at first. The first step was to establish the minimum critical path for all the services offered to customers. This was captured by a combination of group workshops and individual interviews.
Cross-department group workshops were critical in breaking down the trust barriers and it took a few sessions before the participants fully engaged and started to question the activities rather than the people doing the actions.
With everyone in the organisation working on different parts of the work processes, it became clear that a number of the employees were not engaged in meaningful work and they were failing to achieve their potential. The process held a mirror up to every employee and allowed them to really look at what they were doing, whether it was adding value to the company AND whether they were enjoying the work. Resizing the workforce resulted in many voluntary and only a few compulsory redundancies.
An end to end customer journey was mapped out with each value-added service measured and costed, allowing some loss-making services to be either dropped or included only as a premium service at extra cost.
The management had clear remits for making decisions, with a transparent authority matrix developed so that everyone in the company knew who was responsible for each task and who had authority for making decisions.
Processes were streamlined so that they only included activities that were:
- Generating revenue,
- Reducing cost or protecting margin, or
- A legal requirement.
The value of the company increased significantly, and the profitability improved by £1m in less than 6 months. Equally importantly employee engagement and satisfaction increased and customer referrals grew exponentially resulting in faster growth.
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