The importance of running any business as a system

August 14, 2019

So many businesses everywhere run amok because ‘anything goes’. In such businesses, the leader runs everything ‘by the seat of their pants’. That was the way I used to do things too, up until hearing about W Edwards Deming.

So many businesses everywhere run amok because ‘anything goes’. In such businesses, the leader runs everything ‘by the seat of their pants’. That was the way I used to do things too, up until hearing about W Edwards Deming.

The late Professor Deming was an American engineer, author, academic and management consultant, with considerable expertise in developing processes, initially within the manufacturing sector of Japan in the 1940s. His philosophy was one of adopting certain principles of management so as to improve quality of product and service and to enhance efficiencies, by everyone in a workplace working uniformly, according to processes. Think McDonald’s and you have got the basic gist.

With a uniform approach to production, variation was said to be the enemy of the system and constant improvement of quality and productivity, at a reduced cost, had to be the priority. Processes involving suppliers, producers and customers of goods and services needed to be in sync. He abhorred lack of constancy of purpose, as well as any focus on short-term profits. If there were problems in production or service, then the processes were at fault and needed redressing at a systemic level, rather than necessarily targeting employees.

Benefits

Any business of any size or type and in any industry will benefit from gradually introducing a business system involving policies, processes and protocols. In adopting a systems mind-set and introducing a comprehensive system, benefits include reducing (if not eliminating)  variability and errors, improving efficiencies, increasing productivity, reducing risk,  enhancing effectiveness, and producing much improved outcomes for the significant benefit of all stakeholders. Waste, cost of production and employee attrition improve, while customer loyalty and sales increase.

Data

Way beyond the ubiquitous monthly and annual financial reports produced and relied upon by all businesses, relevant, helpful data becomes all-important for quality control. Intuition, hunches and gut feel become an anathema. Data informs decision-making, it being the voice of the system. Data directs those changes which must be made to the system. Greater predictability and better outcomes result from reliance on data. Without that happening, poor decisions, costly mistakes, wastage of time, money and resources, frustration, and worse, will be experienced to the major detriment of the business.

Tips

The following are some helpful tips for building and maintaining your own business system:

  1. Start with customer policies, processes and protocols focusing on the overall system for delivering optimal product and service at each customer touch point
  2. From there, build policies, processes and protocols for each technical product so that this part of the system becomes a knowledge bank for current and future team members
  3. After that, one at a time and gradually, develop numerous policies, processes and protocols for new business opportunities, leadership, strategic planning, new employees, work performance, meetings, workplace issues, office administration, office financials, risk management, and any other matters peculiar to your business or industry
  4. In building a system, DYI with leader and team having ‘hands on’ is better than engaging an outside consultant, as leader and team understand all the nuances and complexities of their own business and the requirements of the system for optimal result
  5. Leader and team must decide what data is going to be most relevant and helpful in a given business and industry to optimise performance, service and product, with reports on such data to be produced and relied upon in the future as  issues arise and as the system needs changing
  6. Long-term, only one person should edit changes to the system for quality control purposes  and to avoid a free-for-all so that anyone and everyone does not gain editorial access
  7. For start-up businesses, it is so much easier for a system to be developed from the very outset rather than trying to do so once the business is well established
  8. Once the system has been built, leader and team must own the system and work on the system together, with the system being an agenda item at board, leadership and team meetings and with decisions directed at improvement to, and compliance with, the system
  9. Once a year at an offsite team development day, leader and team can revisit business fundamentals and key components of the system, as well as develop fresh perspectives for improving the system. Presentations, group discussions, group exercises and brainstorming for ideas can all be included.
  10. When the system is up and running, ensure that ‘everyone is always on the same tram, going in the same direction’.

All of this will be well worth your effort.  With such a system in place, your business will have a very strong foundation to facilitate growth and success, for the great benefit of all stakeholders.

This article was originally published by B&T Magazine

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