Creating a sustainable business is hard work. And, the hardest part just might be creating great systems. If you’re like most business owners creating systems is probably the last thing in the world you want to do.
If you’re like many business owners I know you didn’t start your business so you could create systems to run the business. And, if you’ve been in business for any period of time you’ve probably learned that without systems your business isn’t going to run very well.
The truth is every great business has great systems. If you want to have a business that is going to last past you, you’re just going to have to buck it up and learn how to create systems that help your business be consistent, both for your customers and your employees.
Creativity is good and your employees don’t want to figure it out.
When I owned my vending company I used to think my employees liked the freedom we gave them to do their job. We would let our route drivers go “shopping” in our warehouse for what they would put in their machines. We gave them very little guidance as to what to sell and how to merchandise the vending machines.
When I ran routes, I liked to choose what went into the machines I serviced and I thought everyone else did too. I was wrong. No one ever told me I was wrong, but the results of systematizing our routes taught me something very important.
What I learned……
I learned that before my employees could know what constitutes excellence we needed to have great systems. I learned that before I could provide a consistent customer experience that exceeded the expectations of our customers, we needed great systems. I learned that before we could have predictability of costs we needed systems. Are you seeing a pattern here?
The truth is if you want to have a business that is sustainable, you’re going to have to develop systems. I know this something you might not be wild about, but if you don’t your company will just drip with inefficiencies and your people will be confused about what they’re supposed to do.
There was this time.
In the vending business, we had a problem. We had low productivity from our route drivers. I didn’t know why this is true, at least at first.
I used to yell, plead and cajole my route drivers to work harder. I’m sure they resented me when I went on these rants. And, it wasn’t their fault. We had set up systems that didn’t help our drivers know what they do and the lack of systems hurt our sales.
We used to have over 200 items that our drivers could “shop” for before they went out to fill our snack machines. The problem was the snack machines only had room for forty items. Because I used to think that having variety was more important than having best sellers in the machines at all times, we often ran out of items like Snickers or M&M’s in our machines.
I thought that if we ran out of these items our customers would just choose something else. Boy, was I wrong. Instead of choosing something else, they would just walk away and we lost a sale.
This was pointed out to me by one of our customers. He was our contact at a large chain of grocery stores. One day he asked me why we let our customers walk away and not get what they wanted? I was confused and he explained to me how grocery stores operated. They didn’t care if they ran out of low volume items and they never, never, never wanted to run out of the best sellers. We were doing the opposite…..and that was really dumb.
At first, I was skeptical about that being true, but just in case I was wrong I decided to try an experiment. We took our warehouse inventory down to 100 items, but more importantly, we started putting double rows in of our five best sellers. Instead of having forty selections we now only had thirty.
The strangest thing happened. Not only did our sales increase, but our route productivity increased as well. I thought this was a pretty cool thing. Our next step was to reduce our inventory to 50 items and triple row our top selling items. Again, our sales and productivity improved.
Eventually, we brought our warehouse selection down to twenty items. From the beginning of our experiment to our eventual display of having three or four rows of our best sellers, we saw our sales per service increase by four times and the cost of service go down by 75%. We also saved tons of money because we significantly lowered the inventory we had on hand.
All of this came out of systems. The result…….our employees were happier, our customers were happier, our inventory cost went way down and because all our metrics went in the right direction I was happier.
Isn’t this something that you would want?
But, I hate systems and have no patience for designing them.
I hear you. I don’t hate systems, but I sure hate documenting them. This is where I want to tell you about another secret I learned.
I didn’t document my systems. The person doing the job did. Again, this lesson came to me in the way of a fortunate accident, otherwise known as a mistake.
We needed to have a system put together for how we serviced and cleaned a vending machine. I didn’t have the time or interest in putting this document together. I delegated this task to our route trainer. I told him I wanted to him to make a list of the steps that had to occur when we filled and cleaned a coffee vending machine.
Since he was the one who trained this process, it was easy for him to do. He took out a yellow page, wrote down the fifteen steps or so and gave it to someone in our office to type up. I thought that was kind of cool and then asked him to do the same for all our vending machines. And, before I knew it we had a full operations manual put together for filling and cleaning our machines.
The best part. I didn’t have to do anything to make this happen, that is unless delegating was doing something. Our trainer did it and instead of it taking me hours, it took me minutes. And, that’s how I want you to design your systems. I want you to delegate the job to the person who either does the job or is responsible for training others to do it.
And, this is the important step you can’t skip. After you delegate the job, you must inspect to make sure it’s done properly. If you don’t inspect, you haven’t delegated, you’ve abdicated. And, you don’t want to abdicate.
What I’ve learned about systems.
Instead of hating systems I learned to love them. I learned that having systems in place was one of the keys to make me operationally irrelevant. I learned that excellence only comes when employees know what they’re supposed to do. I learned that it was impossible to provide a customer experience that was predictable without systems. All good lessons, at least in my opinion.
Here’s what systems will do for you and your company:
- They’ll allow you to provide your customers a consistent and excellent customer experience.
- You’ll become more efficient because your employees won’t have to try to figure out what to do.
- You’ll have something positive to work on when you have happy accidents, otherwise known as mistakes.
- You’ll be able to start experimenting with your systems by changing one thing at a time to see if you get improvements.
- Your employees will know what they have to do for them to do a great job and be successful.
Here’s what I want you to do:
- I want you to buy and read or listen to The Goal by Elyah Goldratt.
- I want you to buy and read or listen to Traction by Gino Wickman.
- I want you to assign each of your supervisors the job of documenting one system each.
- After your supervisors each design one system, I want you to review their work and make sure the documentation is done in the form of bullet points and allows new people to easily understand what they need to do for success in their job.
- Now, look for a bottleneck in your company and modify one of the supporting systems to get rid of the bottleneck.
- Wait for the next bottleneck to appear and then fix that…..you get the idea from here.
Remember, your next owner doesn’t want you, but they do want the systems that make your company run. If you have good systems it will both increase your business value to while you own it and your next owner will be able to afford to pay you more when it’s time to transfer your business.
Sounds pretty cool, doesn’t it?