Systems Thinking

I’ve been a follower of the ultimate systems guy and small business guru, Michael E. Gerber, for many years.  In fact, I regularly teach the principles and encourage would-be entrepreneurs to read his most famous work, The E-Myth Revisited, Why Most Small Businesses Don’t Work And What To Do About It.  If you ever hope to ever enjoy the lifestyle and financial success that likely drove you into your venture in the first place, you’ll need to embrace this idea of systems thinking.  The idea goes something like this:  Just because you are good a doing some activity, doesn’t mean you can run a business that provides that activity.  For example, just because you are really good a making homemade pies and cakes, doesn’t mean you can run a bakery.  That’s the idea and story of The E-Myth Revisited.    If you don’t know Michael Gerber or have never read this book, I encourage you to do so.  In fact, it’s number one on my list of required reading for entrepreneurs.

  

Your goal as a starting or new business owner is to graduate from being a technician (someone who is good at doing a specific job or task, like an engineer or salesman or accountant) to being a manager (the one who manages the whole operation) to being an entrepreneur (one whose job it is to promote and position the business for growth and prosperity, but not the person who does the individual jobs or manages the people who do the jobs).   A technician can do a specific job or possesses a certain set of skills.  Your job as a business owner is to identify the best way to perform your job and then document that system of performance so that any employee with the basic skill set for the job could step in and also perform the job at an acceptable level.  If you ever want to graduate from being the worker, you’ll have to use your skills to create a system for doing your job that can be taught to others.  In fact, you should approach your whole business from the point of view that you will franchise the business eventually.  You likely will not actually franchise the business, but you should approach the management of your company with that perspective.  That way, you can create a company that will run just as well when you are standing there as when you are not.  This is really critical if you ever hope to be an owner and not an employee.  

  

Think about your business in relation to one of the most famous franchises in the world; McDonald’s.  Everything at McDonald’s is systemized.  From how to prepare the store for opening in the morning to how to close it down at night, everything is documented and systemized.  I was fortunate enough to work at McDonald’s while I was in high school and college.  I say fortunate, because not only did I have a job that provided needed funds to pay for my college education, but I also learned about business management from the experts in franchasing.  While you can’t factor out every behavioral issue of employees, you can create a business that makes excellent profits that’s based on a system that allows for incredibly high turnover of unskilled workers.

  

Hopefully, your business will not have 200 -300% turnover rates.  But if it does, your systems will allow you to deal with that in a way that still insures your business will operate in the same ways that it would if you were performing the jobs yourself. 

  

Much of this systems thinking approach doesn’t really take place until your business is up and running.  However, as you design and organize your business for the first time, think about how you want to organize your operations and what is the best and most efficient way to perform the individual tasks.  This is an excellent opportunity to get some of this work done.  As you progress, you can continue to collect data and ideas for organizing and systemizing your processes when the time is right.