P8M1 Why Systems Are Important

Powerful Systems Quotes

“Without systems and processes, what you really have is a bobby that makes some money” Stephanie Chandler, author of 101 Ways To Grow Your Business
“If you cannot describe what you are doing as a process, you don’t know what you are doing” W Edwards Deming

Why Systems Are Important

For customers, systems give
Consistent, high quality service
An outcome they can rely on
For the business owner
Higher productivity and lower costs
Happier customers who are more likely to buy again and refer
Less dependence on key team members
Freedom from the business – you can sell

What System Means

SYSTEM = Save Your Self Time, Energy & Money
Or SYSTEM = Save Your Self Time & Earn Money
The key to being an effective entrepreneur who has a business that is self sufficient and can prosper on its own
Systems free you to live the life you want to live

Only Two Types Of Activity

Regular work should be systemised
One-off or infrequent work should be managed as a project
Clear goals – completion time, cost, quality
Don’t make your business difficult for yourself, your team and your customers

If There Are No Formal Systems

Critical knowledge is in the memory of you and your key team members
Quality varies depending on who is available
Stress is high
For customers – what will happen
For employees – what to do
For you – what results will be created
Risks are high

McDonalds

Admire the business system
Renowned consistency of product and process through franchisees across the world
Operated by kids
With upsells and cross-sells routinely offered

Processes

Processes are the source of a business‘s distinctive capabilities that create competitive advantage
Coordination essential
Process paradox – processes and process metrics improve but profit can go down because the wrong processes are improved – focus on processes that add value for customers
Radical process improvement changes rules and cause competitors to play catch up
Processes can create competitive advantages which are difficult to trace back to the source and copy so process based competitive advantages are sustainable.
Processes are not just about workflow with clear inputs and outputs – think management policies

Join Up The White Spaces

The traditional way to think about a business is through an organisation chart – processes join up the white spaces between the functions
Functional optimisation often leads to sub-optimisation of the business – sales vs production vs finance
Processes show how work gets done – or doesn’t – across the functional boundaries

People vs Systems

Dr Edwards Deming – 85% of problems come from systems rather than the people operating the systems
If a good performer is trying to work a bad system, the bad system wins.
Don’t try to fix people when systems are broken

Overall Business Performance

Business performance is affected by the interaction of performance at:
The Business level
The Process level
The Individual level
Each is affected by their own design issues, goals and management policies.
Business level strategies fail when poorly implemented at the process and individual levels

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