Scale-Ups: Managing the Cultural Shift Pt4

Part 4: The Importance of Systems

In this series of 5 articles I’m sharing thoughts from my past 25 years of working in scale-up organisations. The first three topics covered Empowering Others , Building the Right Teams and Creating Accountability . This penultimate piece focuses on the importance of setting up the right systems.

the three personalities that exist within every small business owner: the technician, the manager, and the entrepreneur

In his book The E-Myth Revisited , Michael E. Gerber calls out the importance of systems in building successful businesses. He introduces the concept of the three personalities that exist within every small business owner: the technician, the manager, and the entrepreneur. The technician is the person who loves doing the hands-on work and often starts the business based on their technical expertise. The manager is responsible for creating and implementing systems, while the entrepreneur is the visionary who sets the direction for the business.

it is essential to work on the business, not just in it

Gerber emphasises that for a business to be successful, it is essential to work on the business, not just in it. This means developing systems and processes that can be replicated and implemented consistently, regardless of who is performing the tasks. He also makes the point that the lack of appropriate systems is one of the main reasons why most small businesses fail.

Founder's Resistance to Systems

Founders possess a unique blend of passion, vision, and entrepreneurial spirit that propels them forward in the early stages of their business. They thrive on taking risks, making quick decisions, and adapting on the fly. Consequently, the notion of implementing systems often clashes with their natural instincts. After all, systems can seem bureaucratic, time-consuming, and restrictive attributes that appear to hinder the entrepreneurial spirit. Founders may argue that time spent on developing systems could be better utilised for activities directly linked to business growth.

After all, systems can seem bureaucratic, time-consuming, and restrictive attributes that appear to hinder the entrepreneurial spirit

However, it is essential to recognise that as the business scales, the demands and complexities increase exponentially. Without the right systems in place, chaos and inefficiencies may infiltrate critical processes, leading to operational bottlenecks, customer dissatisfaction, and missed opportunities. Systems serve as the scaffolding that supports and enhances business operations, enabling founders to focus on strategic initiatives while ensuring day-to-day activities run smoothly.

Importance of the Right Systems ?

The right systems are instrumental in maintaining effectiveness and driving improved efficiencies as a business scales. They provide structure, clarity, and consistency, enabling activities that can be systemised to be completed more efficiently, thereby saving time and resources. By streamlining processes, businesses can maintain high levels of productivity even as the company grows busier. The right systems also foster effective communication, collaboration, and information sharing among team members, aligning efforts toward common goals.

When founders are no longer involved in every decision or task, systems serve as a guide

Additionally, as founders gradually step away from the day-to-day running of the business, the right systems ensure that the organisation continues to operate seamlessly. When founders are no longer involved in every decision or task, systems serve as a guide, ensuring that employees have clear instructions, defined roles, and access to relevant information. This creates a culture of empowerment and accountability, allowing the business to thrive under new leadership and reducing dependence on individual expertise.

Avoiding Complexity and Best Practice Pitfalls?

While systems are indispensable for scaling businesses, it is crucial to avoid the common pitfalls associated with their implementation. New systems can often be overly complex, stifling productivity and hindering adoption. It is tempting to replicate practices from larger, established organisations under the assumption that they represent the pinnacle of effectiveness. However, blindly copying so-called best practices without considering the unique needs and dynamics of the business can lead to unnecessary complexity and suboptimal outcomes.

blindly copying so-called best practices without considering the unique needs and dynamics of the business can lead to unnecessary complexity and suboptimal outcomes

Instead, founders should focus on simplicity and tailor systems to their specific requirements. Prioritise functionality over complexity, ensuring that the systems are intuitive and user-friendly. Simplicity promotes adoption and fosters a positive organisational culture, where employees embrace the systems as enablers rather than burdensome tasks. By customising systems to align with the business's unique processes and values, founders can leverage technology, automation, and standardisation to drive efficiency without sacrificing agility.

The Operations Manual?

At some point in its growth every organisation will create an Operations Manual. However, it is typically created long after it is first needed

Gerber advocates for the development of an Operations Manual, which serves as a comprehensive guidebook for the business. The Operations Manual documents all the systems, processes, and procedures required to run the business effectively. It becomes a valuable tool for training employees, ensuring consistency, and enabling the business to operate independently of the owner's direct involvement.

At some point in its growth every organisation will create an Operations Manual. However, it is typically created long after it is first needed. Again, establishing such a guidebook is often perceived as ‘corporate behaviour’ whereas the reality is that it brings far more upsides than downsides to the scaling organisations.

Conclusion

As small businesses embark on the journey of rapid scaling, founders must recognise the transformative power of the right systems. Although the instinctual resistance to systems is understandable, embracing them is essential to ensure sustained effectiveness and efficiency.

Coming next: Alignment & Communication

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