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Systems First - They Can Go On Long After You

 

Warren Buffett (famed Investor) reportedly once told Bill Gates that a "ham sandwich could run Coca-Cola (NYSE:KO)." That quote complements Peter Lynch's equally famous quote, "Go for a business that any idiot can run -- because sooner or later, any idiot probably is going to run it."

Business needs a vision, and a clear plan how to get there. Then the business needs a setup for operation, Systems. Systems first, then well trained good people to run the systems.

 

Ray Croc died in 1982 and McDonalds is still the biggest fast food co. in the world. McDonalds is the symbol in business for systems, studied and copied in numerous business’. The E-Myth Revisited by Michael Gerber is a good business book on systems, and inspired by the franchising of McDonalds, and how to duplicate your business. The book covers strategy to management, systems, etc.

 

The main idea of the E-Myth, is to treat your business like you were going to franchise. It does not matter whether you are, just to simplify the processes within your business so employees understand their roles better and things run smoother. If you were trying to sell your business as an ongoing concern, the next owner would need to know how to run it.

 

Document the systems, manuals, training videos – then train staff and re-train when needed. Checklists for quick reference on system procedure that is available at all times. You also need management, and employees to buy into the system above all, sacrifice to make the business run better.

 

Sam Walton died 25 years ago, and Walmart goes on as big as ever. Amazon will go on if Jeff Bezos walked away tomorrow. Amazon is actually based on Sam Walton systems. Jeff Bezos recommends books on systems, running big organizations, and especially Sam Walton’s book – ‘Made in America’.

 

The Buffett advice at the start of the blog was for investors to public companies. The idea is simple -- businesses outlive their CEOs, but those built to last can keep growing regardless of whoever is in charge, which makes them ideal long-term investments. While it may be hard to find a company that doesn't depend on its CEO at all, it's important for investors to understand how much his or her leadership matters to the company's future. That way, you won't get stuck holding the bag if a hotshot CEO suddenly retires without a clear succession plan.

A good manager duplicates themselves, and can pass the business on. Without systems, you can never replace yourself and grow your business. A good manager is not needed, because the system and staff are so good, they got it covered. Business should not run on Ego, but the system and cause of the business, are bigger than people that work there

 

Train people (employees) to think within the system. You cannot have a system for all things. There will always be situations that arise that were not thought of, but systems and checklists will cover 80 – 90% of what employee will face.

Look at the New England Patriots in sports – same coach (Bill Belichick), system, but different players for 15 years, and yet the same Super Bowl winning results. Alabama Head Coach Nick Saban (multiple college championships) is a big believer in systems and process. Saban also happens to be a former assistant of Belichick.

 

Bill Walsh, the legendary football coach of the San Francisco 49ers created the west coast offense. It was all about the system, and timing of the passing game to setup the entire offense. Walsh was known for taking average Quarterbacks and producing above average results (and winning).

 

Walsh was so organized he scripted the first 15 plays of the game. He created the idea of ‘situational football’. He had certain plays for certain moments within a game, like the last 2 minutes of a game, etc. Many teams copied the 49ers system, and this changed how the game was played in the late 1980s to even today’s football. What is common today in football, did not exist before Walsh.

 

Small companies can become big companies with good ideas, and then systems (and managers) to carry out the idea. If a business cannot succeed on a small level, it will not grow. A good product mass produced can overtake an industry.

Samuel Colt founded Colt's Patent Fire-Arms Manufacturing Company in the 1830s (today Colt's Manufacturing Company) and made the mass production of the revolver commercially viable. Henry Ford with his Model T car created the moving assembly line, which took Colt’s system to a whole new level in the 1913. 

 

The success of Japan from devastated nation to booming economy in a 30 year span is also about systems (and dedication). ‘Kaizen’ is the Japanese word for "improvement". In business, kaizen refers to activities that continuously improve all functions and involve all employees from the CEO to the assembly line workers. It also applies to processes, such as purchasing and logistics, that cross organizational boundaries into the supply chain.[1] It has been applied in healthcare,[2] psychotherapy,[3] life-coaching, government, banking, and other industries.

By improving standardized programmes and processes, kaizen aims to eliminate waste (see lean manufacturing). Kaizen was first practiced in Japanese businesses after the Second World War, influenced in part by American business and quality-management teachers, and most notably as part of The Toyota Way. It has since spread throughout the world[4] and has been applied to environments outside business and productivity.

Constantly review the business, like it is a living thing. You have to step away and evaluate systems quarterly, or yearly. And be careful to remember to innovate, and not just focus on efficiency. A business needs R&D (research and development) to grow. This will be inefficient and experimental at times, but good for the long term.

Steve Jobs died in 2011, and Apple goes on as the biggest co. in the world years later. Now a lot of the Apple success has to do with Steve Job’s vision on quality. Quality (R&D) and design became the system of Apple. Apple’s marketing is also studied as much as its tech ideas.

 

This is the 30 thousand view of your business, aka seeing the overall picture. Systems are working in (and sometimes on) your business. Then step away, and make sure you’re working on your business for growth. Apply the 80/20 rule to your systems, and discard what is not working. Think efficiency like Kaizen mentioned above.

 

Operations of a business are not the only place for systems. Your business does not have to be a factory to have procedures on how things are done. Systems can extend to many areas of a business.

 

The receptionist can have a system for greeting guests, or answering the phone (or formatted paperwork). Sales can have prospecting systems, follow up systems, and standard reply emails with certain attachments.

 

Marketing can have a format for different webinars, to brochures and PDFs, to online ads to certain types of customers. Checklists for your new customer acquisitions, to a format for on-boarding a new customer, or even employee can be created. Training in companies should absolutely be systematized.

 

This is not only good for organization within a business. It creates a good culture, and well…. it’s just good business.

 

We write this blog to help small business owners with their dilemmas, because that is what who we are, and those are our clients.

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