Optimise

This myth, more than any of the others, sets you up for failure.

Think of McDonald’s as an elite athlete who’s competing at an Olympic level in the sport of business systemisation. They’re a lean, mean, systemised machine. They’ve been training their whole life and they’ve won numerous gold medals.

Now, compare that to you and your business … How long have you been training for? How do your systems and processes look?

Compared to them, we all look like couch potatoes. It would never make sense for you to try to replicate the results of McDonald’s by trying to follow their current habits, diet and exercise regimen. It sounds silly, but it’s not uncommon for someone to get bitten by the systemisation bug and think they need their systems to be at McDonald’s level before they start using them.

They start split-testing the equivalent of “Would you like fries with that?” or seeing how the colour of team members’ shirts affects sales. And they do all this before they even have a baseline in place.

Like it or not, it just isn’t possible to create Olympic-level systems on your first go – it takes hard work and consistency over a long period of time. But, in truth, you don’t NEED perfect systems to deliver a great result, and it probably doesn’t even make sense for you to systemise like a global fast food chain.

Don’t get me wrong, there are great lessons to be learned from McDonald’s. But remember the four stages of business systemisation from my introduction? If you try to jump from survival to saleable in one giant, pole vault-style leap, you’re going to do your business an injury.

Let’s not forget that McDonald’s, in its current guise, is the result of six decades of development. If you get the chance, watch the movie The Founder – the story of Ray Kroc’s efforts to turn the original McDonald’s restaurant into a franchise. When Ray arrives on the scene, the McDonald brothers have already created a restaurant that functions as a well-oiled machine, and the movie only provides a glimpse into the years of hard work that went into reaching that point.

Before I saw this movie (warning – minor spoilers ahead), I didn’t even realise that the McDonald brothers had already tried and failed to franchise their business. It took a lot of persuasion on Ray’s part to convince them to let him have a crack at it. And while he eventually succeeded – obviously – there were a lot of problems and headaches along the way. The whole project would have crashed and burned if Ray hadn’t … well, if you haven’t seen the movie, I don’t want to completely ruin it for you.

My point is that the McDonald’s system was far from perfect when they started. It took years of optimisation to reach near perfection. It’s good to dream big, but when you translate that into action, start by systemising based on where you are, not where you’d like to be.

Optimisation, tweaking and testing your way to a better business is useless – even counterproductive – if you haven’t first established a solid baseline. One of the core principles in SYSTEMology is to first capture what you’re already doing. That means if you’re still getting your systems together, now is not the time to start optimisation.

It’s entirely possible that your business structure is already pretty advanced and you’ve already carried out the earlier steps in one form or another. And that’s okay too. Everyone will go at their own pace. But don’t try to mix up the order of the steps or work on more than one simultaneously.

You can’t improve what you don’t measure¶

There are many reasons each step is ordered and prescribed in the order they are. And there are reasons it’s best to leave system optimisation until last.

Perfection, person dependency and time constraints all do their best to stop you from getting to this final stage. Moreover, it’s not possible to begin the process of optimisation ’til you have consistency in your work, making it possible to measure your outputs. Which, in turn, gives you a baseline to work from.

The deeper you get into SYSTEMology, the more you’ll recognise your business is simply one large system pieced together by a collection of smaller interconnected systems. Everything is connected and small tweaks in one area of your business can dramatically impact another.

For example, by tweaking who you’re marketing to and how, you’ll dramatically affect your sales. This can then alter your selling system, which can alter the experience of your product/service delivery. This, in turn, impacts the likelihood for repeat business.

Long story short, these are just some of the more obvious relationships. The fact is, it’s all connected, and it’s easy to miss these relationships unless you’re watching for them.

Continuing from the last step in the previous chapter, you and your key team members have returned from your vacations only to discover plenty of problems that still need to be addressed.

Before you jump into creating your next batch of systems, you first need to create a measurement system. A solid measurement system will highlight the interconnected nature of your systems, improve your consistency and allow you to predictably improve performance.

Let’s break this down into clear action steps and begin the process of optimisation.

Step #1: Create a CCF dashboard to measure performance.

A dashboard, in this context, is simply a document stored in a central location with all of your key numbers and metrics from across your business. This is updated regularly at predefined intervals.

You may or may not already have something like this in place, but either way, it’s easy to overcomplicate this step. There are many data points that could be included, and you’ll quickly find that collecting data isn’t the problem …

Analysing and gaining valuable insights that inform your actions from the data collected is the real challenge.

So, what’s the 80/20 here? Of the thousands of metrics you could put on your dashboard, what are the most important? What will give you the greatest insight to how your systems are performing? You’ll be happy to know the answer is right under your nose!

Take out your CCF and look at the headings that run down the left-hand side:

• Attention
• Enquiry
• Sales
• Money
• Onboarding
• Delivery
• Repeat/referral

This linear process describes the flow your clients go through in your business, which makes it a great place to start measuring. Over time, you’ll discover other metrics worth tracking, but for now let’s start here.

You don’t need to measure everything. In fact, focusing on too many numbers tends to do more harm than good. So, let me challenge you, even if you have a dashboard in your company, to simplify. Let’s set the goal to identify 5–7 key metrics that measure the performance of your CCF.

I’m going to work from the default template, but you’ll want to customise it to suit your unique CCF. Again, we just want to identify one metric for each stage and list them on a blank piece of paper.

Attention: The ideal scenario would be to track all the people who come into contact with your business, but if pooling together multiple data sources to get a blended number is going to represent a logistical challenge, start with something basic. This could be the number of visitors your website receives or the number of people who walk through your shop door.

Enquiry: Shall we use the number of new email enquiries received? The number of inbound calls? Perhaps the number of proposals sent out? Maybe we could blend those figures together… or maybe not. Just pick one, preferably the data that makes it easy for you to collect and calculate. For this example, I’m going to go with ‘number of proposals issued’.

Sales: You probably sell a range of products with a range of price points, but let’s start with the most obvious – how many sales did you make? Your bookkeeper or inventory program should be able to calculate this one with ease.

Money: What’s the average price of the product or service that you sell? If you feel there’s too much variation in that figure, use the average dollar price of the central product or service you used to create your CCF.

Onboarding and delivery: There is a range of metrics you could be monitoring here – production time, number of projects in active development, inventory turnover, etc. That said, I’m going to combine these together to find one metric that gives us a pulse on how we’re doing – profit margin. Your bookkeeper or accountant should be able to calculate this for you in a heartbeat.

Repeat/referral: Maybe you use your net promoter score? Or, if you’re in a business where you get repeat customers, how many times do your clients come back? If you’re in the software business, what’s your churn rate? If you sell coffins and there’s not much repeat business, how many referrals do you get? This one might be a little harder to calculate with your current data set but, at the very least, it should get you asking the question, “How would I measure this?” For our example, I’m going to use ‘the number of times our clients come back’.

When you’ve finished this exercise, you should have a list that looks something like this:

• Number of website visitors
• Number of proposals issued
• Number of sales made
• Average sale price
• Profit margin
• Number of times clients return

These metrics focus on key areas of the business AND they’re easy to track. Best of all, these numbers probably already exist somewhere in your analytics, your CRM and/or your accounting software, so it’s just a matter of pulling out the data.

Next, create a spreadsheet that lists all these metrics in one row and then use the column to identify the date ranges. Decide on the frequency in which you want to capture these numbers. I recommend calculating these figures, at a minimum, on a monthly basis. Weekly is probably better, but keep in mind that, once you start, you’re committing to keep this updated. It’s okay to make things easy for yourself in the beginning, and you can always build up to higher frequency intervals later on.

It won’t surprise you to learn that I recommend assigning the responsibility of populating this spreadsheet to someone other than the business owner. It’s a simple system that can easily be assigned through your project management software and you can then add it in as an agenda item for one of your regular meetings.

Need a ready-made template? Head to www.SYSTEMology.com/resources.

You now have most of the big rocks in place to really take things to the next level. You have identified and documented your most critical business systems, created a dashboard and established your management meeting rhythm. The work is far from over, but with a continued focus on consistency and bringing everyone up to the standards you’ve created, you’re on the track to complete business reliability.

It’s time to discover who’s committed to helping you achieve your vision, where the biggest problems within your business still exist and what it’s going to take to get everyone working together to reach your goals.

Step #2: Spot the problems.

Most business owners are great at solving problems, it’s just that many get stuck solving low-quality problems over and over again. One of the goals of SYSTEMology is to move the business owner up the problemsolving ladder and have them working on the biggest-leverage, highestquality and most important problems of the moment.

When you have a clear system for problem-solving, having the business owners shift back into problem-solving mode is actually a great use of their talents. It’s simply a matter of identifying problems as they arise, prioritising them and then looking for a systems-centred solution. This ensures you do the work once and solve problems forever.

At the end of the last chapter, I suggested sending some of your key team members on a vacation. If this is the first time you’ve done this, when they return, a few new problems will have appeared – it’s inevitable. These problems could have been caused by holes in existing systems or areas not yet covered by your existing documented systems.

If it’s a quick fix or tweak, empower team members to fix the problems in the moment. This could be as simple as adding a comment to notify the knowledgeable worker to review things.

For larger problems, it’s a good idea to create a new section in your project management software. Label it ‘Problems List’ and teach your team, whenever they spot a larger problem that’s related to a system (or lack of one), to record the details as a task in this section.

In the early days, this list will grow rapidly. Add it as an agenda item to review it within your monthly meeting. If you’ve identified your systems champion, have them own this. Allow them to work through the list, categorising the problems based on your business departments and then prioritising based on urgency and impact. The approach is always the same – work in small batches and then identify, assign, extract and organise your systems.

There is no exact formula for calculating the order of priority, but begin by ensuring key team members (in particular) can take leave and still have their core tasks move forward.

Over time, your list of problems will shrink and problems that once seemed frequent and never-ending will disappear. New problems will still crop up but they’ll be high-quality problems that, when solved, create big wins.

The key is to ensure it’s a part of your regular meeting agenda so the team is kept accountable, and it’s consistently addressed and moved forward. Systems development is a bit like eating an elephant: you have to do it one bite at a time.

Step #3: Begin optimisation.

Can you believe we’re into the final step of the final chapter and only NOW do you get to begin optimisation?

This is all a little tongue-in-cheek, since you’re bound to have made improvements along your journey. By focusing your attention on areas within your business, you can’t help but improve them.

But I’ve steered clear of this topic because my focus has always been to first provide you with a solid foundation of systems. Before making any big changes, you need to shift the culture within your company. You need to allow your team to develop consistency and get everyone focused on the right metrics. This is why so much of the focus to date has been on capturing what you’re already doing, rather than completely reengineering and optimising your business.

This will seem counterintuitive at times because it’s entirely possible to create a system that very quickly becomes outdated. But stick with me here. We’re making things easy for your team, and this is probably the first time you’ve actually started getting some real momentum around the development of systems within your business.

Remember, before we began, your business was already (mostly) working, and we’ve modelled these systems from what your best team members are doing. We’re looking for consistency and aiming to bring all your team members to that level. It’s also comforting to know your new systems are always the worst they’re ever going to be the first time you create them.

And if that isn’t enough, in circumstances where you know you’re going to have to completely re-engineer something, you can keep your documentation light at first. A few videos and some bullet points are enough to get things started. Only once you have a baseline of systems can you create enough space for your team members to start doing their best work.

You’ve also created a healthy, robust work environment – one where problems are identified and added to a list for tweaks, improvements or a complete overhaul.

The art and skill of growing your business now is knowing which areas to focus on next. Monitor your numbers, listen to your team and let your business tell you what it needs.

Listen to your business¶

I remember a good example of this a few years back in my own business. During a finance meeting, we identified a problem with clients paying on time. The data we’d generated showed that some accounts were 120 days overdue, and yet we were still performing work for those clients.

Slow payments are often seen as just part of doing business and the way things work in our industry. However, because we had the data and the space to discuss the problem, we identified that this was hurting our cash flow and, more importantly, it was something we felt we could fix.

We looked for the easy option first and decided to try an automated solution. Our accounting software let us send automated emails to clients if payment wasn’t received. We created three levels of emails:

Email 1: Your account is overdue.

Email 2: Your account is really overdue, and if the bill isn’t settled we’ll have to stop work.

Email 3: Your account is really, really overdue. We’ve stopped work.

We knew it would be clear, fairly quickly, whether or not it was effective.

The short story was, it wasn’t. There was a slight improvement, but it appeared that clients were ignoring the emails. We knew from previous experience that if we called or even sent a personal email to the client directly, we’d often get a response, but the automated solution wasn’t working.

While we would have loved to solve the problem on the first go, often you have to have a few goes at it. It’s just part of the process of finding a solution. We’d implemented our first idea, gathered the data and found the issue reappeared on our problems list.

In our next monthly meeting, someone floated the idea of taking payment upfront and using automatic billing. The idea was to get payments to arrive consistently, in advance and without any action required by our clients.

This would require a little more work than writing a few emails so we spent some time talking over the pros and cons. Would new clients agree to this or would our conversions suffer? How would our existing clients feel about making the switch to automatic billing?

Despite some reservations, we decided the potential benefits outweighed the downsides and we adjusted our invoicing process.

1. New clients would be advised that auto-billing was required and that work would not begin until the first payment was received.

2. Existing clients would be asked to switch to this new system.

3. If an existing client objected, they would be permitted to remain on an account system, with the understanding that if they were late with a payment they would subsequently be transferred to auto-billing.

We had a little bit of pushback, but nowhere near as much as we’d feared. And, as hoped, we saw an immediate improvement. Whereas before, clients could be three or even four months late, now payments were made in advance, on time, every time.

Naturally, because this was a new system, we continued watching our metrics. Even though it quickly appeared to be a winning solution, we needed to keep an eye out for any unexpected side effects and be ready to adjust accordingly.

The takeaway from this story is the beauty of having a simple system for problem-solving within your company.

• Step #1: Identify a problem and add it to the problems list.
• Step #2: Discuss, devise and deploy a solution.
• Step #3: Monitor and review the results.
• Step #4: If the solution doesn’t deliver the expected results, go back to step #1. If the solution does work, document it and make it part of your new process.

It’s obviously not a complicated system, but it’s extremely effective once you make it part of the way you and your team work.

In the early days, it may feel a little like you’re just going around and around on a merry-go-round, but don’t despair – that isn’t a bad thing. The goal is to reach a point where your core systems are solid and you go through a cycle of identifying problems, fixing them and moving on to the next one. Business is simply a game of problem-solving. Wax on, wax off.

A lot has changed since I originally wrote SYSTEMology. Watch the video below to see how our clients are using AI to accelerate this whole process.

The accelerated method of optimisation¶

You may recall earlier I mentioned the wisdom one of my mentors shared with me about hiring a coach, consultant or expert in their field of expertise to help create the systems.

While I caution against this in the early days, having worked your way through much of the SYSTEMology process, you’re now extremely well-positioned to get the most value from working with consultants. You have a baseline and know your key metrics, so before any re-engineering or major changes take place you can identify your current performance. This is the ideal scenario for any coach or consultant because you’re giving them something to work from. The process is still the same – you share with them the problems you’re experiencing, and they advise on a solution. The difference is you now have a system for implementing new changes swiftly and the mechanism for reviewing the results.

Working with an expert can be an extremely smart way to accelerate things. Keep thinking about your business as a collection of systems and you’ll recognise that the more you focus on building up your database of systems, the more valuable it will become.

Which brings us back to the last of the four stages of business systemisation: saleable.

This is what you’re working towards. You may not be ready to sell and you might decide you don’t ever want to sell, but by building your business as though it is saleable, you’ll open a world of opportunities you never knew existed.