Having efficient systems

I wondered how it could have happened without anyone challenging it.

A company selling coffee machines had just discovered that for the past 18 months, the machines that left their warehouse did not have the stickers on them with the details of the phone number to call.

This was significant.

These machines would be in use for a long time. Users of the machine or even owners would change.

No contact details meant that when ingredients needed to be ordered, it was easier to go online and find a new supplier than ask the accounts department for details of the provider of the machine. That’s if they could even work out where the machine came from in the first place.

We never did get to the bottom of why the stickers stopped being put on the machines, although we found them tucked away on a shelf. We will never know how much income was lost. But it wasn’t just coffee or other ingredients. It was new parts, service callouts, even new machines themselves when the old one was worn out.

We discussed the issue and other connected matters in the company boardroom. Everyone agreed that there were no written systems or checklists for any activity that took place in the company.

Of course, the business had systems. Every business has, no matter how small.

Every person has a system, an order you do things even if some of it is common sense. Put on shoes, tie laces, find socks. No – wait!

Little habits you’ve developed to make whatever activity you do as efficient as possible.

And this business was no different. It had grown quickly. The marketing was good, and the sales skills were great.

But when the company reached a critical mass, things started to go wrong. There were too many people for the owner to manage direct. So, he brought in a manager who did it her way. And when things didn’t improve, he brought in another manager for something else. The two managers didn’t get on. Tensions grew.

As office politics raged out of control, the business became more chaotic. It still kept growing and getting new sales until the number of new customers started to be outweighed by the number of customers being lost through poor service. That’s always what happens in the end.

I drew a breath and recalled my own similar experience albeit when our firm was a much smaller size (less than 10 people).

We were doing ok. New clients were signing up, new staff were coming on board and we were growing.

But silly things were going wrong.

I’d just had a very polite call with one of our clients who said he had received a letter which said that a form or something or other was enclosed but actually it wasn’t.

I apologised and went out and had a grumble to our secretary at the time.

Soon after I was speaking to our (then) senior partner. We were a satellite office of a bigger firm at the time. I explained the dilemma.

“Growing pains” he said.

Growing pains. I stewed on this for a few weeks.

But if these are growing pains, then that implies that once my team have grown into their jobs, then we won’t get all these silly things going wrong.

But what if we grow again? Or what if a member of my team who has grown into their job leaves? Am I going to spend my entire career apologising to clients for forms that aren’t in envelopes?

Around that time, I found a book which changed my whole outlook on business. The E-Myth revisited by Michael Gerber.

The book was a revelation. It explained that the Entrepreneurial myth is that people run businesses when in fact they simply work in a business that they also own. Take them out of the business and it ceases to exist.

It talked about the importance of systems and how they made your business less reliable on you. It talked about finding systems-based solutions to problems. So that even if the person changes the system still works.

So, I started writing systems. Lots of them.

And still things went wrong. Even though the systems were great. Why?

Because the people who were responsible for following those systems didn’t know they were responsible.

So, we sat down and listed out all the roles that exist in an accountancy practice. This was not a list of the people who worked at A4G with their job titles. That’s the complete opposite of a systems-based solution.

It’s surprisingly hard to think of a role without thinking about the person currently doing it. But that’s what you have to do to grow your business. And once you’ve identified the roles, you list the responsibilities that go with that role.

Most of the roles are what we call Primary roles. These are roles where you must only have one person doing it. As soon as you get two people doing it, then you have three possible outcomes:

1. One will take responsibility and the other won’t. The job gets done but eventually the one who always takes responsibility will start to get fed up
2. They will both do a particular task – not very efficient
3. Neither will do that task. This is the most likely outcome. If no one person is responsible for something, then no-one will do it. Think about the weekend you went away and left your two teenage children alone in the house. Then think about the washing up that you found when you got home. Neither of them were responsible for doing it so neither of them did.

Multi roles are where there is a pool of work to be done which can be shared out between more than one person. Even if there is only one person doing it, it is work that is capable of being shared out.

For each multi-role there must be a supervisor who allocates the work out even if the person who is the superviser is one of the people doing the work as well.

And then you allocate each Primary role to one person and each Multi role to one person or a pool of people.

Many of your team will end up with four or five different roles. That’s fine. As you grow and the workload associated with some of those roles grow, they can pass one of them onto someone else.

But getting everyone to accept that they had to do everything that was on their role proved a challenge.

Most people were allocated roles they already (sort of) did. But the roles were much better defined and there were often tasks on there that they hadn’t done before. Sometimes there were things they didn’t want to do. In the past, those things had simply slid off their shoulders and onto mine.

Painful discussions and training followed on a few things. We got there in the end. We lost one person, but I did a little dance as they left the building for the last time. You always do when the really awkward ones leave!

Bit by bit each of those responsibilities started to have systems written for them. Each problem was approached with the mantra:

“There are only three reasons something goes wrong:

• Someone didn’t follow the system
• Someone didn’t understand the system
• The system wasn’t good enough”

Identify which of the three was the cause and act accordingly.

Sounds easy doesn’t it? In reality it took us about 5 years to get the structure right and the journey is a never-ending one that we are still on today.

But we made progress in the meantime and it allowed us to grow. It also allowed us to take on inexperienced but enthusiastic young people as trainees and get them up and running quickly. Many of those went on to pass exams, become managers and even partners. Without systems, all that talent would have been missed.

But back to the original story.

The directors confirmed that they did not have one single documented system in the whole business. We took a break while some more drinks were made, and I popped into the gents.

And that’s where I found that it wasn’t true that there were no documented systems. In the gents on the wall, nicely laminated was a sign which said:

“Do not flush the paper handtowels down the toilet as they will block it.

Are you stupid or something?”

Ok; as systems go it wasn’t the best one in the world. It didn’t state the purpose of the system (although we might guess), it also didn’t say where they should put the paper handtowels (although I’d like to think the readers could work it out). It also didn’t have a clear series of steps that patiently set out how to remove a paper towel from the container, dry your hands, then put it into the bin provided.

But it did the job. The instruction was written down and it was somewhere that it could not be ignored.

I don’t know who made up that sign but it’s clear that they felt passionately enough about the issue to go to the trouble of preparing the sign, laminating it, getting some Blu Tack and sticking it to the wall.

It’s just a shame that they weren’t as passionate about ensuring that the stickers with the phone numbers on were being put on the machines. They could easily have produced a laminated sign that went on the door where their coffee machines left the building.

But better late than never, that’s what we did.

Of course, systems take many forms and signs on walls are very small ones. Procedure manuals, checklists, even the design of database forms to ensure people can only enter the allowable options. These are all systems.

If your team is 6 or less people, you can probably just about get away without writing systems down. You’re in control of everything so you can direct everyone. If staff have been with you for a while, they will know the systems as well as you.

But as numbers increase, it all become more complicated. Maybe you have to decide whether you want to be a Ronald or an Elton or where on that scale you are.

But if you want to be a Ronald….

Well, systems are crucial.

There’s more than one way of tackling them. We love the E-Myth, but once you’ve read and absorbed the lessons from there, try From Good to Great. And if you want to learn how systems helped Toyota become a world leader in car manufacturing then there are a whole load of lessons to be learned about Kaizen in The Toyota Way.

As we emerge from the pandemic and your business grows back to its previous size or perhaps beyond, you might fool yourself into thinking that things are all heading in the right direction. But as you lose sight of every activity in your company, someone somewhere may have stopped putting the stickers on the machines.

If you want to keep growing and ensuring that each bit of incremental growth is profitable, getting your systems right and continuing to improve them will be critical.

Have a good weekend.