Balanced Systems Thinking

I want to share how my workout went this morning and how that relates to business. So today, I did my regular work out. I spent about an hour lifting weights and doing cardio and had a really good workout that I put a lot of effort and a lot of energy into it and it went really well. Then when I got done with my workout, I cleaned up and came into the kitchen and, wanting to grab something to eat, I decided on eating a bag of chips and grabbed a Diet Coke to drink and that was my breakfast. I did this because I didn’t have or I didn’t think I had the time to spend 10 minutes making something that would be good for me to eat.

I didn’t really think anything of it until later on as I started to think about how eating a bag of chips and a Diet Coke for breakfast impacts my overall health and did I really make the right choice. I realized that what I did really “undid” some of the energy that I put into my workout and overall my health did not really improve all that much because I took a lot away from my workout by those food choices that I made.

Your Business is Like a Biological System

Now, when you think about this in the context of your business, your business is a lot like the human body. Think about a person and you are a collection of biological systems that give you life and make your body work. You have a cardiovascular system and you have a digestive system and you have a nervous system and a number of other systems. These systems together work in harmony, each doing certain tasks, that allow your body to thrive. Your business is very similar to this.  It’s a collection of systems that all do different tasks that work in harmony together to create value for your Customers and allow your business to exist.

When you think about having good health as a person, there are multiple things that go into that. It’s how you exercise, how you treat your body physically, what kind of sleep are you getting, and it’s what kind of nutrition or food and drink you’re putting into your body. Those factors impact how well your health is so when you think about that in my experience with this last workout, I had a really good workout and then I ate a bunch of junk and so by neglecting one aspect of my body I’m going to have some subpar results in my overall health. I could eat nothing but super foods all day and then go smoke a bunch of cigarettes.

This creates a similar type of problem where I’m treating my digestive system very well and eating a bunch of good food that allows that system to work well and thrive but then I’m ruining my respiratory system by filling it with cigarette smoke. I could run marathons three times a week but if I’m only sleeping a couple of hours each night I am again not giving my nervous system the rest that it needs in order for my body and my health to be good.

But What About Business?!?

Translate that into your business – I could put together a fantastic product but if I don’t spend time acquiring new Customers, it doesn’t matter how good my product is. If nobody sees it, nobody understands it. If I don’t find and educate those Customers, it doesn’t matter how good my product is.

I could build out a beautiful campaign to get new Customers but if I don’t have the right infrastructure or if I neglect the infrastructure to support those Customers, it doesn’t matter how good I was at acquiring leads and new Customers.

Likewise I could spend a lot of time and energy making sure I got new Customers and I service those Customers well but there is, as we all know, the host of administrative activities that are required to successfully run a business… things like making sure you do your accounting properly and pay your taxes and if you don’t do that, you might not feel the pain today but in the future, at some point, that will cause you significant problems. Just like with my combination of good exercise and poor nutrition, I neutralized the good work by focusing too much on the exercise and not enough on the nutrition. I see lesser results with my own physical health and you can see the same thing in your business. If you are overly focused on one part of your business or you spend a bunch of time and energy making one part of your business really good and neglect other parts, the health of your business is not going to be anywhere near where it could be.

So What Do We Do About It?

There are a couple of things that you want to realize before really trying to address this. There are a couple common mistakes I’ve seen in working with companies.

One, people get hyper focused on fixing one system so they realize, “hey I’ve got a bunch of systems in my business and I am not getting the number of Customers I want” and they get hyper focused on that one problem and they all of a sudden spend all of their time and energy focused on fixing that one problem at the expense of everything else. It goes back to that initial example of if you’re overly focused on only exercise and you don’t take care the nutrition or you don’t take care the sleep, your health isn’t going to be that good. People get overly focused on, “okay I just gotta fix this one thing and I got a spend all of my time and energy on this until I make it perfect” which is a mistake.

The other mistake that I see is people try and fix everything all at once. You realize that you have this understanding of systems now and the understanding your business is a collection of the systems and none of them are working the way you want them to so you want to fix them all today at once right now. That’s not good for your business either. You’re not going to be able to do that in an effective way that really makes a difference in your overall business and improves things the way that you want to improve them.

How Do You Fix Things?

First, realize that you can’t fix everything at once. You have to accept that you can’t fix all of your problems at once and because of that, you need to pick something to focus on… one thing that you want to improve. The other consideration is the 8020 rule or the Pareto principle. This speaks to you not needing to fix everything all at once and you don’t need to make everything perfect before you move on to the next thing.

If you’re not familiar the Pareto principle or the 80/20 rule, it is “80% of your results come from 20% of your actions.” There are different interpretations of the 80/20 rule you can apply it in different ways. Another way you could apply it is 80% of your problems come from 20% of the issues or in other words, it’s just a small group of problems that are causing most of your issues and that speaks, again, to you not needing to fix every single thing if you have a system that isn’t working right for you.

Identify Your Key Systems

Keeping those things in mind, start by identifying your key systems. What are the systems in your business that are the most important things that you do? If you’re a restaurant, think about your Customer lifecycle and how you interact with Customers. How do you get new Customers for your restaurant? Maybe you run ads in a local paper or radio station or you might do Facebook ads targeted toward your location. You have a system there around getting new Customers, even if you haven’t thought of it as a system before. You have a system to greet those Customers when they come into your restaurant and to get them seated in the right spot. Once they’re seated, you have a system for taking their order, making their food, delivering that food to them, allowing them to enjoy their meal, collecting payment at the end of it, and then shepherding them eventually out the door so that you can bring in and service the next Customer.

Think about your systems in your business and what are the most important pieces for you to get right. Once you have identified your systems, identify which one is giving you the most problems today. Now, you can be scientific about this and there is some added value into doing that, but it’s not required at this point to start improving your systems and getting more value out of the things you do. So for now, just think about where you feel like you have the biggest problem and identified that as the system that you want to start fixing.

Identify 1-3 “Fixes”

Now that you have a system identified, identify one to three things that you can do to make the system better. There are a few simple activities that you can do to make this happen if there is nothing obvious for you to fix.

First, you can start by documenting the process that happens in your system. If we think back to the restaurant example, we have a system to greet our guests and get them seated. We can document the system using a Word or Google document and basic narrative structure. An example would look like this

  1. Customer enters the restaurant
  2. Host greets Customer at the door
  3. Host asks how many are in Customers party
  4. Host references seating chart and finds appropriate table
  5. Host takes Customer to table
  6. Customers are seated and wait for server

The documentation does not have to be fancy and can be as simple as this. If we spend a few minutes thinking about how this is going and think about what we see happening with our Customers in our restaurant, we might be able to easily identify improvements we can make to this system. For example, we know that Customers sit at the table waiting for the server and sometimes that takes a few minutes. Instead of waiting for the server to come and bring the menus, we can change our system so that the host provides menus to the Customer when the Customer is seated.

Another thing you can easily do is a time study. Again, this can be a simple exercise and does not have to be overly complicated. To do this you can use Excel or Google spreadsheet to track the activities that you do as part of your system and identify how much time you are spending on the different activities. Just by tracking these activities, you will be able to see where you are spending too much time and make adjustments needed to do less of the activities that provide you less value in your systems or remove those activities altogether.

The third thing you can do is what’s called a Five Whys exercise. To do this, think about the outcomes of the system you want to fix. Think of the outcomes that are not where you want them to be and ask yourself, “why is this happening?” Continue to ask why until you get to a root cause that you can fix.

For example, let’s go back to my breakfast dilemma. I wanted to feel better but I didn’t feel as good as I wanted to feel by the end of the morning. My outcome that I wanted was that I wanted to feel better so I ask myself, “why didn’t that happen.?”

It didn’t happen because I ate chips for breakfast.

Why did I eat chips for breakfast?

Because I didn’t feel like I had enough time to make a proper breakfast.

Why did I not have enough time to make a proper breakfast?

Because I only had a few minutes before I needed to get ready for work.

Why did I only have a few minutes to get ready for work?

Because I set my alarm with just enough time to do my workout and nothing extra.

By doing this exercise I am able to understand why I had this problem and what I can do to fix it. In this case, I identified that I needed more time and not be rushed which I can do by changing my alarm to ring 10 minutes earlier in the morning.

Key Points

To summarize the key points

  • Your business is a collection of systems that allow you to create value for your Customers and allow your business to exist.
  • You need to balance the outcomes of these systems in order to be healthy long-term.
  • If you focus too much on any one system the overall health of your business will suffer.
  • You can improve your systems little by little and should focus on one system giving you the most problems.
  • Work on improving that one system until it is no longer your biggest problem, then identify which system is now your “new” biggest problem.
  • You can use tools like process documentation, time studies, and the Five Whys to help you understand how you can improve your systems.

Put this in practice today and your business will thank you for many years to come!

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