Category: Fundamentals

The Highest Form of Process

The hallmark of a good process is that it makes work easier.

Your goal as a small business operator in developing systems is to create consistency and capture it in processes which can be optimized. Gurus who preach system development often encourage that you document everything. However, this can result in over-developed systems that work against consistency. If you have standard operating procedures with thirty different steps, layed out in detail, it’s likely you have a standard procedure that few people use.

Though we’re pursuing consistency, it’s important to keep in mind that the processes will be used again and again by people. People who don’t want to walk step-by-step through a manual of documentation again and again and who won’t watch a training video more than once.

The most effective systems lean on tools. Tools capture the nuanced lessons learned by process authors in a format that creates predictable outcomes. And they’re more likely to be used because they make work easier. Tools come in many forms, but the two most common are templates and checklists.

When you can create a process that is just five steps and two of the steps use a template and one a checklist, you have something that will be remembered and followed.

When you’re improving a process or creating a brand new one, your guiding question should be, “How can we make this as easy as possible?”

Balancing Consistency & Agency

The fewest steps possible in a process makes for a more productive overall system.

There’s a temptation to build processes that are complex, that address every possible eventuality, that create a polished, perfect outcome. We believe that if we capture lessons learned that they will persist over time and our business system will become increasingly effective. However, the more complex a process becomes, the less likely it will actually create value.

Many years ago, after reading books like the E-Myth and Work the System, I tried to document every aspect of our business. My goal was to expose the workings so that I could improve them and make them consistent. Since then, our team has iterated several times on our processes. On several of these occasions, we’ve blown the dust off of a long process that was painstakingly created and abandoned shortly thereafter.

In developing our business systems, what I’ve learned is:

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Are Agencies Good Businesses?

“Are agencies good businesses,” I asked a small group of agency owners at an event recently.

“No,” one of them immediately replied, “They’re terrible.”

After a thoughtful pause, another owner said, “They can be.”

I’ve asked this question of most agency owners I encounter. It’s a question I’ve pondered for a long time. My general feeling is that agencies aren’t that good of a business model.

That evening, I spoke with someone with no agency experience who bought an agency. He told me that he purchased it based on its objective attributes. From his perspective a business is just a business. Whether you’re McDonalds or a small agency, your model can be reduced to financial documents and some attributes around how you create value (services vs products, inventory, recurring revenue, etc.) Any business can be exposed and evaluated apples-to-apples on a spreadsheet.

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The Three Amigos Compete

I know a guy who has returned to school to get certified in medical billing. He used to be a transcriptionist and software ate his job. I know another guy who dropped out to wander around the country in a van. He was an adult caregiver and is trying to support his van-life as a virtual assistant. More recently, I met another guy who runs a content marketing agency that’s been battered by ChatGPT, Claude, and the other AI’s.

What do these three guys all have in common?

They’re all trying to work at the bottom of the value spectrum, the area where value has the characteristics of a commodity or is one.

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Focus & Iterate

Last week, in a weekly meeting, my team discussed how we could improve projects with clients to avoid what we call “zombie” projects where the client’s behavior kills project momentum.

We looked at a specific project that is in motion with a client who has frequently disengaged in the past. My team listed off all the trouble behavior that they’re sure that the client will do that will result in the project being difficult to work on and hamper momentum in the coming weeks:

– Fail to deliver assets
– Continually change the scope
– Stop communicating
– And etc.

They held up their collective Zoom hands in frustration, as if to say, “We’re powerless in this situation.”

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Subtraction

Adding things is tough.

If you look at your business, adding customers, employees, products, marketing, and systems all require a significant series of investments. And once you’ve added the thing, the return is inconsistent. Even if you’re scrupulous in your execution, you rarely get home-runs. Mostly, you get a mixture of base-hits and strikeouts. It often takes months and years to see your new addition bear fruit.

Subtracting things, on the other hand, is much easier. It’s typically quick, simple, and has an immediate and positive effects. You cut a bad-fit employee and profit jumps up,  you fire a bad-fit customer and life gets easier, you kill an unproductive service and suddenly the business is more valuable.

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Aligning Incentives

The offer is the atom of business. When you disassemble the complex systems of enterprise into their most fundamental components, you end up with offers.

I’ll give you this in exchange for that.

Value propositions. Offers of employment. Strategic partnerships.

Offers aren’t perfect. They exist on a spectrum of acceptability from, “Hell yes!” to, “Uhhh… I guess so.”

Offers exist in an environment that is in flux. An amazing offer today might be an untenable one tomorrow.

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Building Tempo

When I was in my early twenties, my roommates and I entertained ourselves by playing an old Nintendo. We stumbled across a game titled, “Caveman Olympics,” which had an event where you and a competitor would race to start a fire. Two cavemen set next to each other on the screen and the players’ cavemen would blow on their piles of kindling as fast as the players hit the “A” button. In order to start your fire first, you had to build up a rapid tempo of hitting the button and maintain it.

Your business has a tempo too. There are a series of tasks that take place for you to produce value. E.g. for a service business, they would start with marketing tasks, continue to sales, and then dive into operations before delivering an outcome to a customer. Like in Caveman Olympics, a certain tempo is needed to develop the momentum to scale up to the next level and start the fire.

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Competing Priorities & KPI’s

I do a lot. If you ask any of my friends or wife about how I spend my time, they’ll say that I’m always busy. You might be like this. It’s common to find entrepreneurs that are driven.

One of the tricky aspects of this aggressive orientation is that when I don’t meet a goal, it’s not because I was sitting on the couch eating potato chips, it’s because a competing goal overshadowed it as a priority.

This is a key challenge in a tiny, sub-25 person business like mine. As the owner-operator, I take on different roles in the business: sales, account management, marketing, financial management, team management, and etc. Each of those roles asks something of my time, energy, and attention.

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Value Capture in Farming Equipment

I spent the last week working from the family farm in Southern Idaho. As a teenager, one of my jobs was to change hand lines. Hand lines are sprinkler systems for fields that have to be moved by hand, pipe section by pipe section. It’s tedious and labor intensive work.

In the past twenty years, my dad has replaced all of the hand lines with automated pivots. Pivots are computer operated pipes on wheels that pivot in circles around a connection to a source of water.

For the first half of the upgrades to pivots, my dad used a local supplier operated by a guy named Jack. For the other half, he used someone else over an hour away. Why?

At some point in the years long upgrades of all his fields, my dad noticed that Jack started to price gouge his customers. Now he only uses Jack’s business when he absolutely has to.

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