wardell books

Systems Theory

“True freedom is not the absence of structure - letting the employees go off and do whatever they want - but rather a clear structure that enables people to work within established boundaries in an autonomous and creative way.”

- Erich Fromm Psychologist and writer, Escape from Freedom 1941

The dictionary defines a system as an organized array of individual elements and parts forming and working as a unit. If you think about it, isn’t that how a good business should run?

When you think of your business as a system, you can see that it's a collection of business activities working toward a common goal. How effective your business is, depends on the outcome of these activities. But how do we make sure that your business operates the way it's supposed to? What keeps each of these activities pointed in the right direction?

Successful business activities are the result of good business systems. Your entire business is a system but every system is also a collection of smaller systems or sub-systems. If you wish to have control over the outcome of your business activities, then you must have confidence in the way they're performed. That means putting specific systems in place to guide your business activities in the desired direction.

Aisin Seiki is part of the Toyota family. In their Nagoya water pump plant, one of their five-year goals was to clean up the plant. Although it's a manufacturing company, one that includes drilling and grinding, the plant is now spotless. No grease or dust anywhere. How did they do it? By implementing a series of simple, yet effective systems designed to tackle the problem. For example, one of their systems included a three-minute clean up at the end of each shift. They also created a system for filtering and collecting dust before it had a chance to build up. The impact of these new systems not only left the place spotless, they were responsible for increases in quality and productivity as well.

Systems are simply a way to get things done. By themselves they have limited value, but once they're integrated into the structure of your business they become a powerful ally, turning energy into useful productive work. Systems greatly increase your chances for generating predictable outcomes. A well-developed system for cleaning the shop, for example, would ensure that it was cleaned to a minimal standard on a regular basis.

Systems operate interdependently, that is, they work to produce results individually, as well as collectively. For example, your digestive system converts food into energy, your circulatory system carries nutrients throughout your body, and your respiratory system oxygenates your blood. They have independent functions yet they work cooperatively, along with many other systems, to keep you alive and healthy.

Your business is also a collection of interdependent systems, and like your body, when one or more of them are not functioning correctly, it can get sick or even die.

If the shop cleaning system mentioned above was not working properly, for example, the resulting dirty shop could turn off prospective customers, affect employee morale, and create safety hazards; all of which could affect production and ultimately income.

Whether you’ve thought about it or not, you likely have quite a few systems in place already. You probably do your bookkeeping the same way every time, you might have your phone answered the same way every time. In fact, you probably have a standard way of doing a lot of things in your business. It’s just as likely, however, that very few if any of your systems are properly documented. Your employees probably know what to do from experience, but there may be people in your business who are the only ones who know how to do certain things the right way. Maybe you are one of those people.

Chances are, too much of your employees’ work is left up to their discretion. Different people may even use different systems to accomplish the same task. Occasionally it’s unavoidable, but rarely is it a good idea. If you don’t have control over the way things are done, your business will not operate predictably. That means that any effort you make to improve it will be just as unpredictable and can have a limited benefit at best.

Predictability is a key component of growth management. Creativity, spontaneity, and individual working styles are all important, but you need to have a set of rules in place before you can break them. Even the most artistic endeavours must begin with structure. A musician, for example, must learn to read, write, and play music before she can produce a creative masterpiece. When you are confident that even in your absence things will be done right, you'll be free to focus your attention on the future. That’s where you, as the leader of your business, are most valuable.

It takes more than desire and hard work to build an outstanding business. As long as your business relies on you to function, neither you nor your business will be free to grow.

If we use the human body as an example again, we know your central nervous system sends and receives sensory information throughout your body. Information requiring analysis is sent to your brain for evaluation, but basic decisions are often made without your conscious involvement. For example, your heart beats whether you think about it or not. You continue to breathe whether you think about it or not. You pull your hand away from a hot stove whether you think about it or not. Even the highly complex skills of a figure skater are performed with a minimum amount of conscious thought. Ironically, if a figure skater had to consciously think her way through an entire routine, her performance level would drop dramatically. Your business works the same way.

Once it's fully organized, there are a great many things that can happen in your business without your direct involvement. In fact, the more you are personally involved, the more the performance level of your business will drop. It’s not your job to operate your business, it’s your job to steer your business.

To some, the thought of operating their business through systems brings to mind an image of a company run by robots. They worry that systems development will stifle creative thought and independence. But this couldn’t be further from the truth.

In reality, systems free people from the tyranny of routine and elevate their work to a higher plane. When one must concentrate their efforts on work that is easily replaceable by a system, they become little more than a stand-in for a machine. But once they become masters of a system, they're freed to concentrate on the process of constant and never ending improvement. Mastering the basics of a system frees the creative artist in us all.


What Are Policies?

In many respects, policies can be thought of a basic set of operating rules for your business. They're guidelines on expectations. Your Code of Conduct, for instance, is a list of policies. In most cases, detailed systems will be necessary to ensure these policies are carried out accurately, but not always.

A retail chain, for example, might wish to have its employees dress in matching colours that rotate each day of the week. This would call for a dress code that required a detailed system, outlining the boundaries of acceptable attire for each day. On the other hand, a software development company might only need its employees to wear casual, yet professional attire. In both cases, the companies may choose to have a dress code policy, but only in the first case would a system be necessary.

The decision to write a system is often intuitive, so you may need to make up your mind as you go along. You may find that something starts out as just a policy and ends up as a system sometime in the future, and that’s fine. Your priorities are bound to change. After all, business is not static.