Clockwork: Design Your Business to Run Itself

by Mike Michalowicz

  For a business to grow and serve its client base, it needs to get things done. This is the Doing part of a business. The business must also orchestrate its efforts so that all the people and systems are moving the business forward in a complementary fashion. This is the Design of a business. As people on your team work together, their communications will consist of making Decisions and Delegating work that must be accomplished. How you allocate your business’s time between the Doing, Deciding, Delegating, and Designing functions is called your 4D Mix, and getting it in the right proportions is crucial to helping your business run itself.

  Most micro-enterprises and small businesses spend too much time Doing. Imagine that solopreneur who is running around like a chicken without a head doing everything, or that small business where everyone—including the boss—is working crazy hours with no time allocated for planning. The goal of clockworking your business is to move you toward Designing it to run itself while other people or resources take care of the Doing part. To make this happen, we need to start with you and get clarity about how much time you spend Doing, and to do that we need to analyze your 4D Mix and that of your company.

  As is true with any problem or opportunity in life, if you want to improve things, you need to know your baseline. Once we know that, we take deliberate and direct steps to get your company (and you) where you want it to be. The optimal 4D Mix is when the business spends 80 percent of its time Doing, 2 percent of the time making Decisions for others, 8 percent of the time Delegating outcomes, and 10 percent of the time being Designed for greater efficiency, better results, and less cost in the process. Regardless of whether you have one employee, one thousand, or somewhere in between, the optimal 4D Mix stays the same.

  Here are the seven steps to make your business run itself:

  Analyze the 4D Mix—Set the benchmark levels for the blend of Doing, Deciding, Delegating, and Designing at which your business is currently operating. A clockwork business balances getting work done, managing resources, and constant improvement. In the first phase of making your company run itself, we will do a simple time analysis to see how much is being spent in each of the four categories. And once we know, then you can adjust your company to the optimal 4D Mix.

  Declare the Corporate Queen Bee Role—Identify the core function in your business that is the biggest determinant of your company’s success. Within every company there exists a single function that is the most significant determinant of the company’s health. It is where the uniqueness of your offering meets the best talents of you and/or your staff. It is what you declare the company’s success will hinge on. I call it the Queen Bee Role, or QBR. When this function is at full throttle, the business thrives, and when it is slowed or stopped, the entire business suffers. Every business has a QBR. You must identify and declare your company’s QBR, and as you improve its performance your entire business’s performance will elevate. The QBR is the “thrive factor” for your business, and you must decide what you want it to be.

  Protect and Serve the Queen Bee Role—Empower your team to ensure the biggest determinant of your company’s success is guarded and fulfilled. The QBR is such a critical role to your business that every employee, even if they are not the ones serving the QBR, needs to know what it is and how to protect and serve it. In a highly efficient business, the QBR is always the priority and systems are in place so that the people and resources who serve it are not taken away from it. Only when the QBR is humming along, can all people in the business do their own most important work (this is called their Primary Job).

  Capture Systems—Document or record the systems you already have in place so your team can do the work the way you want them to. Even though it may not seem that you have systems, you do. In fact, every business at every stage has all the systems it needs. Those systems simply need to be captured, trashed, transferred, and/or trimmed. Every entrepreneur and employee has a way of executing various tasks, but often they are undocumented and nontransferable. Using a simple evaluation and capture method you will impart that information to your team or freelancers with ease. Hint: You will not be creating a manual. Both the creation and consumption of manuals is inefficient and therefore has no room in a clockwork business.

  Balance the Team—Adjust roles and shift resources to maximize the efficiency and quality of the company’s offering. Businesses are like organisms; they grow and contract and change. To perform optimally you must match the inherent strength traits of employees to the jobs that need them most. Instead of a traditional top-down organization chart, an optimized company is more like a web. You never restrict employees to one job function. Instead, an efficient organization identifies the natural-strength traits of the employee and matches them to the tasks that benefit the most from those traits.

  Make the Commitment—Devote your process to serve a specific consumer need in a specific way. The biggest cause of business inefficiency is variability. The more services you provide to a wider mix of customers, the more variability you have, and the harder it becomes to provide extraordinary and consistent services. In this step, you will identify the best type of customer to serve, and determine the fewest products/services that will serve them at the highest level.

  Become a Clockwork Business—Free the business from dependency on you, and free yourself from dependency on the business. A clockwork business is a business that delivers consistent results, including growth goals, without your active involvement. As you are less available for the business, it will naturally become designed to run without you. In this step, you will learn how to create a business “dashboard” that enables you to stay on top of your business, even if you’re not there.

  That’s it. Seven steps. In that order. You will discover and execute these seven steps throughout the rest of the book. As you go through this process, you will feel frustrated, or stuck, and want to give up. Don’t freak out; those are just signs that you are getting comfortable with the uncomfortable new stuff I am teaching you. Again, don’t freak out, and don’t you dare ever stop. And as a result, you will experience a business that runs on automatic, just like clockwork.

  SEVEN STAGES OF CLOCKWORK

  STAGE

  CORE CONCEPT

  KEY ACTION

  1

  THE 4D MIX

  The four types of work are Doing, Deciding, Delegating, and Designing

  Conduct a time analysis and categorize the type of work

  2

  THE QBR

  The core function you decide to hinge your company’s success on

  Declare your company’s QBR and identify who is serving it

  3

  PROTECT AND SERVE THE QBR

  The core function of your business is always the priority

  Educate your team on the QBR and empower them to guard and/or fulfill the QBR

  4

  CAPTURE SYSTEMS

  You already have all the systems created for your business

  Use the trash, transfer, or trim method to free time for Design work, QBR work, and Primary Job work

  5

  BALANCE THE TEAM

  An optimized organization chart is a web-like structure

  Match the strongest traits of team members to the tasks that most need those traits

  6

  THE COMMITMENT

  Your business strength comes first, then you target the customer who will benefit most from it

  Identify, focus, and cat
er to the consumers who will most benefit from your unique offering

  7

  BUSINESS ON AUTOMATIC

  Doing makes you work for the business, Designing makes the business work for you

  Take the four-week vacation

  FIGURE 1

  * * *

  Time is everything. Every. Single. Thing. Time is the only thing in the universe (until someone invents a time machine) that is not renewable. Either you use it wisely, or you don’t. Time will still tick, tick, tick away no matter how you spend it. I suspect even right now, you may have made a few nervous looks at the clock, as time races by, hoping you can cram in this book (and your work) faster. Am I right? Even just a little bit? If you are experiencing that, I want you to know it’s not your fault; it’s Parkinson’s Law. And I want you to know you are actually in a good position. Better said, you are in a salvageable position. Your business likely has demand and you are delivering on it (although not efficiently). What we are going to do is make a few simple tweaks to make your business run like a well-oiled machine and, in the process, give you back that ever-precious time that seems to move, more slowly and comfortably.

  I want to be clear that this book is not about doing more with the time you have. It’s about your business doing more with the time it has, and about giving you freedom to do other things with your time. It’s about getting your life back while you grow the business of your dreams. That can happen. Actually, it does happen, all the time, for other businesses. Our job, today, is to do it for yours. But for this to work, you need to be all in on this with me. Are you ready? Good. Let’s get to work.

  Scratch that. Let’s get to less work.

  CLOCKWORK IN ACTION

  Your primary focus is to design the flow of work through your company so that other people and other things can get the work done. Commit to putting your company’s output first and your productivity second. How do you do this? Simple . . . you will find better answers when you ask better questions. Stop asking “How do I get more done?” and start asking, “What are the most important things to get done?” and “Who will get this work done?”

  At the end of each following chapter, I’ll share action steps you can accomplish quickly—usually in thirty minutes or less—and still experience big progress. For this first chapter, I only have one action step for you, but it is perhaps the most important. It will force an immediate adjustment in how you view your role in moving your business forward. The step? I want you to commit . . . to me.

  Send me an email at Mike@OperationVacation.me with a subject line that reads: “My Clockwork Commitment.” That way, I can easily spot it among the other emails I get. Then, in the body of the email, please write something like:

  “Starting today, I commit to designing my business to run itself.” Include any other information you think is relevant, such as why you won’t stand for the old way of running your business anymore or what this means to you and your family.

  Why email me? Because, if you’re like me, when you commit to someone else, your follow-through skyrockets. Remember, I personally respond to all emails from readers (albeit super slowly at times). I look forward to receiving yours.

  P.S. Make note of that unique domain for my email, OperationVacation.me. I know it might not make sense at the moment, but it is me who gets it. And soon enough, very soon in fact, you will learn what Operation Vacation is all about.

  CHAPTER TWO

  STEP ONE: ANALYZE YOUR COMPANY’S TIME

  The first time Scott and Elise Grice visited me in my New Jersey office, we talked about laundry for a solid twenty minutes. Yes, you read that right. Laundry. Specifically, how they do three weeks’ worth of laundry—for both of them—in an hour and ten minutes . . . while running errands. I’ve never given more than a passing thought to laundry, and yet, as Scott and Elise explained how they streamlined it, I was riveted. Seriously, they are systems ninjas.

  As our conversation progressed, I learned why systems are so important to Scott and Elise. Founders of Hey, Sweet Pea, a branding team originally based in Austin, Texas, the couple has taught and developed brands for more than 1,400 creative entrepreneurs (think photographers, writers, stylists, graphic designers). Two years into their business, they were handling thirty to forty custom branding clients at a time. To give you a sense of how successful they were, other companies in their industry typically handled four to five custom branding clients at a time. They were rocking it—until life intervened.

  In 2013, Elise contracted West Nile virus, which landed her in the hospital, and it quickly escalated to bacterial meningitis. Over the next two months, she spent six weeks in the hospital and two more completely immobilized at home or in an ambulance going back to the hospital. Because of her illness, every time Elise so much as looked at a screen—her phone, her tablet, her laptop—she experienced shooting pains in her head. Too exhausted to even type on a keyboard, Elise couldn’t work at all. She had to call it quits, and that meant she and Scott would also have to quit their business, because when Elise “The Coach” Grice couldn’t work, the business team couldn’t run any “plays.”

  “We had a team of nine contractors producing work, but Elise was the creative director, and we couldn’t send anything to the clients until she approved it,” Scott explained. “Since she couldn’t look at a screen to approve work, everything backed up. The business came to a grinding halt and we couldn’t invoice anyone.”

  Two months after she contracted the disease, Scott and Elise found themselves sitting on her hospital bed, surrounded by medical bills, wondering what they would do if she never got better. “We were both crying. I said to Elise, ‘If you don’t fully recover, we can’t run this business. You are the only one who has the ability to approve this stuff, no one else, including me, can.’ We were making payroll out of our savings account. I was terrified for my wife and I was terrified for our business. I had no idea what we were going to do.”

  Their business was entirely dependent on Elise, and in just two months without her, the wildly successful company was in wildly dire straits. It took only two months. This is what we business owners fear the most—that if we step away from our businesses, if we check out, even for a few days, our businesses will suffer or die. I know I’ve felt this countless times, and used this fear as a justifiable reason to work, work, work, and then work some more. I suspect you have, too. (Here’s a little secret: The work is never done.)

  We’ll return to the Grices and find out whether their business survived in a few pages, but if you fear what will happen to your businesses if you take a break—or are forced to take a break—it’s a big sign, as in flashing-neon-billboard big, that your business needs to be designed to run itself. If you had systems in place to keep your business running with or without you, you wouldn’t worry about taking time off. I think you know that, because you’re reading this book. What you may not realize is that getting your business to run without you begins with you, and how you view your role in your company. We first must move you from Doing to Designing.

  As I said in the previous chapter, productivity is a trap because, ultimately, the work is still being done by you. Most of us are used to doing whatever it takes to keep our businesses afloat—and the operative word here is “doing.” In the early days, we have no choice but to take on every role in our hopeful startups. There is even that cheesy phraseology that circulates with us entrepreneurs, “I’m the CEO, the CBW, and everything in between.” I’m sure you have heard that one. You know, the chief executive officer, the chief bottle washer, and everything in between. Cute. But not a way to grow an efficient business.

  Entrepreneurs are natural DIYers—HGTV has nothing on us. Shoot, we should have our own channel! We do everything as we build an early stage business, because we must do everything. We can’t afford to hire others, and we still have the time
to do everything. We aren’t usually that good at most of it (even though we convince ourselves we are), but we get the stuff done well enough. While it makes sense that we have to take on many different roles when we first get our business off the ground, keeping it up is not healthy and not sustainable. Finally, we make that first hire, and even with the added financial pressure,* we feel some relief since we couldn’t keep up the insane pace of doing everything. But the sprint-like pace in fact does not go away. Even when we hire people to help us—employees or subcontractors—we often still end up “doing” a ton of work—scratch that, more work—because we, like Elise in her branding business, are the linchpins.

  Designing a business that runs itself is doable. In fact, it is very doable. To pull it off, you have to shift away from Doing and focus more and more of your time on Designing the flow of your business.

  THE FOUR DS OF RUNNING A CLOCKWORK BUSINESS

  There are four phases of activity that you engage in as an entrepreneur. These are “the four Ds”—Doing, Deciding, Delegating, and Designing. Although you are engaged in all four of these phases to varying degrees during the course of your business’s evolution (you spent some time Designing your business before you launched it), and while your business will always have a mix of all four Ds, our goal is to get you, the entrepreneur, Doing less and Designing more.

  Shifting from Doing to Designing is not a “Monday morning makeover” kind of shift. It’s not a switch you flip; it’s a throttle. You build toward this. You become more and more of a designer over time, and there is no finish line.

  Doing: This is the phase when you do everything yourself. You know it well and you do it well (enough). When you’re a solopreneur, doing everything yourself is a necessity. This is where almost every startup starts, and where most of them get stuck, permanently. Of the twenty-eight million small businesses in the United States, more than twenty-two million don’t have a single employee.* In other words, the owner is doing everything.