Clockwork: Design Your Business to Run Itself

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Clockwork: Design Your Business to Run Itself Page 11

by Mike Michalowicz


  Chances are, you have eaten a few bananas in your life. Did you know that most people don’t know the best way to peel a banana? Most people peel it from the stem, which means the banana often gets squashed, or is difficult to open. Too green and you can’t open it easily. Too ripe and it gets mushed. But the solution to proper banana peeling has always been out there—monkeys do it. They hold it by the stem, pinch the opposite end, and the banana splits right open without a scratch.

  How do you capture this process? It’s already out there. On YouTube and a million other video hosting sites. Just go to YouTube and type in “Best way to peel a banana” and you’ll find the technique.

  You can even use this as an exercise to get your team buying into the new way to create systems (by capturing the best practices by video, or using an established video that teaches the best practices you want to use). Here is the exercise: Buy a dozen bananas. Get a few employees you want to train with a system, to individually show you how they peel a banana. Don’t have them do this together since they will try to copycat one another. And don’t you dare stare them down and make them nervous. Make no judgment. Just observe. Some may do it the “right” way already. Likely, most won’t.

  Next, send them the video you find on YouTube on how to peel a banana. Have them watch the video and give them another banana to practice. Then have them meet with you again and show you how to peel a banana. Boom! System captured (thanks, YouTube) and transferred. The point here is, don’t try to make it right or perfect before you get it off your plate. Just get it off your plate by capturing what you already do on video, or via a few other methods I am about to teach you. If you wait to establish the perfect process before you transfer it, you’ll never find the time to get it right. So hand it off, then work with that person to get it right.

  Now stop monkeying around with bananas and let’s do this with what matters in your business.

  SYSTEMS FOR STARTUPS

  If your business is brand spanking new, you can easily argue you have no systems. I mean, you don’t have anything, even in your head, to tell others to follow. What do you do then? Two things.

  Remember that the transition from Doing to Designing is like a gauge or throttle, not a switch. You want to do the work for a period of time so you can learn and relate. Then you can capture what you learn to transfer it. Or you could take a shortcut and become a curator of other people’s systems.

  One search on YouTube will deliver dozens, if not hundreds, of systems for almost anything you need. Most of the work has been done for you. It may not be how you want it or the way you would do it, but the systems are there, and rated and reviewed by others. Want to have an invoicing process your team can follow? Search for “how to invoice customers.” In the deck-building business? Search for “how to build a deck.” Need your team to dig holes, pour concrete, and hammer in joists? Search for “how to dig a hole for a deck post,” “how to pour concrete for deck footings,” and “how to install deck joists.”

  The systems have already been created. Your job is to capture what is in your head, or to use what other people have already captured from their heads. Then you go about designing the process for your team to use the knowledge that is all captured, recorded, and ready to be rolled out.

  CAPTURING SYSTEMS

  Once you have identified what you need to systematize first, you next determine which primary process you are following. Are you 1) communicating (speaking or writing), 2) making a physical action (moving something), or 3) interacting with something (working on the PC, pushing keys on the cash register)? Or, of course, it can be a combo of all three.

  If you or someone else in your organization is already doing the work, you (or that someone else) simply do the task and you capture it as you do it. Capture your system through recording devices. For example, let’s start with work done on a computer, since that is so common. Let’s say I invoice clients (which I have done) and my QBR is writing and speaking (which it is). I used computer-screen recording software to record my process. (I don’t want to make a software recommendation here, as it is constantly changing, but I do have a list at Clockwork.life.)

  As I perform the task, I just record the screen and narrate what I am doing. I then store the video in a directory labeled for that task. Now the person who is doing it has a training video they can use to replicate the process over and over again. Easy to find in the directory and easy to do since it is recorded, step by step.

  Every company goes through a flow of steps in order to be sustainable. A company will do things to attract prospects, to convert those prospects into customers, to deliver products/services to those customers, and to collect and manage the cash throughout. This process is called Attract, Convert, Deliver, and Collect (ACDC), and the power of managing the ACDC of your business is about as epic as the band AC/DC. Just with less shouting and sweat.

  How should you set up this directory structure of systems? Easy. Make it public and use the ACDC categories. I am going to dig deep into the ACDC flow of your business in the final step of applying Clockwork to your business, but for now I will go into the basics. Every company must consistently complete four major stages in order to keep itself in business. The business must:

  Attract—Bring in new prospects interested in the company’s offering.

  Convert—Turn a portion of those prospects into customers.

  Deliver—Supply the customers with the product or service as promised.

  Collect—Ensure that the money promised by the customers is gathered.

  The ACDC model has nothing to do with electricity, or the band, for that matter. But it is as important as electricity and as epic as Angus and Malcolm Young tearing out the opening guitar lick to “For Those About to Rock (We Salute You).”

  SAMPLE SYSTEM DIRECTORY STRUCTURE

  SYSTEMS

  Attract

  Website

  Email Marketing

  Convert

  Website

  Email Marketing

  Deliver

  Shipping

  Admin

  Reporting

  Analysis

  Collect

  Accounting

  Everything you are doing in your business will fall into one of these four categories. So on a sharing platform that your team can access, like a cloud-based drive, create a directory called SYSTEMS. Under that directory, create four more: ATTRACT, CONVERT, DELIVER, COLLECT. When you capture a marketing process, put it under ATTRACT. When you capture a process of shipping your product, put that under DELIVER. If you have a generic admin task that services all parts of the business, like cleaning the bathroom, put that under an ADMIN folder of DELIVER. Put all money-related systems, like receiving deposits, doing the accounting, and paying bills, under COLLECT. If you wish, you can change the name from COLLECT to CASH. The goal is to make it simple for you and your team to find the recorded systems when they need to refer to them.

  Will the video capture address every anomaly? Not likely. But because it is much more of a show-and-tell, it conveys a lot more than you can with a written script. Plus, you just did the work while creating the training, so there is no time lost in building the system. Boom. Bam. Slam.

  For other activities where you are talking (a type of communication process), all you need is a voice recorder. You probably already have one in your pocket: your smartphone. And for the physical stuff you just need a video recorder, which you already likely have, too. That same smartphone.

  Capture the activity, store it in a folder system that is accessible to your team, and then delegate it to another employee, virtual assistant, anyone. (Well, not anyone. The Starbucks barista is already too busy making your Ecuadorian medium roast coffee to take on your other tasks.) Just get it off yo
ur plate. Protect the QBR at all costs! (Okay, maybe not at all costs. But it is right up there with your child’s life and properly prepared Ecuadorian coffee.)

  In the beginning, employees may come back with basic questions that you forgot to include in the captured content you made. Maybe you made a video on how to ship stuff using the computer but didn’t include the login. This is where you give them the answer, and now request that they make the next, new and improved, video. That is right. They start working on improving the system right away, and by recording they become the teacher. And we all know the best student is always the teacher.

  Doing this has had a massive impact on my business. I noticed that admin tasks were clearly time consuming, and doing things like shipping books (which I did myself for years) and invoicing took me far from my QBR. I wrote the original SOP for shipping books, which quickly became irrelevant and was ignored. So I had to teach the person myself, which was time consuming and never retained. So I would teach again. Then, when a new intern replaced the old one, all the knowledge went out the door and I had to train again.

  I then went to the capture process I outlined above, and it was like magic. I just used a screen and video recording software package to capture the process on the PC of how to take an order and get it ready to ship. I took out my handy iPhone and filmed myself packing an order and explaining details on how to pack. That video and PC recording were all it took. I haven’t shipped a book since. The team does it. When the next person starts the process, they review the video. Amazon changes its shipping process pretty regularly, so when the process needs to be updated, whoever is currently doing the process records a new video. And since the person making the new video (teaching) is the best student, they both reinforce the process in their own mind and have a training video ready for the next person.

  We did the same for invoicing and paying bills. Video done. Recording done. The work gets done to the standard. And invoices go out.

  Once the systems are delegated, figure out your measurable for it and to whom it needs to be reported. For example, I want to know that invoices are going out and money is coming in. The metric is simple: what new projects have come in and what do the accounts receivable look like. After a five-minute review, I know whether the system is humming along or if there is an issue that needs to be resolved. I’m not trying to seem too manic about efficiency, but I do want to drive the point home: I have the report taped to the left of my computer monitor once a week. When I come back to the office from speaking tours, I see the report instantly (without even needing to turn my computer on). If I have been away for three weeks, then there are three new reports. Simple. Fast.

  The key is to always have one person accountable to the outcome. Make that point abundantly clear. That way, you know who to talk to when there are problems in need of a solution. On the wall in my home office, I have a quote from one of my heroes, George Washington, in which he addresses the importance of singular accountability. “My observation is that whenever one person is found adequate to the discharge of a duty, it is worse executed by two persons, and scarcely done at all if three or more are employed therein.” If a founding father of the free world felt this was of critical importance, you and I should consider the same.

  As you move into the Designing phase, always look to simplify processes to get the same (or better) results than in the past, with less effort.

  While on a speaking tour in Australia, I had dinner with Craig Minter at the Potting Shed in Sydney. Craig is an efficiency consultant who goes into businesses and looks for obvious opportunities for the business owner to create organizational efficiency. After chatting over a beer about everything from tinnitus to long distance running to optimal footwear, Craig explained how he works.

  “You often can make the biggest strides in streamlining a business through effective delegation. That’s why the first thing I look for is where the owner may not be delegating decisions. Then, I determine the decisions they must make for their business to run like clockwork, and where those decisions are distractions,” Craig explained.

  According to Craig, the owner is usually doing something with the QBR (though he doesn’t use this term) or other important tasks, and then they get distracted with decisions that take them off their game. If decisions are being pushed up the organization, distractions are happening and time piles (idle or waiting time) appear. And if a time pile appears, Craig looks to change the process so that decisions happen faster and with less distraction. He usually can.

  Craig went on to tell me what he calls his “traffic light” story, about Debbie Stokes and her curtain manufacturing company, R&D Curtains. “Debbie was spending two hours a day making decisions. Every time a job was done, the leader of the work crew would come knock on Debbie’s door and ask what they should do next. She would stop what she was doing, go to the floor, and evaluate the work. It only took her a few minutes to figure out what the next job was, but then another fifteen minutes or so to get back to the project she had been working on before the interruption. Then, the next knock would come.”

  Debbie hired Craig, who implemented a system where they put a red, yellow, or green tag on each job order. Now, with this “traffic light” system, Debbie’s crew knows which job to work on next, and they don’t knock on her door to ask her for guidance. She spends about ten minutes a day sorting all of the jobs for the next day, adding red, yellow, or green tags. Red signifies something urgent and needs to be done next, green is a project that still has adequate time before it is due, and yellow is in between. The team knows the simple rule: make decisions throughout the production day that keep work in the green or back to green as soon as possible. Debbie can now spend more time making big-picture decisions and strategizing next steps for her company.

  While you may not be able to reasonably capture every task and delegate it, with a simple solution like Craig’s “traffic light” system, you can find ways to trim down the work for the individual serving the QBR and transfer the rest out to the team.

  FREEDOM LEADS TO MASTERY (OR THE 30,000-FOOT VIEW)

  Earlier in the book I shared my friend Scott Oldford’s insights about the delegation mind-set. Scott sells educational products, and using his delegation process, he has freed himself from doing any task in his business, including the QBR. He now spends his time looking at his company from the 30,000-foot view, which allowed him to achieve something most entrepreneurs never do: mastery.

  Scott and I met at a Mastermind Intensive where I picked his brain, and he was so kind as to reveal exactly how he freed himself from the QBR. This is what I learned:

  Scott first explained the mind-set of delegation, which is worth going over again. He explained that every entrepreneur and business leader knows they need to delegate, just like you know you need to do it. But the mistake is that most people believe delegation is a 10 percent you/80 percent them/10 percent you quotient. You devise what your team needs to do and task it to them (that’s the first 10 percent). Then, they do 80 percent of the work, and the remaining 10 percent is still you making decisions and measuring results. Scott explained how this is just a trap. Either you have none of it or you have all of it. We need to get to none.

  The process of delegating is not a magical switch of handing something off to someone else and everything is roses. Instead, Scott explained, you go through stages. The first stage is giving tasks (but you still make decisions). The second stage is giving responsibility to make decisions (but they don’t own the result they are trying to achieve). The third stage is allowing determination of the result of tasks (but they don’t own the outcome, which is the benefit it will deliver to the company). And the fourth stage is getting employees to own the outcome. This is a process of education in which you must give the tasks and responsibilities first, but then grow and guide the employee to knowing how they want to impact the company and working back from that.

 
When your employees don’t execute the task the way you want, you will, like most entrepreneurs, probably get upset and accuse the employee of falling short. But the real reason you’re dissatisfied is because you didn’t give enough detail or guidance when delegating (which is why entrepreneurs tend to revert to the Deciding phase). Most entrepreneurs, in their head, know exactly what they want, but they don’t put it into words (um, or let’s see, a video recording). Scott’s example is that we see the perfect oven in our head. It has six hundred parts. Yet all we tell the employee is, “Give me something that cooks food.” The employee comes back with a pile of sticks and two rocks to rub together. Then we get upset that “they can’t do what I want,” but that’s because we haven’t told them what we want.

  Scott’s fix to this problem is to have his employees interview him (with a recorder at their side so they don’t miss a single detail). This is a way to get freedom from the tasks. You can capture what you do for highly replicable tasks, but some things are more nebulous. Having someone interview you brings out the details. People can’t read what is in your mind, but they can get it on paper. They can proactively ask you the questions that they have or believe they will have. They can ask all the questions necessary to take your vision and make it into something doable. And by asking these questions, they alleviate that second 10 percent where they are coming back to you with questions after the fact. You are a visionary, but you may not communicate it well. So, let them interview you. Let them document it. Let them get your input the first go around, not via a back-and-forth.

 

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