I read a post from Dylan Hassinger on a private entrepreneurship forum I’m a member of that compared business to software at some point last year. That analogy has stuck with me ever sense.
I don’t have a software background, though so I like to envision businesses as manufacturing machines.
You put something in one end and then it goes through all these defined processes of scaling in business and then it comes out the other end as profit (or not). Depending on how those processes work, you get something different out the backend.
The manufacturing machine analogy makes sense to me because it’s easier to see why you should always be working on the business, not in the business. When you’re working in the business, you’re just one of the gears – not a great way to create leverage.
What you want to be is the mechanic or the tinkerer.
You’re standing up above the machine just trying out new pieces. Replacing one cog with another one to see if the end product comes out better, adding on new cogs, getting rid of cogs that don’t seem to be helping very much anymore.
This is interesting on a theoretical level, but what does it really look like?
Create–>Define –> Automate/Outsource.
The highest leverage is to the left of that scale at create and define. That’s where you want to figure out how to spend the most time, doing the tinkering.
Once you do the tinkering and figure out that what comes out is better than before the tinkering, then you define it and at that point, it doesn’t make much sense for you to keep doing it. You either hire for it, automate it, or outsource it.
This is increasingly what our company looks like, and I suspect what more and more companies will look like in an entrepreneurial Fourth Economy.
Our team is composed mainly of tinkerers and mechanics playing with a big machine.
Work The System: How To Write A Standard Operating Procedure
That machine is our implementation of Sam Carpenter’s Work The System.
We run off of a Standard Operating Document containing our mission, principles and the processes and procedures used to cary those principles out and run the business
Dan explains (in text and video) how and why we set-up our system in a Framework for Hiring and Managing Employees a little less than a year ago:
- Increased precision. Our conversations and the actions we take are more elegant. Why are we doing this? When are we doing this? What precisely do we do? How much does it cost us?
- Increased modularity. It’s much easier to outsource elements of our business, hire new team members and train them, or to leverage ourselves out of lower value tasks.
- Added legacy to our conversations. Every important decision, principle, and process in our business is recorded on our live document so our conversations build out assets for our business. We see business failures as failures of process, and that give us an opportunity to address those problems in a positive way.
- Reduced email volume and removes some of the need for project management software.
Why The New Structure?
- Increased Transparency – The new structure and standards we implemented make it easier for people from different departments to go into, find, and understand other department’s documentation and SOPs (Standard Operating Procedures), so you waste less time digging around trying to find what you’re looking for. That means improved efficiency for existing employees and contractors and a higher level of flexibility. Someone can more easily pick up a process and run with it.
- Improved Hiring/Onboarding – It also makes it easier for people joining the company as we continue to grow to be able to understand how our SOD (Standard Operating Document) and the company works which means less teaching in the early stages and more getting shit done.
The New Structure – Nuts and Bolts
A Template for Organizing and Using the Standard Operating Folder
(ATTN: That’s the most valuable thing in this whole post which is why I’m using obnoxious colors to get your attention)
What Changed:
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The Department SOD – This is a Text Document organize the SOPs and Important Documents/Dashboards of your department
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The Department SOP Folder – This is where all the SOPs for your deparment are shared
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The Department Important Documents/Dashboards Folder – This is where documents, files or dashboards (frequently spreadsheets) that are essential documents to the company, but not defined processes
- Drafts/Experimental Folder – This is a catch all folder for anything that doesn’t fit into the above categories goes. This is a catchall category for documents that aren’t SOPs or essential to company functioning. It’s a good place to store ideas and drafts of what might eventually become SOPs. Use this folder to keep from cluttering up the other folders so the essential documents remain easy to find
All documents should start with Why, Where, When, and Who. These can each be very brief, from a few words to a few sentences that help give context to someone (especially new employees or contractors) looking at the document for the first time understand the purposes of the document.
Document Templates. Document templates are just examples of what the different kinds of documents should look like once they’re ready to be published (that is they pass the Off the Street Test – That is someone should be able to come off the street (with basic qualifications for their position) and be able to execute on it. We have 5 different types of documents in our system:
What This Actually Looks Like
If you just created “The Valet Spot Newsletter SOP”, that will start out in the Marketing Experimental/Drafts folder.
Initially, it might just be a few sentences about how you put together the Newsletter for the time. After you’d done the process a few times it would be built out to be more robust and accurate until it passed the Off the Street Test – someone should be able to come off the street (with basic qualifications for their position) and be able to execute on it.
When the document was ready to be published, you would first make sure it matched the formatting guidelines for how to write a Standard Operating Procedure (SOP) Template. Then you would move the file into the SOP Folder of the Marketing SOF. You would then link to that document from the Email SOPs subsection of the Marketing SOD.
How to Implement (Templates)
If you don’t already have a SOD, head over to Tropical MBA, watch the video there, and copy the template at the bottom of the post.
If you already have a SOD – Read through this document on how to organize it.
Re-Organize Existing SOPs/Important Documents. One of the major benefits of our new system is the increased transparency and visibility. This means existing documents and SOPs need to be re-organized into the appropriate folders os they’re easy to find.
If you are interested in using these documents for your own system, you can download them all by entering your email below.