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Seven Signs You Need A Business Operating System

Posted by John Boudreau on Dec 28, 2017 7:44:37 PM

We’ve all heard of a computer operating system or “OS”.

The computer OS manages the hardware and software resources of the computer and provides a common language by which each component communicates with each other.

The operating system controls all the processes which are running in the background on the computer. Maybe you've experienced this, but some processes can drain computer resources, slowing the computer down and making it much less efficient.

No new software or component can be installed unless it is compatible with the OS.

An operating system can get corrupted, causing the computer to slow down or even worse, crashes. To fix the problem, the only solution is to reboot and install a new OS.

There are a lot of parallels between a computer and your business.

Your Business Has An Operating System Too...

Just like a computer, every business has an operating system, called a "business operating system".

This is not a new concept. Authors like Brad Feld and Matt Blumberg have written about a business operating system. 

So, what is a business operating system?

Let's look at the terms individually. 

A system is a "set of principles or procedures according to which something is done; an organized scheme or method". Notice how the system defines how something is done. This system controls the operating of the business. 

A business operating system contains a number of specific processes (HR, hiring, sales, production, finance, communication etc) which "run" in the background and require resources in order to operate.

The business operating system allows the business to operate in the most efficient was as possible. The goal, to generate superior results. 

As you consider your business, can you point to a business operating system?

In order to operate with maximum efficiency, your business must have a common language which drives clarity, alignment and superior execution. This common language is your business operating system (BOS).

What Are The Symptoms Of A Poor Business Operating System?

It turns out there are a number of symptoms that point to a lack of a business operating system or a malfunctioning one. Here are the symptoms. Do any of these sound familiar?

  1. The business feels chaotic and out of control
  2. Increased sales is not resulting in increased profit, only more chaos
  3. There is a high rate of employee churn. As soon as you hire someone, another person leaves. Employee retention and hiring is a problem.
  4. There is poor accountability. Employees are not 100% clear on their key responsibilities. This results in dropped balls, frustrated customers and stressed out employees.
  5. Meetings feel like a waste of time and ineffective or seen as complaint sessions where nothing ever really gets accomplished or solved
  6. The business is in constant fire-fighting mode, moving from one fire to the next.
  7. There is no budget which is used to plan spending. You do not have the information to make decisions. Cash flow is a problem.

In order to deal with all these issues, you need the right business operating system in place.

The right business operating system contains a group of processes that go from the 50,000 ft level of the business to the "boots on the ground" activities of each employee. The right business operating system drives clarity and results.

To solve the seven problems mentioned above, here are the processes your business operating system should contain. We call it the Envisionable Business Operating System. These process fall into two major categories:

(1) Processes which allow you to create a plan

(2) Processes which help you track the plan

A Process For Clarifying And Communicating Your Vision

Under the category of creating a plan, you need a process for clarifying & communicating your vision (core values, core purpose), so everyone knows where the business is headed long-term, why it’s going there and how the team will behave along the way.

Studies have shown that only about 14% of all employees understand their company’s strategy. As leaders,  we need to work hard to help our teams understand where we are taking our companies.

In addition to helping our teams know where we are headed, we need to bring clarity around how we will behave - our core values. I’ve seen a majority of problems within companies originate from a lack of core value clarity.

A Process For Determining The Right Goals For The Business

Once you have clarity regarding the vision of the business, you need to drive further clarity and alignment by defining the goals of the business. Goals are what drives the business closer to its long term vision.

Each goal should have an owner and a way to determine if it’s been reached (a KPI or key performance indicator).

For help in driving clarity here, we've created a simple guide here. 

A Process For Making Sure The Business Is Aligned Around Your Vision And Goals

Just coming up with a vision and goals is not enough. Tracking the plan is just as important. As I mentioned before, you need a system. A system is not a one-time event. If you do not do this, your business will drift off track. Very much like a computer OS prevents a user from uploading new programs, your business operating systems keeps your business from moving in the wrong direction. 

You must work to keep the team aligned and on track to achieve the vision and goals. To do this you must have the proper meeting rhythm with specific agendas and meeting dates. These meetings remind the team what is important and gives the business an opportunity to make adjustments and stay on track. 

To help you with this process, we've created small business meeting agendas which you can download here.

A Process Which Links The Company Goals To The Day To Day Activities Of Each Employee

Up to this point, we've talked about higher level goals and vision. This plan needs to be broken down into specific initiatives and linked to each employee.

Each employee must understand the specific role they play in achieving the goals and vision. This is process drives accountability by clarifying each team member’s key responsibilities and how their success is measured (KPIs). This is the critical connection between a plan and the execution of the plan. 

How do you do this? We've written about this process here, but ultimately each company goal needs to be shared with each employee. You need to activate each employees creativity and ask them how they can help. This process drives greater engagement and results. 

A Process For Solving Problems (Fires)

Along with keeping the business on track is a businesses problem solving process. No business is static. Since every business encounters problems, each business needs a process for keeping the business out of fire-fighting mode by identifying and solving business “fires” in a systematic way.

Without this process, a business can quickly become overwhelmed with all the problems and not make progress on its goals.

If you're struggling with fire-fighting, I've written about it here

A Process For Your Processes

Each business needs a way to define each the core processes which deliver value to the customers so they can be executed over and over again flawlessly. We’ve all experienced a business which delivers its product in a inconsistent way. The result is unhappy customers.

A Process For Developing A Budget And Generating Solid Financials On A Monthly Basis

So many businesses truly "fly-blind" either by (1) not having a budget (2) not updating that budget on a monthly basis with actuals so they can make adjustments.

I've written about budgeting here, but having a budget and solid financials is a critical part of your business operating system. I can tell you with 100% confidence that not having a budget is inhibiting you from experiencing superior performance. There are many ways to make this happen and we can help. There are also several outsourced CFO services which can help drive results. 

A Process (And Software) For Easily Updating And Tracking The Right Key Performance Indicators (KPIs) Of The Business

Lastly, every business needs a process (and software) for easily tracking the key performance metrics (KPIs) of the business which measure the success of the business in an unambiguous way.

As you can see these processes are all interrelated and necessary for success.

For example, if you were clear about your vision, but did not define your goals, you will not get any closer to your vision over time and your people will become frustrated and disengaged.

If you goals are clearly defined, but each member of the team does not have clear roles and responsibilities, the team will end up wasting time working on things that don’t get you any closer to achieving the company goals.

I could go through each of these, but they are ALL necessary for the successful operation of any business.

In the next several blog posts, I am going to detail HOW Envisionable installs this business operating system within a business and how we've helped clients achieve a 20+% increase in revenue and 150+% increase in profit.

If you'd like to chat, please feel free to contact us below. We'd love to help!

I Want Learn More About The Envisionable Operating System

 

Topics: business operating system, company processes