The Power of Systems in Your Life and in Business

Looking to scale in your life or in business? Well, when it comes to scaling, the power of systems is unmatched. There’s a quote from one of the great experts in self-development that parallel’s this belief:

“Sow a thought, reap an action; sow an action, reap a habit; sow a habit, reap a character; sow a character, reap a destiny.”
~ Stephen R. Covey, The 7 Habits of Highly Effective People

Here, Mr. Covey expresses how with an intent (a thought) you can generate action. When an action becomes automated, it becomes a habit. A series of powerful habits can then be shaped into a routine and routine is nothing more than a system for self-improvement.

Using the Tools of Titans

Starting in January, I began reading a book called The Daily Stoic by Ryan Holiday and Stephen Hanselman. I’ve been reading one page a day for the last 176 days. Then, a couple of months ago, I realized it had been a while since I had listened to the Tim Ferriss Show and decided to give it a listen (after receiving several notifications—now that’s effective marketing). After feeling the same motivation I had a year ago from listening to it, I realized I really should just read his books Tools of Titans and Tribe of Mentors.

Taking the concept for The Daily Stoic, I decided to read one section a day of Tools of Titans, until completed. Then I would switch to Tribe of Mentors and do the same thing. There are roughly 140 sections in the first book. So I figured I could get through both books by the end of the year. Boy, am I glad I started.

Winners Have Systems

“Losers Have Goals, Winners Have Systems”
~ Scott Adams

Recently I came across the section about a guy named Scott Adams. Now if you don’t know who this is, then you may recognize his work on the comic strip Dilbert. In his section in Tools of Titans, he states that it’s more important to have systems than it is to have goals. With goals, there is a binary response; you either win or lose. With systems, you progress over time building transferable skills or relationships that ensure that you will inevitably succeed over time. For example, don’t think of creating a viral piece of content. Instead, focus on creating content daily. Depending on the medium, you can build speaking skills, writing skills, or artistic abilities.

Over time, the quality of your content will naturally improve resulting in the creation or finding of opportunities. This can be utilized for your personal branding or your business branding.

Business Systems

When it comes to scaling ones business, a similar process takes place. Rather than creating a habit or routine, instead you create a system. This can include Work Instructions (WIs), Standard Operating Procedures (SOPs), and other guidelines in which to follow within your business. In The E-Myth Revisited, by Michael E. Gerber, he discusses what’s known as the “Franchise Prototype.” The concept is to think of your business as the product, rather than the product or service you provide. In doing so you can focus on improving your business as if you were going to franchise it. This applies to every type of business regardless if you ever plan to franchise it or not.

Working On Your Business, Not In Your Business

Working on your business, rather than in your business allows you to create a unique and consistent experience for your employees, vendors, clients, and customers. Consistency creates order in a world filled with chaos and is one of the most comforting traits a business can have for its people. By providing a consistent experience for people who interact with your business, you begin to create expectations. When these expectations are consistently met rather than changing with every interaction, you will build customer loyalty.

The Power of Systems

Now, the results are more powerful than you can imagine. In the U.S., more than 80% of businesses will fail within the first five years. However, Business Format Franchises (e.g., McDonald’s, Ace Hardware, etc.) have a staggering success rate of over 75% in the first five years. This shows the power of systems when implemented properly into your business. Just like habits and routines, you can strengthen and improve these systems. Hence the name, Franchise Prototype.

Building Your Systems—Where to Go Next

So now that you understand the power of systems (and The Power of Habits 😉), what can you do to take advantage of them? My recommendation would be to follow the Business Development Process outlined in The E-Myth Revisited. If you don’t have the time to read the book yourself then I’ll try and simplify it here for you.

Going Deep

First, decide what it is that you want out of life. Now, I understand that this is requires deep thought. However, without this, the proceeding steps are difficult to accomplish. Once you decide on your primary aim in life, you can see where your business can help in this aim. This is the “strategic objective” and is how you remain motivated when working on your business. Now that the deeper questions have been answered, let’s dive into the business itself.

Business Strategies

The first step is to define your organizational hierarchy. This is important because without a proper hierarchy, there is no way to ensure accountability within your business. Next, is to define your management strategy. This will shape how you manage your staff. However, this is not a management tool rather it is a marketing tool. By having a proper management strategy, you can increase consistency throughout your organization and improve the customer experience.

Now that you have have your higher ups positioned to win, it’s time to set your people up for success. Your people strategy should focus on making the desire to do the work greater than the desire to not do so. This is done through the process of gamification. Creating a structure in which people can improve—by working in your systems—you create a game. It’s important that this game can’t be won, however employees should be able to improve themselves through reaching objective standards.

Marketing Strategy

Now that we’ve worked on your people, it’s time to work on your marketing. Here, the objective is to define your buyer’s persona. This is developed through both the demographics and psychographics of your ideal customer. This is important as it will describe who your customers are as well as what they desire. People buy on emotions and later justify through logic. So the goal is to understand the product your selling, and I don’t mean the commodity or service.

For example, if you’re selling ice cream, you are not just selling frozen cream. In reality, when you sell ice cream your really selling happiness. Maybe your ice cream stand has unique has some crazy concoctions. In this case, maybe you’re selling an experience. The point is, you want to discover why your customer buys and focus your marketing efforts around that. Don’t push the features, but rather the benefits.

The Systems

Now that you have your entire business laid out, the final goal is systematization. For every set of actions, ideas, information, or things in your business, a system can be created. This can apply to: how you greet your customers, to application of packaging labels; from upper most management, down to the settings on your printers. This is the key to a successful business and the entire concept of the Franchise Prototype. This part can is the most time consuming (in my opinion) yet the most powerful action you can take in ensuring the health and longevity of your business.

As mentioned before, this is where WIs, SOPs, and Operation Manuals come into play. By having clear instructions on how to handle every part of your business, you can truly create a business that can run without you. As I am working on my business, I have begun implementing the process of defining systems within my structure I have laid out. The few systems I have generated have already had a tremendous effect on how I interact with my clients and will define how future employees will engage with them as well.

So now that you know the power of systems and the steps to take in order to begin defining them, what are your thoughts? Does your organization—whether a business owner or employed—have properly set up systems? Are there ways you can either generate systems or improve the ones that are already in place? Share your thoughts in the comments below. I look forward to seeing what you think =)

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