Systemisation – practical or conceptual?

Friday, February 26th, 2016

Over time, as I have worked with business owners and entrepreneurs to systemise their businesses, my understanding of this process has changed.

Originally I thought that what I was doing was helping my clients to make some changes in the way they think and behave. Whilst these might range from helping them to understand how their leadership style motivates or demotivates to how to develop effective strategy the interventions are all practical – and of course this is still a critical part of what I do.

Increasingly, however, I have come to recognise systemisation as the process of helping business owners develop a conceptual model of their business that allows them to understand and reason about it – and so steer it towards sustainable success. By a conceptual model I mean an inter-connected system of cause and effect, flows and balances, levers and dials that represents the whole organisation:

The reason that it has taken so long for this to dawn on me was that I assumed all my clients already thought about their business that way. To some extent, they do. I am sure that conversations along the following lines take place all the time in SMEs:

“If we invest to improve delivery times then customer satisfaction rises and attrition drops, as does marketing and sales effectiveness, so revenue grows”.

“The reason why profit per machine is falling is that centralised operation reduces volume – however we are selling higher-value machines”.

However, these conversations and the resulting actions are generally isolated in context and the learning is what Agyris called “single loop” which is to say no wider conclusions or learning are drawn from them once the particular action has been taken. They do not become incorporated into the way the business is managed in any repeatable or sustainable way.

One of the prime reasons why this is the case is that SMEs are, generally, very poor at managing and interpreting data. Data is the blood that flows through the veins of a systemised business. Both of the above observations only become actionable and manageable when the right data is available.

A second reason is that SMEs do not have the management framework to present and understand the data. Some (but not many) will invest in off-the-shelf dashboard systems but if the task of locating, translating and fixing the raw data does not demoralise them then the disconnect between what they see on their dashboard dials and what they know actually makes the business tick will.

It is perhaps not surprising that plonking a technical solution on top of a business with no clear conceptual model does not help much. Developing that conceptual model takes many, many months of discussion and tweaks to process, systems and reports, and learning through dialogue in the management review. This is best captured in a simple manual KPI spreadsheet that can evolve as the business evolves.

For more on this see the systemisation plan plan download on this website.

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