Business Operating Systems: The Key to Long-term Growth and Sustainability

Like Culture, every company has an operating system. It is either developed and managed by the leadership team or it is a smattering of random processes that can be altered with the winds of employee change.

Whether it’s a 10-person small business or a 1,000-person company preparing to take that next step, an agreed upon and consistently implemented operating system must be in place and consistently executed by all members of the organization for any business to achieve its long-term vision.

It's no accident that larger organizations thrive while many smaller ones do not. This is because the most successful companies implemented a business operating system early on in their development. They understood the importance of having clearly defined roles, processes, and systems throughout their entire organization. They learned early on that they needed standardization of workflow processes for them to achieve the long-term goals of the company. Even if it’s a small team of five, everyone needs to know who is responsible for what and the system everyone will be responsible for operating within. A business operating system eliminates guess work, forces accountability, and creates a culture of execution.

Most businesses also find, usually by suffering through the process of trial and error, that a consistently applied and clearly understood “way” of doing things results in a more efficient and effective company. Having a business operating system can also go a long way toward improving morale, managing the expense rollercoaster, and increasing revenue. All of which result from everyone understanding the vision and the “way” the company works together to achieve that vision.

Business operating systems, whether it’s a predeveloped one such as EOS or not, help a business organize its operational processes into systems that are aligned and understood by all. It also influences decision making through the shared understanding of the organization’s core values, short term targets, near-term objectives, and long-term goals. A business operating system helps everyone understand their role within the organization and offers a tried-and-true way for achieving key initiatives.

By implementing a proven operating system early in the lifecycle of a company, entrepreneurs and leaders of larger organizations can avoid many of the pitfalls that most businesses experience. One of the most common being entrepreneur burnout from trying to do it all and be all things to everyone. This can also be true for a maturing business as much as it is true for a startup. As a business grows, people take on more and more and try to fit as many things on their plate as possible. They eventually find themselves doing more, but being less efficient, less effective, and getting frustrated because nothing receives the attention it deserves. As a result, few things are developed to the level necessary to ensure excellence.

If you are an entrepreneur, you can probably relate to this story. When you were doing things by yourself everyone was happy, and you were excited about the future. Now that you’ve grown and business is out pacing the time you have available, you need people with the same commitment and understanding of the vision to continue to meet customer expectations. So, you hire people. However, you quickly realize that employees can't execute the “way” you do. You begin to see more and more issues arise. Your business begins to suffer. Issues linger and rarely get resolved. You try your best to address them, but you don’t have the time to do it all and think strategically about the business. Therefore, you put your head down and try to extinguish all the fires burning in front of you. The problem is, as soon as you put one fire out, four or five more that have been smoldering for weeks ignite. What was once exciting begins to feel like a wildfire out of control.

As the example above indicates, as things start to become more and more complex, the need for great people, well defined processes, and an execution oriented cultural becomes more and more apparent. If you don't have the right people working in the right structure, it becomes harder and harder to move beyond the ceiling you eventually hit. When you were doing things by yourself, you and your customers were happy. Now, your employees can't execute the “way" of the business like you did. You'd love to have processes documented, but you never have enough time. Therefore, hope becomes a strategy, which you know is never a good plan.

This example is why every startup and mature company needs a business operating system. Such a system will provide the structure, accountability, and the freedom that is needed to effectively run the business.

A solid system for operating a business should include the following.

• Clearly identified Vision

• Purpose

• Core Values

• Target Market

• Area of Focus

• Organizational Chart with Clear Accountabilities

• Strategic Planning (Quarterly, Annual, and Three-year Goals)

• Systems Identification (Finance and Accounting, Operations, Sales and Marketing, Human Resources, etc)

• Core Processes for Each of the Various Systems

• People

• Accountability

Entrepreneurs and companies with an operating system are better able to hire and retain people who connect with the vision, have a desire to the job the way it needs to be done, and are capable of meeting the expectations placed in front of them. As a result, organizational alignment becomes the rule, not the exception. It is then that business owners start to see the fruits of their labor. This is when they begin to see their team rowing together. This is also when they find themselves with more time to look ahead and steer the boat in the right direction. It is then that they begin to see the business become self-sustaining. It is also then that the entrepreneur begins to realize a life of their own.

Randy Stepp is a Principal with Renaissance Leadership Group. RLG is a full-service business and franchise development company whose purpose is to help business owners realize their dreams of independence and freedom.

Visit Renaissance Leadership Group at www.renaissanceleadershipgroup.com to learn more about business development