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| Home - Industry Article - Sep 03 Issue |
Systems for Growth
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So what are the systems required for a successful business organism? Of course, that depends upon what specific objective is being sought. Were it possible, space would not allow a full description. But for any objective I believe there are five levels that, when taken together, represent a sort of "whole-product" for systems and automation. Some are more important at earlier stages of corporate development, while others are more important at later stages:
The Idea System. We all have skills and capabilities. When we become employed we take our skills, solve problems and see the results. Based on this experience we then create our own mental-models of what works and what doesn’t. As a result, the next time we see something similar we naturally want to do what worked before. The problem is that in high-technology there are at least five different stages of market development, five different business models, and five different kinds of competitive environments. Very few people have actual experience in all of these environments. So an accepted "Idea System" can become a standard set of mental models that allow managers to use common terminology, lexicon, and mental frameworks. It is a standard set of models about "how things work." While such a system is historically not required by many companies, I believe it is at the root of why many managers can communicate directly with one another but end-up hearing entirely different things. For example: two account executives in your company are independently asked to deliver their strategy for penetrating a certain major account. Would they cover the same topics? What would their definition of "strategy" be based upon? Now what if you wanted 40 such plans to review?
The Information System. An Information System is the framework for how ideas and plans are to be presented and communicated. For example, if you are a CEO think of your board of directors meetings. In all likelihood, some of your directors have made specific requests about how the budget or financial review should be presented. They may have requested that some items be presented as an expense vs. capitalized. They might have requested that all budget items be shown as a percentage of sales. Imagine if each director was on four boards and saw financials presented entirely inconsistently at each meeting, with no accounting rules. It would be virtually impossible to quickly draw conclusions. Or, imagine if you are CEO and have asked two different divisional managers or product managers to present their business plans for approval. Manager A comes in and presents a detailed business plan over the course of an hour, delivers a 30 page written document, a snazzy Powerpoint presentation and lots of technical details. Manager B comes in with one 8 ½ x 11 page with bullets and just talks intelligently for 30 minutes. Regardless of which style you prefer the lack of a common information system makes decision-making difficult because you can’t be sure whether all the facts are there. As an organization scales, a standard set of expectations becomes important.
The Procedural System. For key business objectives, this is the standard work-flow process by which events must occur to get things done. A classic example of a procedural system that starts to be hugely important as a company scales or increases product complexity is its product management process that defines how a company will propose, define, produce, launch and track success of new products. As a company grows it simply can not scale unless the organization learns how to accomplish the process of invention-to-market-success without all decisions having to bubble up to senior executives. In a sales team it is the notion of a standard selling cycle. To be sure, each customer has its differences. But for a sales team to effectively scale and improve it needs to have a common view of just how the sales process is supposed to work in the first place.
The Control System. Standardizing processes allows the organization to get things done without the day-to-day detailed involvement of senior executives. The process defines what decisions are being made and by whom. But a Control System makes sure that the right executives are involved at key points along the way, and that the process does not just run-along left unchecked against resource realities. A standardized procedural system, without a control system to measure results, produces surprises. If you are being regularly surprised is it because of a process failure, or in-adequate controls?
The Automation System. Only once the other systems have been defined, whether rigorously or loosely, can real automation start to occur. Inadequate controls make it impossible to track automation. Inadequate processes leave no way to implement controls. A process that has an incomplete information system at its root will in the best case be clumsy to implement, and in the worst-case be gamed. And for the entire system to work, an effective idea system must be at the root. If not, we all run the risk of becoming highly effective at automating and systematizing the wrong or inconsistent approaches. That, of course, is why hiring the right people is so important. But that’s another article.
Mike Tanner is a Managing Director at the Chasm Group, where he provides advisory and consulting services in the areas of new venture development, market development strategy, operational planning, portfolio investment strategy and market positioning. Mike holds board seats for Apexion and Savi Technology, and sits on the advisory boards of Entivity and Unicru. He can be reached for comment at: mtanner@chasmgroup.com
 
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