Four Processes of a Successful Organization - Tarkio Technology Institute

Tarkio Technology Institute FOUR PROCESSES OF A SUCCESSFUL ORGANIZATION Instructor: FOUR PROCESSES Quantify o Know the numbers, do the research, understand your business. Innovate o Innovation is simply changing the methods or ways you are doing business to produce a...

Tarkio Technology Institute FOUR PROCESSES OF A SUCCESSFUL ORGANIZATION Instructor: FOUR PROCESSES Quantify o Know the numbers, do the research, understand your business. Innovate o Innovation is simply changing the methods or ways you are doing business to produce a desired/different result. FOUR PROCESSES Standardize o Standardization is the elimination of discretion or choice Add value o Added value is the introduction of anything to the marketplace which is pleasant and unexpected.  Tarkio Technology Institute UNDERSTANDING SYSTEMS “A BUSINESS IS A REPEATABLE PROCESS THAT MAKES MONEY EVERYTHING ELSE IS A HOBBY.” Instructor: WHAT IS A SYSTEM sys·tem /ˈsistəm/ noun 1. an organized and coordinated method or procedure. 2. An interconnected set of elements that is organized to achieve something. The sum total of all systems in any given business make up its operations. Well designed and executed systems are crucial for efficient operations. Where does it fit in the Business Model? BUSINESS MODEL FRAMEWORK Organization Marketing Operations Key Partners Key Value Customer Customer Activities Proposition Relationships Segments Key Channels Resources Cost Structure Revenue Streams IT Financial Legal  WHAT IS A SYSTEM Organizational Systems Good systems are the technology, procedures and steps used to monitor, distribute, organize and manage all of the organization’s resources… toward the organizations strategic goal! Effective systems will efficiently apply and leverage a business’s core competencies. An organization’s core competencies are those things the business does well which give the company its identity and reputation in the marketplace. DOES THE SYSTEM WORK? To assess an organization’s systems, ask the following questions; 1. Do their systems allow the flow of information across departmental boundaries to enhance performance and effective decision-making? 2. Does the technology used in the system allow for the easy sharing of information between departments and individuals? 3. Does management routinely review and up-date systems to meet the changing demands and needs of the organization? DOES THE SYSTEM SUPPORT… An organization’s systems should be aligned with its strategic plan. Properly aligned systems have two main purposes; 1. The connectivity, coordination and integration of the organization’s stated objectives toward the strategy. 2. It should provide accurate measurement of the organization’s milestones along the pathway to achieving the Strategic Plan. A new strategy will likely require some new systems! PURPOSE OF A SYSTEM The purpose of a system is to standardize processes that produce a desired result. The desired result should be positive or add value in some way otherwise either the system is bad, or the process is unnecessary. Every step in a system should have a purpose! SUCCESS USING SYSTEMS Creating and improving systems is the heart of successful business practice. Successful systems are born from successful processes. Successful systems evolve from simple, manual processes. Great systems start on paper… or on a tennis court with chalk! Stick with the KISS principle throughout! GALL’S LAW A complex system that works is invariably found to have evolved from a simple system(s) that worked. The inverse is also true. A complex system made from scratch never works and cannot be made to work. Ex: Building a car from a block of metal. A Planview study found that 44% of time wasted in the workplace is due to inefficient systems. START SIMPLE Starting with a complex system fails because uncertainty ensures you will never be able to foresee crucial interdependencies and variables in advance. You don’t know what you don’t know, so start with what you know you know. PEOPLE VS. SYSTEMS Some problems require people to fill a role, some just require a system. Throwing a person at every problem will put you out of business. Healthy business operations are based on quality people working effective systems. ANATOMY OF A SYSTEM Good system design starts with understanding a framework: Boundaries: Where does the system begin and end; where does it live (environment) Steps/Flow: What steps and tasks are involved. Resources: What information, costs, or materials are necessary. ANATOMY OF A SYSTEM Here are the qualities of a system. A system addresses a specific problem or business issue. A system will have boundaries; where it begins and ends(environment). A system will have steps or flows within itself which fulfil “tasks” A system is automatic once implemented. A system does not require intensive thought or effort to run. A system will use resources; information, costs, materials, etc. SYSTEM CONSTRAINTS Every system has constraints. It is the limiting factor(s) that prevent the system from reaching maximum efficiency or output. Ex: Auto assembly line: Parts, paint, people… speed, electricity… “Once you eliminate your number one problem, number two gets a promotion.” SYSTEMS CHANGE All systems change. There is no such thing as a system in stasis. Plans that do not take change into account are of limited value. A system unable to operate beyond its current design is a system headed for extinction. Without change your business will go with it. GETTING STARTED Any methods, procedures, or tasks done to produce a product, deliver a service, or add value for your customers should be systemized. The core areas of your business should be your starting point. An organization’s core competencies are those things the business does well which give the company its identity and reputation in the marketplace. THE SYSTEMS TEST If a system does not ultimately support the mission of your business in some valuable way it should be scrapped. Ask yourself: Why do we do this? If your answer doesn’t tie to your mission, stop doing it My fishing system: Only keep fish 8 – 10” long!  “The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.” - Henry Ford  Tarkio Technology Institute DEVELOPING SYSTEMS “IN GOD WE TRUST....ALL OTHERS BRING DATA.” Instructor: TWO WAYS TO THINK 1. Systems way of Thinking: A way of making sense of the complexity of the world by looking at it in terms of wholes and relationships rather than splitting it down into its parts. It is used as a way of exploring and developing effective action in complex contexts, enabling systems change. 2. Reductionist way: Is the idea that a certain field of study or even something more specific (large and complex) can be broken down into smaller parts that can thus be used to describe the idea as a whole again. THE BLIND MEN Beyond Ghor, there was a city with all its people blind. A king with his entourage arrived nearby; he brought his army and camped in the desert. He had a mighty elephant, which he used to increase the people’s awe. The populace became anxious to see the elephant, and some of the blind ran like fools to find it, groping sightlessly, trying to gather information by touching some part of it. Each thought he knew something, because he could feel a part… One touched an ear, “it is a large, rough, wide thing… like a rug!” Another felt the trunk, “it is like a straight hollow pipe!” The one who felt the feet and legs said, “it is mighty and firm, like a pillar!” MORE THAN THE SUM OF ITS PARTS A system isn’t just any old collection of things. It is an interconnected set of elements that is coherently organized in a way that achieves something. Elements (parts or steps) Interconnects (how organized) Function or Purpose I have yet to see any problem, however complicated, when looked at in the right way, did not become still more complicated. ~Poul Anderson SYSTEM STRUCTURE We don’t’ live in a static world… but a dynamic one! Input/Inflow Stock Status can drive or control inputs Output/Outflow Status can drive or control outputs Metric Feedback Loop Tells a Status: Low/Empty SYSTEM STRUCTURE What if we need some level of “sustainment”… …think in terms of a “throttle”! Input/Inflow Stock High Normal Low Output/Outflow Metric Feedback Loop Inputs and output is controlled to sustain a status! WHAT CAN WE SYSTEMATIZE? Identify issues that happen regularly. Invoicing, Salary tracking and Pay slips, etc. Identify issues that take a lot of time. Bookkeeping, Tax prep Identify issues that frustrate you. Resupply, Daily commute Identify issues that are outside of your core competency. Cleaning, Restocking, Facility Maintenance SYSTEM CREATION STEPS 1. Map out your system; Key inputs, resources, and outputs. 2. Capture the steps (rough documentation) 3. Flowchart with detailed procedures (become your SOPs) 4. Test and Improve the system (repeat 1-4 until functional) 5. Go Live. But wait… that’s too simple! …Of course it is!! SYSTEM CREATION SUPPORTING QUESTIONS We should be able to answer these with each step in the process: 1. What needs to happen or get done in this step of the process. 2. Why does it need to happen? 3. Who’s going to do it (accomplish each element in this step). 4. When is it going to be done/How long does it take (is it time driven, predecessor driven, or some other trigger)? 5. How is it going to be done (using what resources, what determines it is done, what outputs determine completion)? CONCLUSION Systems are the ultimate method of turning a struggling business into a well-oiled machine. You can systematize virtual anything in your business. Every single system has the potential to reduce your mental load, free up time, overcome hurdles, and enhance your progress. Think of your favorite system you ever had or used!  Tarkio Technology Institute TECHNOLOGY AND DATA …AND HOW TO SUPPORT YOUR BUSINESS SYSTEMS Instructor: HOW WILL YOUR BUSINESS USE TECHNOLOGY?  BMGC & TECHNOLOGY Marketing Website, email, phone calls, ads Operations Marketing Operations Project/task management, emails, HR, knowledge sharing Finance Finance Money transfer, payroll, accounting WITHIN YOUR BUSINESS GOALS TECHNOLOGY GOALS 1. CREATE AN INITIAL PLAN TO SUPPORT YOUR BUSINESS SYSTEMS THROUGH TECHNOLOGY 2. SET A FOUNDATION YOU CAN GROW FROM APPROACH Four Principles 1. Determine people and process first 2. Authentic 3. inTegrated with other systems 4. Accurate data SYSTEMS APPROACH: DATA DETERMINE PEOPLE & PROCESS FIRST PEOPLE & PROCESS FIRST Determine: Why: Value Operations Marketing Who: People (customers & staff) Value determines process What: Process How: Systems & Technology Finance PEOPLE, PROCESS, AND SYSTEM “Technology creates the most Process value when it effectively supports the people who run the processes f that bring value to your customer” Missing Lack o ion Adopt Data Success People Not Systems & Software exists to serve Effective Technology people, not people to serve the software! EXAMPLE SIMPLE PROCESS PROBLEM Tom Susan SYSTEM DEVELOPMENT THINK BACKWARD! Inputs Process Outputs Need! Form (Data) Graph (KPI) Easy to review List (Database) and see latest trends or impact! Task workflow SYSTEMS APPROACH: DATA AUTHENTIC OBJECTIVE AUTHENTIC Don’t try and use a car as a boat Use the software and system the way it was supposed to be used. Develop or purchase the system that fits the business need! Notifications inform relevant departments! PICKING THE RIGHT SOLUTION UNDERSTANDING SOFTWARE DESIGN Research the value proposition Find competitors; Compare features Look at others in the industry and their software Accounting Project Management CRM Communication/Collaboration Inventory Management Data Storage/Management Enterprise Resource Planning Know the difference between: Configuring, Customizing, and Creating SYSTEMS APPROACH: DATA inTEGRATED WITH OTHER SYSTEMS EXAMPLE CRM NEEDED Sales Marketing Tech Support Sells customer Unaware Unaware of customer has Marketing new product open service ticket campaigns Data “Silos” are Real… and Painful! CRM IMPLEMENTATION Sales Marketing Finance Sells customer product Determines Determines ROI and Inputs Data/Updates campaign updates profit Data Effectiveness forecasts Update Sales KPI’s Tech Support Update Support Requests / KPI’s Customer Develops Service Addresses Issue; Returns with Plan Campaign Feedback Collection issue Notifications inform relevant departments! SYSTEMS APPROACH: DATA ACCURACY ACCURACY GARBAGE IN… Understand (and respect) the power of data Data drives decisions (business intelligence) Power of automation (beyond spreadsheets) Migration to database supported (Costs $!) ACCURACY ORGANIZATION FIRST Understand tabular data layout Columns, Rows, Headers, Data fields Standardize Data Fields; Choices where feasible Clarify unique terminology Develop training packets as you develop REVIEW Four Principles 1. Determine people and process first 2. Authentic 3. inTegrated with other systems 4. Accurate data GROWING BUSINESS PROBLEMS Streamline Onboarding & Training Foster Customer Relationships Simplify/Standardize Project Management Internal Communication / Collaboration  Tarkio Technology Institute KEY PERFORMANCE INDICATORS “IN GOD WE TRUST....ALL OTHERS BRING DATA.” Instructor: KEY PERFORMANCE INDICATORS KPIs are measurements of the critical parts of a system. Measurements that don’t help make improvements are worthless and a waste of your time. You don’t have to pay attention to everything - just the key measurements that matter. IDENTIFYING KPI’S They are different for every business. What are your core business processes? What measurements tell you whether your core processes are operating efficiently?  GOOD KPI’S Not all of these are mandatory but it does help to establish the “Standard” that all KPIs. This will allow easy growth and accurate reporting as everyone involved understands what is intended. It’s another form of “Expectation Management!” https://onstrategyhq.com/resources/27-examples-of-key-performance-indicators/ LEAD VS LAG KPI’S Leading Indicator We often refer to these metrics as the measures that tell you how your business might/will perform in the future. They are the warning flags you use to let you know when something is going well or isn’t. Lagging Indicator Refers to past developments and effects. This reflects the past outcomes of your measure. So, it lags behind the measurement of your leading indicators. An example of a lagging indicator is “Last Quarter Profit”. It reflects your earnings for a past date. That lagging indicator may have been influenced by leading indicators like the cost of labor/materials. BALANCE Balancing Leading and Lagging Indicators If you want to make sure that you’re on track, you might have a KPI in place telling you whether you’re going to hit that increase, such as your lead pipeline. We don’t want to over- rotate on this, but as part of a holistic, agile plan, we recommend outlining 5-7 key performance indicators as part of your plan that are a mix of leading and lagging indicators when looking at monthly performance. Having a mixture of both gives you both a look-back and a look-forward as you measure the success of your plan and business health. We also recommend identifying and committing to tracking and managing the same KPIs for about APPLY PERSPECTIVE Analyzing data can be comforting for some, but data alone does not tell the full story. Apply your perspective, what you know to the business, and wisdom. “People are the center of the universe, not stuff.” WHAT DO WE ALLOW TO DRIVE US Senior executives understand that their organization’s measurement system strongly affects the behavior of managers and employees. “Forget the financial measures. Improve operational measures like cycle time and defect rates; the financial results will follow.” There must be Balance in measuring across the Whole! THE BALANCED SCORECARD By Robert S. Kaplan & David P. Norton Kaplan (accounting, Harvard) and Norton, president of Renaissance Solutions Inc., created "balanced scorecard" to assist businesses in moving from ideas to action, achieving long-term goals, and obtaining feedback about strategy. Think of the balanced scorecard as the dials and indicators in an airplane cockpit. Reliance on one instrument can be fatal!  How do we look Financial Perspective to Shareholders? Goals Measures What Must We Excel At? Customer Perspective Internal Perspective Goals Measures Goals Measures How do Customers See Innovation & Learning Us? Perspective Goals Measures Can We Continue to Improve & Create Value? CONTINUED ENGAGEMENT Continue your “thought growth” by reading: Positive Measurement White Paper By Dr. Dean Spitzer The Balanced Scorecard By Robert S. Kaplan & David P. Norton Personal Growth is Measured… by Results!  N S ? ST IO Q U E BACKUP SLIDES COMPLEX SYSTEM UNDERSTANDING This is an extension of Business Systems and is important as a business and its internal systems must fit and operate successfully within a larger “ecosystem”. This can mean your systems help your business in a “perfect world” (in a vacuum) but are too easily upset/impacted by the environment. So our business itself may be an element within a larger economic system! REMEMBER THIS SIMPLE SYSTEM What if we need some level of “sustainment”… …think in terms of a “throttle”! Input/Inflow Stock High Normal Low Output/Outflow Metric Feedback Loop Inputs and output is controlled to sustain a status! FEEDBACK MECHANISMS The presence of a feedback element doesn’t mean that it works well! Types of Feedback Loops: Stabilizing Loops (maintains a desired level; like the water tub) Balancing Loop (amplifies counter action to oppose status change) Runaway - Reinforcing Loops (like a “do loop”; Prices/Wage needs) Remember the financial “rule of 72”? $100 will become $200 in 7.2 years at 10% interest $100 will become $200 in 10.2 years at 7% interest  According to the “Competitive Exclusion” principle, if a reinforcing feedback loop rewards the winner with the means to win future competitions, the result will be the elimination of all but a few competitors.  ECONOMY SYSTEM At the heart of the economy is a Reinforcing Loop plus Balancing Loop system. Production Wear & Tear over time Equipment Money In Reinvestment Products Rate of Production BUILDING BUSINESS SYSTEMS