You always said things would be different when you were in charge. Now you are. As your business grows, new situations arise that require new decisions. Early on, there's no real time to develop a formal process -- just handle it and go. Over time those situational decisions become the undocumented tribal knowledge that is how your company operates. Maybe you want to believe that the lack of formal systems is your company's source of responsiveness and flexibility, but realize it may have become the Achilles heel. You've felt the cold monolith of bureaucracy emanating from some organizations and promised yourself that will never happen in your company. Can a business have formal disciplined systems, yet still provide a creative environment for employees while profitably providing responsive flexibility for customers?
The reality is you have a much better chance with disciplined systems than you do without them. How can that be? Because without discipline and systems, decision-making is more chaos than repeatable or reliable. Moreover, if there is no defined way for how things get done, any idea for an improved method merely means one more option for employees to ignore when they choose to. As they say in movie disclaimers, any resemblance between chaos and profitable responsive flexibility is purely coincidental.
The entrepreneur should consider two aspects of creating, executing, and maintaining business systems that support profitable growth. The first is his own relationship with those systems and with his company's position in what Ichak Adizes calls the "Corporate Life Cycle." The second, which will be discussed in a future article, is the actual process of working with and improving disciplined business systems.
Adizes' description of the first five stages of the corporate life cycle are of particular importance here:
The Courtship stage, in which the would-be company founder focuses on ideas and possibilities, gives way to
the Infancy stage when the founder assumes risk. During this phase the long hard days worked by the founder center on generating revenues, with little focus on controls, systems or procedures. Many businesses never make it out of this phase, either because of financial failure or because the founder prefers the short-term pressures and emphasis on producing results today over generating creative ideas and pursuing long term opportunities. Businesses that reach
the subsequent Go-Go stage are led by a founder who organizes around people rather than functions and retains most of the significant decision-making himself.
The Adolescence stage comes next, marked by the birth of an operations management structure. Unfortunately, the old-timers often resent the new attempts at structure and frequently conflict interferes with serving customers. The next stage, and the desirable one, Adizes calls
the Prime stage. It is here that clarity of vision returns accompanied by the balance of flexibility and control.
It is useful to know that companies can go through stages, but it is more important to understand your role as entrepreneur in leading your company to the stage that Adizes calls Prime. Notable aspects of that stage include the role of systems, decision-making, predictability, awareness of the business environment, self-control, and flexibility. If that all sounds good but you just can't see yourself following systems, you may be keeping your company in the Adolescence stage. If you just can't let go of decision-making, you may be the reason your organization can't break out of Go-Go. But you can also lead your company to an environment of creative reliable responsive flexible customer service by supporting development and use of disciplined systems designed with that goal in mind.
So how do we solve the apparent conundrum of strict adherence to defined systems providing responsive flexibility? By looking at what keeps continuous improvement activities from devolving into chaos. Continuous improvement is a commitment to working to get better every day. It means changing things continuously, with the intent of making them better. But if we are constantly changing things, we need to find a way to control that change so that our employees (or others impacted by the change) understand the new way and follow it. If we constantly change things in an uncontrolled way, or if we constantly change things but don't really care if anyone uses the new way, then we are creating chaos and unreliable and unrepeatable results. That doesn't describe a profitable, responsive or flexible company. And it probably doesn't describe one that your customers would like very much.
Oh, and the cold monolith of Bureaucracy? It's the ninth stage of 10, right before Death. It is notable in its thick procedures manuals and innovation-choking environment. You are right to avoid it. Just as you are right to find your way through Adolescence and Go-Go.