Do you want to grow exponentially? Stop working eighty hours a week and start building your business as a system.
Twelve years ago, I began my journey to building a fantastic company and committed to doing whatever “work” it took to be successful.
So I worked. Ten, twelve, sixteen hours a day. Seven days a week.
Even when I was at home, my mind was working. I would go to sleep obsessed and wake up only to rush back to my to-do list, overflowing with a million tasks. I was totally consumed and invested in my “work.” On paper, I worked for myself. But in reality, he worked for a lunatic who runs on a hamster wheel.
The truth is that slaving away eighty hours a week doesn’t make startups succeed. Author and Silicon Valley mentor Michael Gerber describes a more beneficial way to build a successful company.
Over the years, before my startup was acquired, I realized that I had to go from “working at a startup” to “building a company.” This approach built massive companies like IBM and FedEx, and is applicable to any niche, industry, and product.
But before I show you how it works, let’s look at why many founders (including me) get it wrong at first.
Michael Gerber writes that every founder must balance three roles: entrepreneur, manager and worker.
When we ideate business opportunities and imagine how to change the future, we are entrepreneurs. When we coordinate, plan and delegate, we are managers. But when we have to roll up our sleeves and get the job done, we put on our workman’s gloves.
The problem is that most founders (including me in the early years) spend 70% of their time as workers, but only 20% as managers and 10% as entrepreneurs. We start “working”, but we forget that our main function is to create a company.
My business card said “Founder and CEO,” but I spent all my time filing invoices, designing products, writing proposals, and having hundreds of tasks on my list. He wasn’t starting a company, but rather had several “jobs.” Without the entrepreneur to guide me and the manager to supervise me, the worker in me worked until he dropped, only to get up the next morning and work even harder, and the next day, and the next.
A company is a machine, a system, an organism. Creating a company means building a system that can create, produce and distribute products to your customers. The founder of a company is first and foremost an architect, not a construction worker.
Remember that the goal of starting a business is to free yourself from a “job” so you can create jobs for other people.
Ask yourself: “If I suddenly went on vacation for six months, would my team know exactly how to keep my company alive and growing?”
If the answer is yes, you have a business; If not, you have a “job.”
To become less of a worker bee and more of a business owner, we must unravel the inner entrepreneur and manager within us.
Gerber suggests a clear approach: pretend you’re creating a franchise (emphasis on “pretend”). A franchise owner achieves franchise independence by providing her staff with a “how-to guide”: detailed instructions on how to create, produce, and distribute products.
Billionaire Ray Dalio calls it “building a machine.” Imagine your company as a machine to create value for your customers (and charge money for it). And every great machine needs an easy-to-use operating manual.
Why is this approach so powerful? Because it helps you create a profitable, scalable and easy-to-sell company later. But most importantly: it frees you from being a horse pulling the carriage to being the coach guiding the carriage.
Below are the principles on which it is based and that created successful companies and made their owners millionaires and billionaires.
Customers want predictable, consistent and orderly service.
When we launched our first product, we went to great lengths to make our customers happy. We offered free consultations and drove hundreds of miles to help configure our product. The customers were delighted. The problem was that our service was irregular.
Sometimes we spent an inordinate amount of time helping customers, but when we were too busy with other tasks (production, suppliers, product failures), we only offered mediocre service. We responded to a client’s request with a perfectly prepared report, but another day we simply sent them a short email. Our customers didn’t know what to expect this week or next. One day we gave them a pleasant experience and the next we took it away.
The incoherence is deeply unsatisfying. In psychology, they call it burnt-out syndrome: a child is punished and rewarded for the same behavior. This behavior is disastrous for both children and customers.
It is always better to offer consistently good service than to jump between excellent and mediocre service.
Consistency is important in all areas where customers interact with the company: the brand, the voice, the colors, the style of packaging and the design of business cards, and even the clothes the team wears when meets with clients. Consistency also brings a fantastic feeling to your team: your employees will appreciate a solid and consistent set of values, standards and principles for how your company operates.
In the end, what you do is not as important as always doing it the same way, according to Gerber.
Below, you’ll find a surprisingly clear method to achieve this, even for small businesses with limited resources. Keep reading because it will make you a crucial part of your system.
An operations manual says, “This is how we do it here.”
It is a document that explains all the rules and processes to manage any type of work (such as responding to customer requests or designing products). Provides clear, specific steps to complete a task efficiently and effectively. Without such a document, all your work becomes exceptions.
The first part of our company’s operating manual was the sales process.
In the beginning, our sales represented a mysterious black box reserved for the most experienced team members, who could provide all the answers to potential customers. But we learned that any sale can be reduced to a series of simple steps. 80 percent of these steps can be performed by an average professional without a deep understanding of our technology.
We simplify our sales process to a series of “if-then-if” steps: identify the buyer, confirm the customer need, budget and deadline. The result was a three-page template that any salesperson could fill out in a few minutes with a client.
Our squad did magic. We significantly reduced the time needed to qualify our potential clients. We freed up all the (expensive) product developers because we could outsource this process to any friendly freelancer willing to talk to dozens of customers daily.
Ultimately, our goal was to also document all other processes: marketing, content creation, product development, production, IT, legal affairs and HR, in short.
Over time, you realize that each task follows a pattern. Document these patterns in your operations manual every week and you’ll get a solid picture of how your business runs, ensuring consistently high product quality, satisfied customers, and a motivated team.
But probably the strongest argument supporting an operations manual is that you won’t need many highly sophisticated employees. As long as there are people who fit into your team and can read (and understand) your instruction manual, you will have a powerful weapon to propel your company to stratospheric heights.
Great companies are not built by extraordinary people, but by ordinary people doing extraordinary things.
I didn’t realize this at the beginning of my journey as a founder. I demanded exceptional intelligence from my staff. I expected my engineers to develop the best products, negotiate the best deals with suppliers, and speak magic to our customers. I was looking to hire highly qualified people in the hope that they would make my job as CEO easier.
Unfortunately, this approach depends on people’s whims and moods. If they are motivated and happy, the work gets done. If they are not, no. It is impossible to produce consistent, high-quality results this way. No such company can grow and survive for long. Additionally, it is very difficult to find exceptional talent.
Building a system doesn’t mean founders should see themselves in Captain Kirk’s seat, wearing white gloves and doing no real work.
Building a company is a lot of work. More work than one can imagine.
But those who end up being successful ask themselves: “How can I teach someone else to do homework effectively?” and then they will write the answer in their operations manual. Because sooner or later, they will hire employees to take care of what they do today.
Companies like McDonald’s, Federal Express, and Disney did not become successful companies with a systematic mindset. They started like this. “For IBM to become a big company, it would have to act like a big company long before it became one.”said Tom Watson, founder of IBM.
It is in your hands to create a company like this.
Start with one simple step: sit down and write down how you solve a specific problem in your company, for example, calling a prospect, creating a product feature, or handling an incoming call from a customer. Imagine you are creating a step-by-step guide for your neighbor.
The purpose of your life is not to serve your business. The purpose of your business is to serve your life. So work on your business and not on him.
This changed when we started developing our operations manual.
Remember: the better your operations manual, the less knowledge you will need to run your company, the faster you can grow and the higher your margins will be.
If your startup is dedicated to technology, you must have engineers. If you offer accounting services, you must have accountants. But you don’t need to hire brilliant engineers or accountants. Instead, you need to create the best system (aka operations manual) through which good engineers and good accountants can be leveraged to produce fantastic results.
This is what you have to do: create a company whose results depend on the system and not on people.
