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How an operations manual can save your business

This is the fourth installment in our series on developing and designing clear systems. Click here for part one, part twopart threepart five and part six.

During the last long-haul flight I took, I re-watched Apollo 13 (the one with Tom Hanks as Jim Lovell). Perhaps not the best choice as I was hurtling through the sky at 500 mph in a tin can myself, but there’s something to be said for the thrill. If you haven’t seen the film, it's based on real-life events and it's gripping.

For context, here’s a quick summary of the plot:

April 13, 1970: 238,855 miles from Earth, an onboard explosion rips apart one oxygen tank and damages another. In space, Commander Jim Lovell—and back at Houston’s Mission Control, Flight Director Gene Kranz (played by Ed Harris)—find themselves in a desperate battle against time to save the astronauts’ lives. They literally rip up their operations manuals to abort the planned moon landing, preserve the remaining power and oxygen, build a filter from scratch to reduce the poisonous build-up of carbon dioxide, and find a way to use the lunar module (designed for a 124-mile round trip to the moon’s surface) to “lifeboat” all three astronauts back to Earth.

An exposed wire—the result of tiny manufacturing and testing errors before flight—caused a short circuit, which led to the explosion. On airplanes and rockets, these rare and tiny system errors can be catastrophic.

In your business, system errors can show up in the form of work stoppages, excess scrap, poor customer service, excessive product returns, late deliveries, high levels of frustration among employees, poor financial results and any other number of unwanted outcomes.

The lesson we can all draw from Apollo 13 is that one small flaw early in the process is likely to be multiplied by other small flaws in downstream systems. Minor—sometimes almost undetectable—flaws in your systems can and will create major problems for your end results.

So this week, I want to address the value of documenting your systems and show you how to get started. This is how an operations manual can save your business (and your life).

A well-designed business will always have an operations manual that’s been intentionally designed and kept up to date. But it doesn’t have to be in a ringed binder. Nowadays, it’s just as easy to manage your operations manual through project management software like Asana. More important than how it’s managed is what it communicates. An operations manual for a well-designed business should communicate that:

  1. The owner thinks and leads systemically, recognizing the connections among all areas of the business instead of treating the business as a collection of walled-off silos. Systemic leadership means the business is built from the ground up with a strategic focus on control and attention to detail, not quick wins.
  2. There’s a culture of continuous improvement in place that includes Innovation, Quantification and Orchestration.
  3. The entire company is continually involved in building systems. Employees go to work on the business as well as in it, thinking systemically about the business to build and document systems that work.
  4. Each system found within it integrates employee training, individual development and robust internal cooperation and communication.

A poorly-designed business may also have an operations manual. But it might be out of date or sitting on a shelf, covered in dust. It might lack a strategic focus or ignore the connections across all areas of the company. It’s probable that such a company will be suffering financially. This is the system equivalent of garbage in, garbage out; action plans that no one uses and that don’t produce great business results are just a waste of time. A leader in this situation often resorts to micromanaging day-to-day work instead of guiding the business with a clear vision and destination in mind. There are likely to be high levels of frustration for both the owner and the employees and an unproductive culture of disengagement.

The difference between a poorly-designed business and a well-designed business is having an operations manual that’s integrated with the owner’s strategic objective for the business, which recognizes the interconnectedness of all business functions and that lives within a culture of continuous improvement.

It’s this same type of systemic thinking that enabled Jim Lovell and Gene Kranz to respond quickly in a crisis, set aside their operations manuals and, from scratch, design new systems that would save the astronauts' lives.

[The process of developing your business] is dynamic, simply because the world, moving as it does, will not tolerate a stationary object. The [process of Innovation, Quantification and Orchestration] is that which enables you to preempt the world's changes. It hopefully precedes them, anticipates them and, if not, is at least infinitely flexible in relationship to them. In short, [Innovation, Quantification and Orchestration] are the backbone of every extraordinary business.

Michael E. Gerber, The EMyth Revisited

Innovation, Quantification and Orchestration in action

Innovation isn’t just the invention of something new; it also includes improving the ways you already do things. So, build your operations manual and your systems with the intention of watching how they work and feeding what you learn into a cycle of system innovation. It’s a disciplined application of trial and error because you're refining systems until they produce the results you want. Quantification is the necessary precursor to Innovation, because it tells you what’s working and what’s falling short. Deciding how to measure results should be part of every system so you can quickly identify whether the system is still working as intended—or whether it needs re-training, reconsideration and, ultimately, innovation.

Orchestration means documenting, training and implementing your systems so your people can get consistent results, time after time. Your documentation should describe the desired result, the steps to be taken, the standards—the how and the why behind the action steps—and who’s accountable. It should also identify resources required and a way to measure outcomes so you can orchestrate your system’s effectiveness.

NASA-graphic-3

And don’t forget, your systems are only part of the equation. You need good people, too. I work in a systems-driven business here at EMyth. How do I feel about the systems I use inside EMyth?

I admit I’m slightly older than most of my colleagues and—as they like to remind me—I’m mildly technologically challenged. Even so, I use systems all day, every day. I know three things about the systems that are part of my life at EMyth:

  1. Like Jim Lovell and Gene Kranz, I believe in the mission. At EMyth that’s about helping business owners create a life and business they love leading.
  2. If my daily routine involves systems that don’t work, I have a responsibility to fix them.
  3. If the systems do work, they give me a framework within which I can do my best work. And, in doing so, they set me free. That’s personal growth.

What we've experienced in our work with small businesses is that, as the [process of Innovation, Quantification and Orchestration] becomes an integral part of the business, it also becomes an integral part of communication between the participants. It becomes not only a way of thinking and a way of doing, but a way of being as well. You might say that, while going to work on the business, people begin to realize that it's a powerful metaphor for going to work on their lives…

Michael E. Gerber, The EMyth Revisited

Finally, let’s quickly review what we’ve covered in these articles so far:

  • Your business is a reflection of you; be the systemic leader it demands. 
  • Financial freedom starts by building systems that give you control first and then growth.
  • The Cycle of Innovation, Quantification and Orchestration is how you build systems that work.
  • Working on your business, not in your business, means addressing frustrations at the root cause, not at the symptom level. Thinking systemically will create a business with a healthy culture and strong foundations.
  • The work involved in building an operation manual gives you the operational flexibility to cope with inevitable change. It can save your business.

If this article inspired you to think differently about systems in your business, let me know. I’ll reply directly to your comments, and I look forward to hearing how you’re doing and the results you’re seeing.

In the next article in this series, we’re covering the strategic design of systems. In our final article, I’ll give you a blueprint for doing it right the first time.

Nick Lawler

Written by Nick Lawler

Nick is an EMyth Coach. He was the Chef/Proprietor of a hotel, restaurant and events business in the UK for twelve years before becoming an EMyth Coach. His articles focus on making the transition from technician to business owner.

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