Rethinking procedures to add speed to your business
The cult of SOPs is enticing, but is misleading entrepreneurs. Or maybe more accurately, entrepreneurs are misleading themselves.
Standard Operating Procedures are by definition systemized activities that are done over and over in a near identical fashion. Because of this repetition, founders fool themselves into believing it is a sufficient transfer of company DNA.
My management teaching, which is geared for early stage growth companies focuses on the most effective form of DNA transfer — humans teaching humans.
Let me back up my crazy, anti-SOP beliefs with the events that taught me to loath them.
My first experience with SOPs was with the US Air Force as a Bioenvironmental Engineer. After many months of 8 hours a day training at the USAF Bioenvironmental Engineering school at Brooks AFB in San Antonio, Texas, I was sent to my permanent duty station where I was first introduced to SOPs. There was a 4 feet high by 5 feet wide bookshelf full of 3 inch ringed binders, each completely full of step-by-step procedures on how to do each of my jobs.
I was shown these binders and told to spend an hour a day on them for the first few weeks. The rest of my time was spent learning how to do my job from my direct supervisor and my Airmen peers.
No one could tell me what was actually in those binders.
They were used as a last ditch effort if no one in the office knew how to do something that came up. Most of the time the answer wasn’t even to be found and we had to just figure out how to handle the edge-case that was unlikely to return.
My job took me all around the base where I could see how each of thousands of jobs were done. My biggest surprises came from the mechanics who worked on the F-16 fighter jet. First guy I met was 19 just like me and he had the responsibility of making sure this $30-ish million plane was safe to fly.
He had a checklist.
Sure, in the office was a wall of binders with SOPs, but no one really knew what was in them. Nope, just a clipboard with a series of checklists designed to verify that he completed his job just like his training prepared him to do.
Later in my entrepreneurial career, I realized that my business wasn’t worth anywhere near a single F-16, nor as complex as one.
So if training and checklists could keep squadrons of the most advanced military machines worth billions of dollars flying their missions safely, then maybe, just maybe early stage growth businesses could thrive with a similar DNA transfer.
My next experience came when I met the Aussie crew who help set up brand new McDonald’s all over Asia. I just happened to be in Sri Lanka when the very first McDonald’s opened.
Even back then, the wondrous tales of McDonald’s systems and SOPs were legendary.
The Aussie crew were working like crazy from early morning until late at night for weeks before opening and would do the same for a few weeks after the grand opening. I got a chance to speak with one of the Australian managers about what was going down.
He told me that to open a new McDonald’s in Asia, the local management would come to McDonald’s University in Australia for a few months to learn how to run a McDonald’s. They would get hands-on experience in real McDs in Australia and not just learn the systems in class.
Then the Australian startup team would go to the new location, in this case Colombo, Sri Lanka for a couple months to help local management get set up, including hiring and training all the staff who would work there.
At no point are inexperienced people handed SOPs, even legendary ones, and told to do a job. They even get weeks of intensive on-the-job training just to run cash-registers or cook french fries.
Unscrupulous Internet Marketers
What I think happened was that unscrupulous Internet Marketers sold the story that you could hire a cheap VA, give that person videos and SOPs and you’d have an A-player growing your business.
AND… entrepreneurs swallowed this nonsense whole. Even to the point of continuing the belief after they tried it and failed multiple times.
Sure, SOPs are important — checklists mainly and a few detailed procedures, but knowing when to do them and who should do them is key.
What The E-Myth Said
The E-myth said all businesses need to be like McDonald’s while ignoring the stage of the business.
A startup shouldn’t be like McDonald’s. It doesn’t even have product validation yet, let alone product/market fit or message-to-market match. Tomorrow a startup is unlikely to resemble what it looks like today.
Early stage growth companies, as opposed to small businesses, change rapidly. Systems used 6 months ago are going to be outdated and if they aren’t outdated, then the company isn’t growing quickly.
Early Stage Growth Company Vs Small Business
An ESGC differs from a small business in one critical way, the founder doesn’t want the business to stay small. The founder wants to get out of the low millions quickly so that he/she can afford to build a world-class company helmed by great employees. A small business owner isn’t likely to try massive growth let alone attempt it while still under a couple million in revenue.
Show me any company where the founder(s) are making SOPs and I’ll show you a company growing vastly slower than its potential.
Show me any early-stage company where SOPs are being made, and updated, regularly and I’ll show you a company growing slower than its potential.
There are a handful of easily documented processes that any company can do quickly — nearly all are administrative in nature. Administration doesn’t grow a company. It is simply the friction (i.e. wasted energy) that seems to be required for any business to function… long-term.
In the short term, that added friction takes you away from your priority — growth.
Have your administrative employees document their work. Have any employee that is easily replaceable document their work.
However, in a small, early-stage company there should only be one or two of them. All other people working for you must be in high-impact positions. These positions will change frequently as you grow. Hell, each of those people might be doing half-a-dozen jobs of which one or two might get eliminated as you figure out what your company is really all about.
These high-impact employees will be your main company DNA transfer agents. Your company culture, knowledge and experiences will be passed along through them.
Even in highly systemized organizations such as the military and McDonald’s, employees are the transfer agents of at least 80% of all knowledge. SOPs will help those employees to transfer knowledge in an orderly fashion, but only after the company has become very stable.
Documentation Does Not Equal DNA
To make SOPs for DNA transfer in an early-stage growth company is to force artificial stability onto the people and therefore constraining the growth of the business.
In other words, make a few million dollars in annual revenue and then start documenting your business in detail.