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An E-Myth Lesson

By Brian Phillips

In The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It Michael Gerber tells a humorous but informative story that demonstrates how systems solve problems.

Years ago his company regularly used white boards for meetings. At the end of each meeting the leader of the meeting was responsible for cleaning the white board. In their haste to get on to more pleasant tasks, the employee would invariable hit the wall with the eraser, leaving blue marks on the wall. Despite a series of memos, meetings, signs, and other exhortations, the problem continued.

In short, the company had a conflict. Color standards dictated white walls and white boards. Cleanliness standards dictated that the white boards be cleaned promptly. But the result–blue streaks on the walls–was not acceptable. Thus was born a new system within the business.

The story demonstrates how to use systems (no surprise there). When you experience a problem or frustration (bottlenecks) within your business, rather than plead with employees to act differently, develop a system to address the bottleneck. The system will change their behavior without you becoming an ogre who is constantly complaining.

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Systems and athletics

By Brian Phillips

Professional athletes spend much of their time training and practicing. Whether it is running, or lifting weights, or watching videos, or practicing plays, far more time is spent honing their skills than actually performing in competition. Their goal is to automatize the actions necessary for success. Their goal is to take consistent actions.

Consistent actions lead to consistent results, whether in athletics or in business. An athlete achieves this consistency through practice. A business achieves this consistency through systems.

Systems provide specific steps for completing a particular task. Just as a pitcher knows that a particular arm movement will produce a particular result, a business knows that a particular action will produce a particular result. When a business owner identifies the desired result and the actions that produce that result, he can more consistently achieve his goals.

Much of the work of a professional athlete is boring and routine. Away from the roaring crowds, his life is filled with monotony. He must exercise, watch his diet, and get sufficient rest. All aspects of his life are geared toward the achievement of the results he desires.

The same is true of a successful business–all of its parts must mesh and work together. This is the role of systems. They provide integration and cohesiveness. And like the training undertaken by an athlete, the process of developing systems and procedures might seem boring and routine. But the results are well worth the effort.

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Book review: The Goal

By Brian Phillips

The Goal: A Process of Ongoing Improvement, by Eliyahu Goldratt, was first published in 1984 and has become one of the most popular business books ever published.

Written in novel form, The Goal traces the story of a struggling factory and how its employees turned it into a profitable operation. By identifying “bottlenecks” managers were better able to manage resources and improve overall production.

The Theory of Constraints introduced in the novel states that the maximum output is limited to the maximum output of the “bottleneck”. Put into other terms, a chain is only as strong as its weakest link.

As the story unfolds we learn that managers often focus on the wrong things. While statistics and measurements can be useful tools, they are valuable only to the extent they help us achieve our primary goal. And in the context of business, all companies share the same primary goal– to make a profit.

Measurements of efficiency, for example, can be misleading. If we focus on maximizing the efficiency of each step of a process, we might actually decrease the efficiency of the overall process. That is, we must look at the big picture before we look at the details. And when we examine the details, we must always remain focused on the big picture.

In the context of a factory (the setting for the novel), this might mean keeping a particular machine idle at times. If the machine produces more than the next step of the process can handle, the excess accumulates as inventory. Both the inventory and the manpower used to produce and move increase expenses. In this situation management should focus on increasing “throughput”, that is, the amount of product available for sale.

The significant message in The Goal is the process of discovering and correcting “bottlenecks”. But this process is not a one-time event. It is a continuous process, or as the subtitle states: “a process of ongoing improvement.”

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