Business is hard until you build systems like this

About this video

• Video Title: Business is hard until you build systems like this
• Channel: Ross Harkness
• Speakers: Ross Harkness
• Duration: 00:11:17

Overview

This video explains how to build effective business systems that allow for scaling and reduced working hours. It differentiates between basic documents like SOPs and true systems, which are described as machines for producing results. The video outlines the four key components of a system: inputs, processes, outputs, and the crucial feedback loop. It emphasizes the importance of mapping out business functions, tasks, and their goals, and then integrating a feedback mechanism, particularly through data and metrics (scorecards), to continuously improve these systems and identify bottlenecks for growth.

Key takeaways

• Systems as Result Machines: True business systems are not just documents (SOPs, checklists) but "machines for producing results," consisting of inputs, processes, and outputs.
• The Four Components of a System: A system comprises inputs (raw materials), processes (assembly line), outputs (product), and a critical feedback loop for continuous improvement.
• Mapping Business Functions: To build effective systems, identify core business functions (marketing, sales, operations, finance), their specific goals, and then list all tasks with their individual goals, aligning them with the overall function goals.
• The Importance of the Feedback Loop: The fourth, often overlooked, component is the feedback loop. This mechanism, ideally through metrics and scorecards, allows for objective analysis and identification of what's working and what's not, preventing systems from becoming stagnant.
• Identifying and Fixing Bottlenecks: Business systems can be visualized as pipes; blockages represent inefficiencies. The video advocates for identifying the main constraint (bottleneck) using data and fixing it sequentially, rather than attempting to fix everything at once, to enable smooth "flow" and scaling.
• Marketing as the Top of the Pipe: The marketing system controls how much "water" (leads) enters the business pipeline. While crucial for generating leads, it can only be effective if the subsequent systems (sales, operations) can handle the increased volume.
• The Cycle of Improvement: Effective system building involves mapping, tracking data, fixing bottlenecks, turning up marketing, and repeating the cycle to achieve continuous progress and growth.