Discipline makes Daring possible.

Musings from The Disappearing Boss on People, Process and Responsible Autonomy for small-business employers.

Category: The Autonomous Enterprise

Relics
September 10, 2019

Relics

Yesterday, I drove across the Peak District, along the Derwent Valley and up through Glossop to Calderdale.

Almost the whole way, wherever there was a river below, the valley was thick with old mill buildings, built to last.  Some famous, like Arkwright’s Cromford and Masson Mills, now world heritage sites.   Most forgotten, derelict, or hidden in the core of industrial estates, or turned into housing.

In the late 18th and early 19th centuries, there were well over 100 cotton mills in this area, their owners rushing to embrace the new business model pioneered by Arkwright – a factory powered by water.

Within 30 years, many of them were out of business.   A new technology shift had taken place, from water power to steam, which meant independence from rivers, and freedom from the size constraints imposed by valleys.   Small factory owners, unable to justify the investment could no longer compete and went under.

Now of course, very little cotton is spun or woven in the UK.  Yet more technology shifts meant that even large factories drifted slowly into obsolescence.

To us now, this is history.  But technology is always shifting, increasingly in people-based service industries like accounting, consulting and law.

You can embrace the latest business model, or make a virtue of keeping to the old.  The trick is to do it consciously, keeping an eye out for whats next.

Embracing variation
September 9, 2019

Embracing variation

Nature loves variation.

Small errors, mishaps  and mistakes make a species stronger, not weaker.  They make the system antifragile.

Fine china does not love variation.  Even the smallest of mishaps can cause irrecoverable damage.

If you want a business that lasts, its better to design it to be more of a system than a dinner service.   But that doesn’t mean formless.

Build a strong core of values, purpose and ethos, embodied in simple high-level processes that describe ‘what’ not ‘how’, and you too can get to love variation.

And variation is what leads to evolution.

Good Design makes a product understandable
September 2, 2019

Good Design makes a product understandable

It clarifies the product’s structure.  Better still, it can make the product clearly express its function by making use of the user’s intuition.  At best, it is self-explanatory.   Dieter Rams, Design Principle number 4.

How many times have you pulled at a door that was meant to be pushed?  Or pushed a door that was meant to be pulled?

There are 4 simple design solutions that would prevent that tiny but all too frequent source of wasted energy and frustration:

  1. Put a flat plate on the ‘push’ side and a handle on the ‘pull’ side.
  2. Allow the door to swing both ways, and have a flat plate on both sides (because both are now ‘push’).
  3. Allow the door to swing both ways, and have a handle on both sides (because both are now ‘pull’).
  4. Have the door open automatically as someone approaches it.

1, 2 and 3 make the door understandable, 4 makes it self-explanatory.

 

We live and work among millions of designed products every day, from doors to roundabouts and office blocks to business processes, organisational structures and governments, many of which provide all too frequent sources of wasted energy and frustration.

How would you re-design them?

Brave New Worlds
August 28, 2019

Brave New Worlds

The term ‘robot’ was coined in in 1920 by Josef Čapek for his brother Karel.   The word meant “forced labour”.

For all the impressive advances in robotics since then, some of which we saw on the BBC series ‘Revolutions‘ last night, the idea of “forced labour” – including, for Jim Al-Kalili, child-rearing – remains almost unquestioned.

It reminded me that we humans often dive into technology, when we should be re-thinking how we relate to each other.

Who’s driving?
August 27, 2019

Who’s driving?

Most of us business owners are driven by our needs – for autonomy, for self-expression, success, money or even revenge.   That doesn’t often build a business that lasts, except by chance.

The promise you make can’t be for everyone.   ‘Everyone’, or their close relation ‘anyone’, turns you into a commodity – interchangeable with every competitor in your field, putting all of you in a race to the bottom on price.

And before you work out what your promise really is, you need to work out who it’s for.

There is a community of people who need what you can offer.  They are underserved by what’s out there, looking for a change that you can help them to make.   They want to become something or someone different, and don’t know how to do it.

As long as there are enough of them, (and enough is less than you think), these people are your market, and by putting them in the driving seat, you’ll start to build a business that lasts.

It’s never about us, it’s about the people we serve.

Good design is unobtrusive
August 23, 2019

Good design is unobtrusive

“Products fulfilling a purpose are like tools.   They are neither decorative objects nor works of art.   Their design should therefore be both neutral and restrained, to leave room for the user’s self-expression.”  Dieter Rams, Design Principle number 5.

Processes, organisations, jobs, are products fulfilling a purpose too.

Fluff
August 5, 2019

Fluff

A metaphor for the relationship your business creates with its clients could be seen as fluff.   A nice marketing touch.  Something to hang a campaign on, to help people choose you over others.

But it can and should go much deeper than that.

Blue Rocket Accounting used their metaphor (“we are Mission Control to your space mission”) to standardise their services, to define the Roles people working in the business play for clients and to design how they deliver on that promise.  The metaphor becomes shorthand for the purpose – ‘what we do for the people we serve’.

That’s not fluff.  That’s the foundation.

Increasing revenues
August 2, 2019

Increasing revenues

Profit = Revenue – Cost.

So if you can reduce cost, you can increase profit. And if you can increase revenue you can also increase profit.

So how do you do that?

The classic answer is that there are only 4 ways:

  • Sell to more customers
  • Sell more at a time to each customer
  • Sell more frequently to each customer
  • Put your prices up

This is of course true, but it misses a vital point.   Nowadays, whatever business you are in, there are hundreds of options for customers to choose from.   Why should they buy from you?   Why should they pay you more than the next business?

Unless you are operating in some unfortunate part of the world, nobody really needs anything any more.   For example, we all need to eat, but do we really need 25 different kinds of cornflake?  Do we really need cornflakes at all?

No.

The truth is that you’re not selling anything.   You’re making a promise.   A promise to help the people you serve become who they really want to be.   That’s what people are willing to pay for.   The bigger and better the promise, the more it will be worth to the right person.   That’s how you increase revenues.

The hard part is working out who is the right person, and who it is they want to become.

And the hardest part is keeping the promise you make.

Performance – costs and revenues
July 31, 2019

Performance – costs and revenues

As we all know, profit is what’s left of revenue after you’ve taken out all the cost.

Revenue is easy to measure.  Cost is a little harder.

Ideally, you would directly attribute every cost incurred by a business (including what would normally be called ‘overhead’) to the end-to-end process of acquiring and serving a single client with their chosen product or service.

This is a time-consuming thing to do, which is why many small businesses work on a rule of thumb of some kind, such as the ‘one third wages, one third overhead, one third profits’ approximation used by many accountants.

It turns out though*, that ‘time spent’ is a pretty accurate proxy for all costs, so a relatively easy way to get an accurate picture of how much a process is costing to run, is to measure how much time is spent on running it.

This means that the efficiency of a business as a system can be measured in a straightforward way – by simple observation.

I like simple and straightforward systems, so this makes me extremely happy.

*”Duration-Based Costing: Utilizing Time in Assigning Costs” Anne-Marie Lelkes, Ph.D., CPA, Management Accounting Quarterly, Summer 2017.