It is a commonly cited statistic that 90% of businesses fail within the first two years of their existence. Whether true or not, the statistic is likely not far from the truth, and this occurs more often than not because entrepreneurs and business leaders fail to prioritize business excellence by falling in the trap of the technical expert.
Consider the typical entrepreneur starting up their business as a solo venture. Very often, these entrepreneurs start a business based on their technical skills. While they will have success initially due to these skills, they often end up seeing more complications and less efficiency as they take on more people. Problems eventually snowball, and leave the entrepreneur in bankruptcy. The entrepreneur has fallen in the trap of the technical expert by failing to make a critical realization:
Business excellence and technical expertise are two entirely different skills.
What separates the giants of industry of today from the 90% who fail is not their technical skills, but their ability to leverage excellent organizational structure to better utilize technical expertise. The failure to acknowledge the importance of a business excellence framework likely stem from the culture’s tendency to idolize the myth of the technical expert.
Consider Bill Gates, founder and former CEO of Microsoft, and previously the richest man in the world. Many would attribute Microsoft’s success to the technical ability of its founder, making a point of how he taught himself computer programming at the age of 13 and so on. However, what many people forget is that with these skills alone, Gates would only have stayed a computer expert like thousands of others in the world at the time. What made Gates one of the most impactful people in the history of the world instead of just another computer programmer was his ability to leverage his technical expertise with a sound business structure.
Back in 1984, while being interviewed on the Today Show, one question briefly touched on Gates’ approach to organizational structures. When being asked whether or not he was a “business genius” in addition to being the computer genius everybody knew he was, Bill, age 28 answered
“Well I wouldn’t say genius. I enjoy working with the people, talking about what we’re gonna get done, getting real excited, making sure that the structure is there, making sure that the ideas get measured properly and really leading the company, that’s exciting!”
How to use Organizational Development to Leverage your Strengths
Now that we have discussed the importance of achieving business excellence, let’s discuss how to implement the organizational development processes that leverage technical expertise in your business.
First of all, it is important to realize that being technically skilled and creating organizational structure are not two opposing aspects of business. In fact, organizational structures that enable business excellence are complementary to technical abilities.
Many aspiring entrepreneurs and business leaders mistakenly believe that organizational development means creating a separate venture to their operational department. The crucial switch in mindset these leaders fail to make is realizing that organizational structure needs to be intertwined- and developed alongside the technical operations of their businesses.
The leading philosophy for organizational development that enables business excellence is often referred to as lean philosophies, and indeed, the aspect of enabling structures and rules permeate lean businesses.
Take for example the ideas of continuous improvement through standardization. In traditional businesses, rules and systems are forced by management on workers to ensure a minimum standard of work. Although ensuring a minimum quality of work, this type of structure often stifles the workers creative ability to leverage their technical expertise.
Lean organizations solve this issue by allowing the workers themselves to be responsible for the standardized description of their work, allowing it to become the basis of continuous improvement. Much like the lean approach to leadership however, this independent development of company practices are not left to chance. While allowing workers to be responsible for developing standards, the outcome and specifications of said standards are held to strict requirements ensuring that work will align towards the creation of relevant value.
The approach to standardization is just one example of how lean companies let organizational development become an organic part of their operations, and much like other lean tools and techniques, they are not implemented in a vacuum. In order to successfully develop an organizational structure that enables creativity and leverages technical ability, companies need to make the switch to a lean business model.
The lean business model: Making the structural switch to leverage your strengths
It is a common misunderstanding that becoming lean means implementing lean tools. This is, as previously mentioned, far from the truth. When working with our clients, we always start out by building the foundations for a lean business model first. If you’ve ever heard about companies that tried to implement lean philosophies and failed, you will likely find out that not doing this is exactly the mistake they made.
The first step to making the switch to a lean business model is developing a business operating system (BOS). In short, this is the sum of processes, routines and tools that creates the formalized structure of the organization. On a global level the BOS is a single, transparent and integrated system that moves the organization in the direction of its goals.
We could go much further into the details of the business operating system and its features, but for now the most important thing to realize about the BOS is that it will function as a way to sort and describe the work in your organization. This structure serves as the basis for continuous improvement and will allow you to take the next steps towards business excellence in the future.
One of the best ways to establish a BOS 1.0 if you have little to no structure in your business is to take the UBS (Ultimate Business System) as defined by the thinktank Maui Mastermind. The UBS approach is very simple, and works by creating a shared directory of files on a server with a simple hierarchy. This shared hierarchy needs to be adapted to your specific practice, and needs to cover the five functional pillars of every business: Sales and Marketing, Operations, HR, Finance and Leadership. Within each of the main divisions of the business, subfolders are created to segregate different operations within each division, down to folders regarding specific tasks with specifications created by the user.
When creating a business operating system for your organization, it’s important to realize that it needs to be structured based on the functions and needs of the business. This is the most important part of implementing any new technologies in organizations. At Kaizen Leaders, we specialize in tailoring these implementation efforts to your needs (and if you qualify for our non-profit/startup initiative, we’ll even work with you for free!). To see if your organization applies and to learn more, feel free to read more about our leadership consulting services.