Learning to Iron

Read time: 4 minutes

In this edition

In a recent newsletter, I talked in broad terms about the importance of process for achieving scale. This week, we’re zooming in on the finer details—the “small stuff” that, when neglected, can make your work on process for naught.

Let me know what you think.

Learning to Iron

Well-managed and measured processes can unlock extraordinary efficiency, enabling businesses to scale and boost their margins. Yet, achieving this level of optimization is challenging. It requires meticulous attention to ironing out the kinks and variability in these processes for a smoother operation. In most tech-enabled businesses, processes entail humans interacting with technology, thus automation is a key enabler of the business model. But automation isn’t possible when processes are variable and poorly defined. Scale hinges on our ability to iron out these wrinkles, but that’s no small feat. There are several reasons for this:

  1. Process Mapping: Too often, processes aren’t fully mapped and defined. Processes may vary by product/service, by the individual performing the task, or by client specifications. Generally speaking, the more variability you have, the harder it is to scale. However, this is a bit of an oversimplification. It’s not inherently the variability that’s the problem; it’s that the processes are either completely idiosyncratic (in which case, we don’t call them processes!) or they are not specified in a way that they can be replicated.
  2. Automation Challenges: Even with minimal process variation, automation can be time-consuming. Additionally, there’s a tangible fear that automating processes might reduce necessary operational flexibility.
  3. Short-term Focus: Process work, especially when it is undertaken in a big project, is always accompanied by pressure to secure immediate wins, sometimes at the expense of long-term benefits. The real gains come from steady, permanent attention.
  4. Lack of Incentives: Teams may not feel motivated or supported to pursue incremental improvements. These small gains might seem insignificant day-to-day but can lead to substantial progress over time.

Solutions

Addressing these challenges begins with a shift towards a process-oriented mindset, a theme I’ve touched upon before. This shift involves several key actions:

  1. Setting the Vision: Establish clear efficiency goals to guide your efforts.
  2. Accountability and Structure: Assign a senior individual to own this. Many companies have what’s called a “business operations” function to ensure smooth operations and improve the operating model. These individuals working “on the business” collaborate closely with those working “in the business” to maintain a relentless focus on process optimization.
  3. Highlighting Importance: Consistently acknowledge and reward significant process improvements, both verbally and financially.

Conclusion

The advantages of adopting a process-oriented approach are undeniable. Businesses that start from scratch can experience double-digit margin gains. Furthermore, those already focusing on their “ironing” can see further improvements not just in profitability but also in resilience, enabling them to support revenue growth without accruing the metaphorical “tech debt” of inefficient processes.

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When you’re ready, there are two other ways I can help. Email me at hello@jddeitch.com for more information.

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I help growth-stage leaders and investors in B2B tech-enabled services businesses align strategy with execution. I focus on the twin engines of execution excellence—process and people—to transform your business, paving the way for growth and enhanced profitability.

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With 20+ years of operating experience and a substantial M&A track record, I help investors evaluate strategic and operational strengths and weaknesses and navigate post-deal risks to unlock value.

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