August 11, 2012

System or Infrastructure?

Do you have systems in place in your business, or only an infrastructure?

To permit a business to grow, it needs more than just a framework. Manageable, repeatable systems, which can operate independently of the business owner, are necessary before a business can reach its potential.

While infrastructure is important, and is often a first step in establishing a strong business model, you will need a working operation that goes beyond who sits where and who’s responsible for what.

Infrastructure, or company organization and plans, is animated by systems that embody policies, procedures, methodologies, and expected outcomes. A system is dynamic, subject to change as efficiencies are discovered. It is portable, and does not rely upon the charisma or skill of the business owner, a shop foreman, or a key staff member.

Infrastructure: sales dept, marketing dept, customer support dept, etc.
System: marketing generates leads which sales turns into customers, who are serviced by customer support.

Infrastructure is diagrammed in an organizational chart; systems are diagrammed in (work)flowcharts.

Think of the difference between filling orders for customers, and an order fulfillment system. While there are multiple ways for any company to pick and ship customer orders, there are also “right” ways to do it. Having a warehouse, inventory, employees, and a shipping supplier (all infrastructure) won’t get the job done without a system in place to manage the workflow and ensure all the details are covered. How do you handle backorders? How do you deal with partial orders?

An order fulfillment system specifies the best practices to use to get the orders out. When infrastructure breaks down — say the shipping supplier is unable to meet your deadlines — the system provides for an alternative. If the system falters, no amount of infrastructure can save the day.

Repeatable systems can be utilized by anyone. Call it process, workflow, best practice, or “just the way we do things”, a system can grow with the business, even if infrastructure can’t keep up.

What systems do you have in place to allow the business to run without you?

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