The Art And Science Behind Building Solid Procedures and Processes
Post by Scott Lewis, CEO, Spartan Investment Group, LLC
Business podcasts, audiobooks, articles and magazines like The Lean Startup and Team of Teams often stress the importance of building systems. But what does this mean?
According to Businessdictionary.com, a system, defined in the business sense, is “a methodical procedure or process that is used as a delivery mechanism for providing specific goods or services to customers.” To truly understand what a system is, we need to decompose it to its parts: procedures and processes.
The fundamental building block of a system is the procedure, sometimes referred to as a Standard Operating Procedure or SOP. A procedure is something created with a known set of steps, that when repeated, will produce a predictable result. Procedures are detailed, contain specific instructions on the completion of the task and are usually used at the front-line level. As the CEO of a real estate investment group, I am responsible for the integration of our business functions. This is made easier due to my military training as an officer, which stresses the importance of developing systems.
Once you have developed SOPs for your business, it’s necessary to connect them. Once connected, the SOPs form a process. It’s possible for a process to have only one SOP, however, most processes contain multiple SOPs that different teams can execute and bring together to procedure the final product. For example, in business plan development, there are multiple teams with their own SOPs. Architects have SOPs for developing building plans, Civil Engineers for site plans, Structural Engineers for structural plans — and so on. As a development company, it’s our job to link all of these procedures into a process. We have a very specific procedure for analyzing land, including identifying all attributes of the land and the surrounding area, which is the first of multiple procedures in our Project Evaluation Process.
Building a system is a blend of art and science. The science contains several attributes of both procedures and processes that must be present in order to achieve your desired results. Two key attributes of procedures and processes are that they are repeatable with a multitude of environmental variables and can be executed by anyone in your business line.
The Science: Make It Repeatable And Executable
A procedure or process is considered repeatable when a team, working under normal conditions, can achieve the same results every time. This is a critical distinction that is often missed, especially when the procedure or process is developed after a successful endeavor. Teams tend to forget success quickly. To ensure the procedure or process is repeatable, I recommend a third-party work with the team to analyze the procedures or processes from a non-biased point of view. If you’re going to build the process in-house, then capture the steps in an SOP document created in MS Word, Visio, Excel or notepad.
The second key attribute of a procedure or process is for anyone in the business unit with acceptable training and education to be able to execute it. If a procedure or process is based on a single individual’s skill, competency or their personality, it will not survive. Eventually, that person will leave or get promoted. The phrase “lowest common denominator” is often used when describing how a procedure or process is developed. And at times this has merit. For example, unskilled labors should be able to develop project site security procedures and processes. That said, there is risk in simplifying a process so much that it doesn’t accomplish the result you’re striving for.
Once the science of building a procedure or process is taken care of, the hard part begins. Everyone has a different culture, mission, values, norms, etc. Account for these factors when developing procedures or processes. Overlay your mission, vision, values and culture to all procedures and processes before attempting to execute them to reduce the probability of failure due to external factors.
The Art: Integration And Automation
So you’ve developed procedures and processes and connected them to systems that are functioning within your company. Now what? Integrate those systems and leverage technology to automate wherever possible. If your systems live in isolation, you’re only halfway there. To truly leverage the power of systems, they must be integrated and additive to one another. Review any integrations that may be available. Most providers have a list of other systems that can integrate with their software.
With our systems, we can analyze hundreds of deals without spending time on the initial analysis. Of course, it’s not perfect. No IT system ever is. However, we’ve saved hundreds of hours by eliminating hundreds of deals that would never come close to meeting our criteria. We have integrated systems for analyzing deals, acquiring them (through automated letters of intent and purchase and sales contracts apps), raising capital (through automated Regulation D offering apps) and managing projects (through systems integration between Podio and Smartsheet) all by picking systems that integrate with each other.
By mastering the science and art of creating a process, we are able to do the work of a firm with ten times as many people. And because our processes and systems are executed the same way every time, supplemented with detailed checklists and automated, we don’t miss steps, which provides comfort and predictability for both our team and our investors.