Standard Operating Procedures
Something that sounds so boring but it's so awesome when improving systems this idea of standard operating procedures and a standard operating operating procedure is a predefined process used to complete a common task so there are some things in the operation of your business that happened over and over and over again so for example when a new prospect comes to you and says hey, what you're doing seems pretty cool can you give me more information there's probably a series of steps a certain number of things that you generally do when somebody says can you give me more information about your product there's two general ways of dealing with that the first is what most people do which is just kind of make it up as they go along oh great hi nice to meet you you know let me give you some information but it is a very much an ad hoc type of process happens differently every single time the nice part about that is you don't really have to plan it's not a whole lot of effort you can just kind o...
f wing it but the problem is the results that you get from that type of approach can be wildly inconsistent it's way better to know what works no what you need to do in what order to get the end result which is an informed customer who are informed prospect who is likely to become a customer right? Better to define that process once and then whenever you have a new prospect come in the door you know exactly what needs to be done in the exact order that is going to provide the result that you want more often than not that is a standard operating procedure. So this is what you do, it's just a little thought of what are the things that happen in your business all the time you're creating stuff of value you're marketing to prospects you're convincing prospects to buy when you make a sale, you're delivering the value that you promised in your analyzing your income and your expenses and deciding whether or not it's enough right the five parts of every business that we talked about on day one those are the parts of your business where you absolutely, positively have to define a standard operating procedure if you don't have one, you are really, really sub optimizing the flow of your business. So here's the cool thing about defining standard operating procedures you contest you can put together okay here's how I think it works and then you could do a little experiments with the standard operating procedures and when you notice something works you just change the procedure you do it differently that way from from then on, if you work in a company and you have lots of people doing very similar things so, for example, here a creative life there are lots of producers who are in the business of producing courses probably a good example for probably a good opportunity to put in place a series of things that need to be done when you're producing of course, it's great saves a lot of effort, you don't have to make it up every single time that you do it. And so the first step is making sure that if you've never thought about what you do as a process, it actually is you're probably just add hawking it and you're wasting a lot of time and energy because you're avoiding sitting down and defining what this process actually is, so step one is really just sitting down and as much detail as you can just write down what you do doesn't need to be complicated and use whatever format that you're comfortable with, so some people prefer to write it down in the form of notes and you see a lot of things like if this thing happens, then do this. If this thing happens, then do this look for the source of information based on that do this thing you can write all that stuff down if you are more comfortable working in a visual type format, this is exactly the type of thing that flow charts were created for all you're doing here is creating a flow chart here's what? We start with here's what happens? Here's? What? The process looked like here's. What we end with getting this down on paper is the first step because once is down on paper and you start using it, then you can start to test and tweak and improve. And when something works to keep doing it and you have this large super awesome result. This is where all of us in the audience with creative souls really starts like no paperwork. Bureaucracy don't fence me in like no, this is boring. There's a bit of bias on the part of people resisting, having toe learn a process because they'd rather not have to memorize something they'd rather win. Yes, alright. The creative heart crying out in anguish. Um, this is where a little reinterpretation about the value of this stuff is really, really handy. Ok, so there are certain things that you do in the process of running a business that really are repetitive. You have to do it. You have to do it well if you want to get the intended result and so it's way better to spend a little bit of time and attention thinking about what this looks like doing it once and doing it well. You don't have to memorize that I actually when I write when I create standard operating procedures I write all of this stuff down and I have a system that I used to track it and when something common comes up I don't have to memorize anything I just look at the standard operating procedures like that I need to do this and you do this I need to do this and you just do it it saves so much time and energy because I don't have to think about what to do anymore and so if you are creative person this is the awesome news instead of quashing and constraining your creativity this does exactly the opposite this takes care of the boring crap that you have absolutely positively have to do as quickly and as efficiently as possible and saves and preserves all of your energy and all your attention and all of your time to actually do this thing that you are awesome at mohr right? So the process frees you from having to think about that stuff too much you can spend more time and energy doing the thing that you're good at it's awesome. So I've had a lot of clients uh in the creative type world with a lot of resistance to the idea of even just sitting down and thinking about this stuff really every single one of them that actually did all right said ok, this is terrible it's gonna be boring? I'm going to hate this, but okay, I'm going to give it a try. Every single person that I've worked with who has created a set of standard operating procedures, came back to me a week or a couple weeks later and said, oh my gosh, I have so much time. I'm being so much more creative because I'm not freaking out about this administrative stuff it's just happening. I know exactly what to do. I'm spending way more time being creative and doing this thing that I love to do. It's this this is it sounds like a really boring thing. It is way, way, way, way not so highly recommended spend some time, use the five parts of every business as a way to break this down into ok, what are the types of procedures that you really need to make? Just try it seriously and then come back and leave comments with creative life about all these things that you did that now, you know, you have so much more time to have more fun and serve your customers because it's awesome, right? They really give it a try. Now an important type of standard operating procedure is our good old friend, the checklist, and the checklist is just an externalized, predefined procedure designed to eliminate errors. So it's a list of things saying, ok, I have a new client, I have a new customer, what are the things that I am going to need to do to make sure that goes well? I'm probably going to need to send them an agreement, send them a contract, get their credit card or banking account information like there's, a set of things that need to happen and the most effective way to make sure all of those things get done is create a very special type of standard operating procedure called a checklist in that way, every time you get a new customer, you say, have I done this yet? Yep, check haven't done that yet. Let me do that. I'm going to do that next. It eliminates the thought from the process, and because you're tracking it, it eliminates the possibility of you for getting to do something super super critical that would that would really negatively impact the situation. There's a really great book about this topic? Uh, yeah, an entire book about checklists, believe it or not, it's called the checklist manifesto by a tool go one day he's, a writer for the new yorker. So it's actually extraordinarily well and where guan di is a surgeon, he operates a medical environment. And the most famous piece of research that he cites is there was a hospital I believe it was in detroit there was having a terrible, terrible time it's you know the story right doing it on no no you tell it I just know the story so there was a hospital in detroit that was having this terrible time with inserting I v lines into patients to make sure they're hydrated and deliver medications during during surgery and longer align remains in a patient the higher the probability that that line will get infected and when you have an infection in your bloodstream like that is really bad really life thirty namely that so they took the hospital in the nation with the worst straight of ivy line infections after ten days and they did a test they said ok for this particular hospital we're going to implement a new standard operating procedure and it looks like this we're going to give a five step checklist to the head nurse as procedures air happening with the doctor the head nurse is responsible for stopping the doctor if they don't follow the steps on the checklist in order and this was actually really controversial because in most environments nurses are not allowed to question the doctor about anything they're just there to help right? So the doctors were really ticked off they don't want to do this but they did it anyway and the elements of this checklist really like brain dead simple stuff like step one wash your hands and, you know, doctors were like I've been to medical school for like, fourteen years. You've like telling me to wash my hands? How dare you insult my competence, is that no, no, no, just follow the checklist. So they did, and the ten day ivy line infection rate at the worst hospital in the nation went pretty darn close to zero. This was a problem that was affecting hundreds of patients costing the hospital millions of dollars and causing more than a handful of patients to die. And they solved it with a five step checklist off things that were mind bendingly obvious. Seriously, because when you're in the middle of an intensive care unit and your patient is crashing and a whole bunch of chaotic things were going on around you, you know what? It's really really easy to forget to wash your hands. Okay? So on a checklist, if the things airway simpler than and kind of insultingly obvious that's probably a good thing, those are the things you need to remember to do in the moment checklists awesome you yes, of comments? Well, sky burger points out that creatives love checklists and they've never looked at it as a standard operating thessaloniki way also a kia says standard operating procedures seemed to be only appropriate for certain types of problems those that have repeatable solution steps how can we differentiate problems that standard operating procedures are not appropriate for yes so if you do it the same way every single time without fail it's a checklist type thing if it is something that you you pete over and over and over again but there's a little bit of ambiguity to the process you use a standard operating procedure and one of the things that you add to the standard operating procedure is a question fights all those self solicitation questions that we talked about yesterday it's uh do research to great gather information about that or what do I need to do in order to serve this particular client? You can add some questions to this just things to remind yourself in the process of doing something if it's completely wild and crazy that you've never done before, you probably don't have a standard operating procedure for it yet and the process of doing something for the first time is actually a really great opportunity to create the standard operating procedure to begin with. So as you're doing something new, write down how you do it and then just ask yourself how do I turn this into a standard operating procedures so I can use the work that I've already done to make it easier to do it next right sometimes the very best thing that you can do to improve the operation of a business is not doing something additional it's actually to stop doing something that you're already doing that's not really working very well this is an idea called cessation the conscious choice to stop doing something that doesn't work and so this goes back to where we were talking about intervention bias we want to do things we want to fix things we want to do more do better the emphasis is on doo doo doo doo doo when really stop doing things stop if you can stop doing things that are harmful or stop doing things that are wasteful that may be the best improvement that you could make the thing is it's just not very comfortable because it doesn't feel like work right and if you're working in a business with other people remember where we talked about in absence blindness the difference between the wonderful manager that looked superb boring because they eliminated all of the problems before they started happening versus the crazy manager that was actually just fixing problems so that they have made themselves same type of situation here right there's very little social glory in not doing something anymore when really it's one of the most valuable tools that you have and so just looking at all of the things that you're doing and just asking yourself the question what could I just stopped doing right now maybe it's past the point of diminishing returns maybe it wasn't providing value in the first place maybe it was an experiment that was a noble experiment you collected a lot of information but you don't need to do it anymore. All of those things are really good candidates just tow acts in the same way that you can look at your to do list and say these are the things I'm going to delete because it's not going to get me what I want you could do the same thing in a system by stopping doing things that are necessary fumar ideas, resilience, resilience is having the toughness and the flexibility to survive failures and survive changes and so resilient. So if you think about improving a system optimizing, making it better, making it faster, really maximizing the output of something there's a tendency to subordinate everything else to make sure that that is performing as asbestos possible but there's a little bit of a risk there which is optimizing too much maybe increasing the danger that something really important breaks if something unexpected happens, things change in the environment sometimes unexpected things happen and if a failure occurs, you want to make sure there is enough flexibility to recover from that to compensate from the air to fix it in a way that doesn't blow up the entire system and so in my opinion building your system for resilience being able to continue to operate in a wide array of environments in a changing environment is more important than making sure the system operates way at its maximum and gets the very best result for what is often a very short period of time ok and a good analogy that you can use tio imagine this is comparing to animals so a tiger is optimized for performance right for speed for going out and catching food and doing all of those things right high performance machine cheat is probably a better example run super super super super fast when it starts running slower and it can no longer catch an antelope for food guess what it dies and eyes very quickly it's optimized for performance but is not very resilient compare an animal like that to something like a turtle they're not very sexy they're not very fast right just kind of plot along doing their thing that can eat lots of different things they can defend themselves if they need to uh by fighting back if it's a stronger predator that trying to get at them they withdraw within their shell and just kind of wait it out and they live several hundred years tiger cheat his way sexier toe look at but from a certain perspective the turtle performs better in a wider range of environments. There are a lot of qualities there that a business can really choose to emulate some businesses, like particularly in the startup world, really try to super optimize for performance if they work, they work really super awesome. If they don't work, they di extremely quickly blow up catastrophically. If you're running a business for yourself and you have control over it, you can choose to optimize for other things, like resilience, so if you're making a whole bunch of money but your expenses are really low, a whole lot of things can change in the environment that's not going to affect you very much because you have savings aa lot of the things that you do or you can do to make your business more resilient look pretty boring right savings, taking out insurance policies in the in the event that something unexpected happens, somebody sues you, somebody does something that they're not supposed to. All of those things make your business more resilient. It makes it more likely that something bad could happen outside in the world, and your business will continue to survive long enough to get past it and continue to improve. So optimizing for resilience, actively doing things that make it more likely that your business conserve. I've change it's a really good use of time, it's a really good use of money so it's worth thinking about as you're working on the business system. Start doing things that improve your flexibility that makes sense totally feel free to say that's completely off topic what do think humans are optimized for uh but she does have a nice fat you know what hurdle for resiliency were actually one of the most versatile species on the entire planet because one of the things that we're capable of doing is collecting information about the environment and using that to build tools that allow us to change our environment to suit our needs right? So most species uh let's say let's let's say cheated right it gets too cold the cheated cannot build itself a house and put on a coat and boots to survive that level of coal they can't do that that but we can we build tools to make ourselves more adaptable to changing environments that super cool I think that's that's need about optimized for adaptability adaptability yeah sorry zero right? Sure survival way very weak we're not very fast and we were but you come here and created this amazing society now look all the other animals and humans have operated in every single extreme of environmental condition that we've experienced in the universe right? The extremes of heat the extremes of cold high up in the year way down in the sea the vacuum of outer space and we can adapt the tools that we use to make sure the environment around us is at least within certain boundaries so we're not on the failing end of a very important selection test, okay? So resilience super great. One of the things that you could do to increase the level of resilience in your system is by adding in what's called a fail safe ah, backup system that's designed to prevent or recover from a certain failure. So anything that you do to make sure that if something goes wrong, you have an option or all is not lost that's a fail safe. So for example, if you do not have a backup system for your computer and your hard drive crashes, you're going to lose on all of the data on that computer. Likewise, if your computer is stolen and you don't have a backup, you lose access to all of that information that's really bad you have that's particularly bad for authors who are almost done writing a really, really, really long book. All right, so one of the things I am like way uh, almost probably taking this to two large oven extreme, I back up my computer like five different ways, because if something bad happens and I'm close to a deadline on a book and it's not very easily for me to replicate one hundred thousand words put together in a very specific order, I need toe halik five copies of that book somewhere that's not on my computer just to feel comfortable that one of them is going to survive. This is really important, but anything that you do tow add a level of redundancy to add a level of flexibility into recovering from a failure, the better. So lots of ways that this this appears in the world in let's say, a hospital let's, say, and intensive care use unit in an emergency room that has patients on life support. Well, those machines rely on electricity in order to operate that's a tight coupling. If the electrical grid goes down, those machines a cease and so do the patients attached to them. Critical fair failure. So it's something that you can anticipate, right? So most hospitals have a backup emergency grids that automatically come online would with the main power grid system failure, it's a level of redundancy that makes it far more likely the electricity could go out and everybody is still going to be okay because there's a backup system just waiting to kick on in the event of an emergency, those types of planning's are a very real, very important way to optimize the system. Any examples of backup systems that you've either seen or thought were interesting. I'll give you a couple I can guarantee here in the studio if one of these cameras dies there's probably an extra laying around somewhere that can be installed in its place, right? All right, good. I'll give you another example and and this is this is like way ah, in a different vein let's say a small error occurs I've been drinking coffee throughout this entire course let's say spill some on the front of my shirt uh I have another shirt in a bag uh just just in the room next door that if something pat occurs that could change my shirt and will be ok and fortunately I have not had to use that in the course of this course I'm very thankful for that, but you know what if it happened even though I'm not using the backup system, it makes me feel better that it's their right some of these things could be super mundane, but just having the backup makes you feel comfortable that if something unexpected changes, you're gonna be okay. We'll be able to survive it businesses that exist purely because of that you think of like triple a they just for the majority of their customers I imagined they just provide confidence they don't actually provide any service we pay them and then never use them throughout the year insurance companies are in the business I mean, the entire we actually talk about this in a great deal in part one of the personal mba exactly how insurance works but really if there's some sort of huge risk to either you personally or to your business that you're not comfortable compensating for yourself so you buy a house the house catches on fire and burns to the ground with all of your possessions and you can't just open your checkbook and write a check for another house that's what insurance companies air for you pay a premium to the insurance company and you transfer the risk of some bad thing happening to them and if the bad thing happens, they make sure you're okay if the bad thing doesn't happen, guess what? The insurance company gets to keep the money that's that's how they make money but insurance is just a backup it's it's it's a way of transferring that risk onto some other party that can that can afford to bear it? It helps you overcome something that otherwise would be a tremendously bad decision it's a form of failsafe here's the thing about fail saves you have to install them before the bad thing actually happened. So if your hard drive crashes, you can't say ok, I would like to install a back up hard drive on my computer now so I can get my data back doesn't work that way if your home burns to the ground, you cannot go to an insurance company said I would like insurance please you have to have it before the bad thing happens so here's the thing fail saves are not if you look at from a look at it from an optimization standpoint, they're not optimal in the sense of your spending time energy resource is money installing a system into your business that you really really hope you never use and if you never use it your way eight years you're spending money on something that could be seen as wasteful right? But if you want to have the protection of the backup, the system has to exist before the bad thing happens so optimizing for the resilience of a business means adding some systems that allow you to recover from airs and doing that sooner versus later and so it's really when you're working on improving a system it's really tempting to just optimize for raw performance when really spending just a little bit of time and backup systems gets you a huge gain for not a whole lot of money and not a whole lot of time good stress testing stress testing is identifying weaknesses in a system or in a process or in a standard operating procedure by simulating airs for simulating very failures and the way I like to think about this is let's say you're looking at the system you want to improve it you want to make it more resilient you can kind of imagine I actually called this demon mode so you look at this system you just imagine that you're this demon and your only goal is to destroy this thing all right how can I break it how going to make it not work it's kind of fun you kind of get to put your devious devil horns on and just try to break things and so if you think about the system from that respect this is just another form of inversion right instead of how can I save the system if something goes wrong you start thinking of how can I actively break this thing so it doesn't do what it's supposed to do if you simulate those types of things happening you come up with solutions to make the entire system better and stronger that you otherwise probably would never have thought of and so one of the things that is really undervalued by most businesses particularly if you are providing a service to somebody or you are in the business of consulting or advising or doing something for another business that is making money you can kind of go into demon mode and say ok what of this thing that you do for another person or another business causes damage active damage and and let's say for example the business sues you what's gonna happen how are you going to respond to that and you get some really really good outcomes from that in terms of what you can do right you can search for a lawyer now instead of waiting until you are on the pointy end of a lawsuit before making a call, you can start to prepare from that you can get what's called errors and emissions insurance if you make a mistake, this is really important for you by the way, we can talk about this later, but if you give advice to a business they implemented something goes wrong, they lose money and they blame you and they to you there's insurance that you can buy that covers that it's really cheap because it doesn't happen often and so you could spend just a little bit of money and as an adviser feel really confident that even if the worst possible thing happens, you'll be ok it'll be fine and then kind of looking at this you can ask those what would it look like if someone soon mean it gives gives you that the outcome er's a way for you to kind of work backwards? That's why that's like my favorite section exactly it's funny that you brought that up because that's the last idea oh, so doing this systematically as you're working in improving your business is called scenario planning and a lot of most of us have probably heard the term this is what it actually means you use a counter factual question like what would happen if certain thing happens and you use counterfactual simulation to figure out what is probably going to happen, and you use that simulation to do something different and maybe it's taking out airs and emissions insurance, maybe it's making sure you're hiring really great contractors, air service providers to make sure everything's working, maybe it's having a backup system uh, maybe it's uh, arranging your business in such a way that the failure of certain failures are less likely to occur. There's there's hundreds of thousands, millions of things that you could potentially do differently because you just take a few minutes to think through. All right? What if some unexpected crazy thing happens? What could I do to either make it less of a problem? Or sometimes unexpected things happen and those air really big opportunities? What can you do to take advantage of an unexpected opportunity that comes up? So just like on the personal side, when we were talking about counterfactual simulation, most people don't spend anywhere close to the amount of time that would be valuable to spend doing counterfactual simulation type questions for themselves. Most business owners, most entrepreneurs don't spend anywhere near the amount of time thinking through scenarios in their business and using that as a source of information on how to improve the system overall. How to get better results, how to fix errors before they occur, or how to minimize the probability that some air is going to really negatively impact the business. Really valuable, really great way to use time.