More on Standardization:

As an Entrepreneur you have read all the books on management. You have started a business. Perhaps you are a manager in a major corporation. Now you must execute what has been learned. The question becomes one of where to start.

Even if you are contemplating starting a business the starting point is the same. Start by understanding all the processes external to the businesses. These processes may not be completely under your control. But they feed or affect the business so they must be documented. Processes that fall into this category are but not limited to taxes, insurance, and personnel lodging.

As an Entrepreneur understand all the operations that are a part of the business. Processes that may fall into this category are but not limited to logistics, manufacturing, product distribution and vendor management.

To understand the process start by mapping each step. Detail the step so it is completely documented. Break the step down into the smallest practical parts. The documentation will become the standard.

If starting a new business the documentation will record anticipated tasks with in an anticipated process. Of course this means the processes are theoretical. To make the best theoretical model the Entrepreneur must study the business in detail before starting. Some may call this planning. Believe me this is more than just planning.

Once the the business processes are documented comes an evaluation phase. The processes are evaluated for effectiveness and efficiency. For those of you who hate math this step may be uncomfortable. But the evaluation phase is required. Not only is it required when a new business starts, process evaluation must be on going. Continual improvement through constant process evaluation is required to stay in business in today’s competitive environment.

Be sure the process parameters being measured are relevant to the customer. For example one company’s service center decided to measure time on the phone. Then they ran a promotion among the service center’s telephone operators. The promotion gave anyone who stayed on the phone under some specified period of time on all calls a bonus.

The results were spectacular. Nearly all of the operators met the time requirement. Unfortunately, the required time constraint was not in the best interest of the customer. The operator would work with the customer until the time constraint neared then hang up. Customer satisfaction dropped. Sales dropped. Profits went down substantially.

To measure the time on the phone was good to understand the time that must be spent to help a customer. Setting a limit on the time an operator can help a customer was not good.

Let’s explore what happened a little further. The company in measuring parameters that affected the customer found one parameter that was important, time on the phone with the customer. The service center then made a bad mistake. They assumed the length of time on the phone past some point was related to poor telephone procedures by the operator.

In making this assumption the service center missed an important point described by Goldratt in his book The Goal. In the book he describes his theory of constraints. He pointed out in one example how product was not moving through the manufacturing line fast enough. There was a constraint on the production. The manufacturing firm made the same mistake as the service center when the constraint was defined. They assumed the problem was with the people.

The problem with most processes is not the personnel. The problem, constraint, is with the equipment or the process. Can you imagine how much more profit could have been made by the service center if the process had been changed to decrease the time on the phone by providing good answers to the customer’s questions faster while maintaining customer satisfaction? The customers would have been delighted instead of disenchanted.