If you’ve been in the business world long enough, you’ve seen a lot of bright ideas come and go.
You’ve heard a lot of buzzwords get thrown around for a while. For a few months, no one sounds smart or innovative unless they tell you that their business is lean. Wait a year or two and everyone will stop talking about being lean and start telling you how agile they are. And then the cycle will start all over again when the next big idea comes around.
The same thing happens when companies come up with plans to grow their business. First, they realize they’re not growing because their customer service isn’t up to snuff. So, they spend a year or two focusing their efforts on improving customer service. After that, they realize that waste and inefficiency is holding them back, so they spend another year or two finding ways to streamline their operations.
That’s great, of course – you should be finding ways to continuously improve. But one thing I’ve noticed is that this is almost never cumulative. When the company moves on to dealing with waste and inefficiency, they stop investing in customer service. These business improvements are treated more like fads than solutions: when a new one comes in, the old one goes out.
I saw this same cycle with systems thinking. In 2008, it was on every owner and business person’s mind. Now, only ten years later, you’ll almost never hear it mentioned.
It’s like building material companies have completely forgotten about systems thinking and all the lessons they learned from it. And that’s a big mistake.
Systems Thinking for Building Material Companies
Systems thinking means looking at everything – and especially your company – not as individual parts but as a system. It’s seeing how all the various parts work together to keep it functioning, and also understanding that it’s more than just the sum of those parts.
In an insightful article, Aytekin Tank, the founder of JotForm, compares it to the parable of the four blind men who encounter an elephant:
Slowly, they each reached out and touched a different part of the elephant.
“It’s like a snake,” one man said as he felt the long, supple trunk.
“No, it’s a column,” pronounced another, leaning on the muscular leg.
Another jumped back as he heard the animal’s cry. “It’s piercing, like a trumpet.”
The elephant began to move. The fourth man stood, frozen as the ground shook: “It’s an earthquake!”
What does this mean for building material companies? Well, it reminded me of how frequently building material companies come to me with a problem that they’re viewing from a single perspective. And inevitably, I’ll start working with the company and soon realize that they’re not seeing what the real problem is. They’re like the blind man holding the elephant’s tail but thinking they grabbed hold of a snake.
As an outsider, I see the whole system. My clients often think they’re dealing with a localized problem that needs a local solution. They think they’re struggling to grow because there’s something wrong with the sales department, or with their customer service, or with processing and shipping. They’re not seeing that the problem and the solution lie within the system and not with any individual part.
How Systems Thinking Can Help You Solve Your Biggest Problems
People Problems vs. System Problems
Companies tend to blame their problems on a single part of the system – “Sales isn’t pulling their weight” or “Our customer service team is letting down the customer.” But the source of those problems is often with the system, not just one of its parts.
If you think everything wrong with your company is a people problem, you will end up trying a lot of localized solutions, like firing your sales leaders and hiring some fresh faces to take their place. More often than not, these are just band-aid fixes. They might get you some small improvements (the new sales people you hired will bring in a couple of good ideas) but it won’t last if the system that is causing the problem in the first place is still in place.
Always ask yourself if the people problem you have is really a system problem. When your sales staff isn’t pulling their weight, is it because they’re lazy and uneducated? Or is it because working for your company doesn’t offer them enough opportunities for professional growth? Would they be able to function more effectively if they had time to learn new sales methods or have proper training with digital sales tools before they were asked to use them?
When a company faults their sales force, I usually find that other parts of the company are not supporting the sales team.
Fixing the system is almost always more effective, lower-cost, and more sustainable than trying to fix individual, issues, people or departments.
Once you stop looking at your company as a group of individual departments and start seeing it as an interconnected system, you can set up processes that overcome each department’s individual biases.
Everyone has their own set of assumptions based on their experience of what has worked and what hasn’t. If you go through different departments and ask each of them why a company’s sales aren’t growing, they’ll each give you a different explanation and propose a different solution.
And here’s the thing: none of them are wrong. They just don’t have the full picture.
But when everyone is siloed, there’s no way to have a genuine conversation about company-wide problems. Your shipping people might ask questions about your sales team that come across as overly critical. Because the sales department feels like it’s under attack, your salespeople go into defensive mode. As you can imagine, there’s no real communication and nothing productive gets done. All because nobody sees the bigger picture.
The best solution is to highlight the way every department fits into an interconnected whole. When everyone thinks of themselves as working together, your problem-solving discussions won’t dissolve into a witch-hunt with every department trying to put the blame on another.
Systems Thinking Brings the Customer Back into the Picture
It’s important to realize that even though someone isn’t officially part of your company, they can still be part of your system. And the most important external component of your system is the customer.
When you don’t apply systems thinking, it’s amazing how quickly you can lose sight of the customer’s perspective. How the customer perceives you can affect your sales and growth a lot more than the price of your product or what your shareholders think of you. But unless you bring the customer in, you’ll be prone to making assumptions about what the customer thinks of you, what they look for in a building material company, and how they feel about your competitor.
So, how do you bring your customer’s perspective into your problem-solving process? You could hire an expensive market research firm to gather a bunch of data for you. But there’s a much better, simpler, and cheaper solution. All you need to do is listen to your customers and listen to your staff.
One company that got this right is Procter & Gamble. They used to print a 1-800 number on their packaging that you could call and leave feedback on the products. But it wasn’t just something that some poor low-ranking employee in the customer service department would have to listen through and discard unless it needed an official response. Instead, the senior managers would listen to a compilation of random feedback calls every week. It was like listening to a business podcast but instead of some random expert telling them how to improve their business, it was their actual customers telling them how their toothpaste or laundry detergent could be better.
Now, I’m not saying you should set up a customer hotline, but you do need to keep your ear to the ground. You should regularly be talking to your customers and asking them questions. Call them up occasionally and ask how well you’re meeting their needs. Ask them if there’s some point in the purchasing process that stresses them out, whether it’s trying to find information on your website, dealing with your sales reps, or putting up with late deliveries.
Then, you need to speak to your frontline people. That, of course, includes your sales team. Sometimes, your customers will tell your salespeople things they won’t say to you directly, whether it’s about how your lead times are too long, how you mismanaged your price increase, or how they’re noticing a drop in the quality of your product. That’s valuable information, but not every salesperson will volunteer it. They might think you just want to hear the cold, hard data or that bringing you bad news will reflect poorly on them. Make it clear that you want to know how the customer really feels and what they really think about you, not just the facts that you can fit into your quarterly report.
And don’t stop at the sales reps. You probably don’t realize how many of your employees are unofficially engaging in customer research simply by interacting with them. You’d be surprised at how much you can learn by talking to someone like a truck driver. The off-the-cuff comments they hear when they unload something at a job site can teach you a lot about your customer’s mindset or how they feel about your company.
The best part about asking these frontline employees for this kind of intel is that your competitors (even those who are doing customer research) are probably missing all these little insights that are right under their noses.
If you just listen to your customers (including what they say to your staff), you’ll learn a lot of important things about them without having to pay tens of thousands for a research firm to dig out that same information.
Systems Thinking Encourages a Shared Vision
Adopting a systems outlook also encourages everyone in your organization to work toward a shared vision.
Every department has its own performance targets, internal goals, and metrics for success. When they’re all united under one shared vision, you can be sure that those individual targets and goals are all ultimately aiming for the same thing, whether that’s keeping the customer happy, growing sales, or ensuring the company’s long-term sustainability.
But when every department does its own thing instead of being guided by a shared vision, those individual targets becomes the only thing they care about. Sales is busy growing sales so it can give the next quarterly report a boost.
Marketing wants to publish a certain number of articles and social media posts just so it can hit its monthly quota. And customer service wants to get the customers off the line as quickly as possible so it can brag about how quickly they deal with customer issues.
Without a shared vision, each department is basically pulling your company in different directions. And when you pull something in different directions long enough, it starts to tear apart.
As a company leader, you have to nail down the corporate vision and make sure that everyone understands what they’re really doing is trying to make it a reality, not just hitting their own isolated benchmarks.
Bring Back Systems Thinking
Systems thinking had its moment back in 2008 and then it quickly died down. But it’s not some fad idea that should have been left in the dust; it’s an important insight into the nature of business that should never have been forgotten.
So, when you read or hear about the next bright, shiny business idea, always remember that your company is and will always be a system, and treating it like one will help you solve your problems more efficiently and effectively.