In the early days of a startup, the business runs on adrenaline and heroics. You are the chief salesperson, the head of product, and the janitor. You solve problems through sheer force of will. While this phase is exciting, it is not a business. It is a high stress job that you created for yourself. To transform this chaotic activity into an actual enterprise, you need Systematization.
Systematization is the process of arranging things according to a system or method. It involves taking a recurring task, breaking it down into its component steps, and documenting it so that anyone can replicate the result. It is the transition from art to science.
For a founder, this is the most difficult psychological shift. You have to stop valuing your ability to save the day and start valuing your ability to build a machine that does not need saving.
The E-Myth Principle
#This concept was famously articulated by Michael Gerber in his book The E-Myth. He distinguishes between working in your business and working on your business.
Working in the business means baking the pies, writing the code, or answering the support tickets.
Working on the business means designing the kitchen layout, choosing the coding standards, or writing the customer support scripts.
Systematization is the act of working on the business. If you do not systematize, you are the bottleneck. The company can only grow as fast as you can work. When you systematize, you decouple the company’s revenue from your personal time.
Consistency Over Genius
#Founders often fear that systems will kill creativity. They worry that if they write down a process, the work will become robotic and soulless.
In reality, systems create the space for creativity. If you have to reinvent the wheel every time you send an invoice or onboard a client, you are wasting mental energy on low value tasks. By automating or documenting the routine work, you free up your brain to focus on high value strategy.
Furthermore, systems ensure consistency. A customer does not want a genius experience one day and a terrible experience the next depending on who picked up the phone. They want reliability. Systems allow you to hire ordinary people and get extraordinary consistency out of them.
The Documentation Hurdle
#The biggest barrier to systematization is the upfront effort. It takes longer to document a task than it does to just do it yourself one last time. This is the trap.
You must invest the time to record the process. In the modern era, this is easier than ever. You do not need to write a boring manual. You can use tools to record your screen while you do the work and talk through your decision making process.
Once the artifact exists, you can hand it to a junior employee or a contractor. The first time they do it, they will fail. That is okay. It means your system had a gap. You fix the system, not the person.
The Asset Test
#Ultimately, systematization is what gives your company value.
If you try to sell your business and the buyer realizes that you are the only one who knows how to run it, the value is zero. You are the asset, and you are leaving.
If you can show a buyer a binder (or a digital wiki) that contains the operating instructions for the entire company, you have built an asset that exists independently of you. That is investable. That is sellable. Systematization is the only path to an exit.