10 March, 2014

This is just the start

We have finished the course, but never done learning about the business. We just have learned about the crust of how to run a business and all of this is aimed at making you confident enough to open the door with confidence and start digging your own way
We are never done learning about anything in this information-bursting age. Information and sciences are always changing, overlapping, specializing, branching and accumulating more info from themselves of from other realms

I hope you enjoyed the ride as I did. Go make a checklist of what you have to read or study after this 

3-3-18 improving systems: Experimental mindset

So, how you can find this middle path?
You are an entrepreneur. You are making your own way. There are no instructions of anyone who has taken the same path before you are digging your own way
And you can't know for sure what is the right thing to do before you actually take a risk, jump in and give it a try; "experiment it" I mean
-          All things that you are doing are kind of experimentation: putting a prototype, testing, trying …etc. You just do it intelligently enough; come up with the idea and see how to try it without risking everything  
Those skills, if you put yourself into the experimental mindset of “There’s really no such thing in business as failure, there are things that work and there are things that don’t work, and the things that don’t work give you more information or point you in the direction of the things that do.” That’s pretty much it.
As long as you experiment smartly, even the things that don’t work for you can provide valuable input to the next round of iterations, the next prototype, the next product, and that’s the cool part.
You have all of these things that you could *possibly* do, and collecting all of this information, and a lot of business really comes down to trying stuff.
If you take away the pressure that everything that you need to do has to be perfect… and the more you got away from that and started just thinking, “I’m just going to try something, and see what happens.” The more wonderful things started happening, because the more you try, the more information you collect about what works and what doesn’t.

So one of the very best things, and I hope you take this away very clearly from the course, even though the future is uncertain and you don’t know exactly what exactly will work, nobody does, just the mindset of experimenting with things to try it and see what works and collect information and then try it again and keep doing it and have fun with it. And that’s what effective business really is all about. And the more you do that, the more successful you’ll be. That’s The Experimental Mindset.  

3-3-17 improving systems: The middle path

Throughout the course it seems like there isn't anything that you can optimize, things always move between too much and too little and this changes always with time
This makes BUSINESS as much of an art as it is a science. There is a sense in it; How much you should produce? What do personally think of this? What do you think the most probable scenario to happen? Etc.   
There is an old quote by Aristotle that says, “A master in any art avoids what is too much, and what is too little. They search for the mean and choose it.”

You will find yourself always searching for this middle ground

3-3-16 improving systems: Scenario planning

All the things we do based on some predictions of the future … you say hi to someone expecting that he will reply the same. If you are sure that he will reply by hitting you, you will never say anything to him
But the one and only sure thing about the future is that you can't be 100% sure of anything
-          The best way to deal with the unknowability of the future is to assume that you can only put some assumptions of what may happen. Of course some assumptions are more probable than others, but all of them has a chance of happening

-          So for anything you try to predict don't be satisfied with one scenario. Write down the best case and worst case scenario and the in-between ones and take measures to be prepared for all of them 

3-3-15 improving systems: Stress testing

Stress testing is one of the best ways to discover weaknesses in your system

You just sit in front of your system and ask yourself this question:
Here is the system, how can I break it?
Then you try every way to break your own system (of course without making permanent damage to it). Then you study what you did actually and see how you can prevent this from happening

-          Stress testing is just about knowing the maximum capacity of the system to do ______  that it breaks if things go beyond this capacity (or the quality becomes too bad)

3-3-14 improving systems: The backup system

For any show there is some backup actors than memorize he role of one or more actor so that they can step in if anything bad happens and the main actor can't perform for any reason. This is the fail-safe system

The point of this is summarized in one sentence:

Your business also needs a backup system that can step in and save the situation in case of any failure in the main system

-          It must be separated from the main system; so that a failure or shortage in one of them doesn't affect the other one
-          It will not be the same efficient as the main system, but it will save the situation for a while till the main system is fixed again

-          The best way for a backup system is to be versatile; do as may rules as possible  

3-3-13 improving systems: Resilience

Resilience is equal to "defensive measures":
Some massively underrated and critically important qualities for businesses to protect themselves out in the world (among competitors, in the environment, in the market, in the financial world)
There are some bad and good things about resilience

-          It makes your business live longer
-          It makes the business withstand rough conditions, disasters and situations
-          They are designed to make you need them less with time
-          The better the system is, the less you need them
So resilience is important but has a price: it is not efficient; the resources used in them aren't always used and are intended to use them less. Also resilience makes you less and slower responsive to the environment

Think of resilience as it resembles a turtle; slow and not efficient creature but it consumes less energy, live longer, has it is own cave … etc.

3-3-12 improving systems: Normal accidents

Problems can (and will inevitably) happen at any step in the system especially when the system is tightly-coupled and interdependent

The longer any system runs; the more risks accumulate and the more probable that problems happen

-          Things go wrong all the time, and will go wrong
-          The best strategy towards this is
-          Be prepared psychologically to accidents
-          Always run quality tests
-          Have experts prepared and ready to prevent and deal with accidents
-          Watch and learn from previous accidents to prevent more accidents
-          Analyze close calls to figure out what may cause problems
-            Stress testing (simulate failure in the system to learn from it)

Notice that you don't want to add more to the system in order to make it better; the simpler the system is, the less complicated it is the better 

3-3-11 improving systems: Cessation

All the time we think of improving, introducing, developing, fixing….… always DOING something to the system.

One of the best approaches successful people always do is one of the most radical ideas ever > NOT doing = cessation

Cessation: stopping doing things that aren’t working anymore, or don’t serve you, or are causing problems that you have to fix later, or wasting your time, or you think they are urging but they actually aren't, or unimportant things…. etc.-  is a subtle but probably the most important way to understand to fix an issue.
For example: If a customer is abusive, stop calling them. If they’re a pain in the butt, stop selling to them. If an employee is causing more problems than they’re actually providing value, fire them. All of these things – you don’t have to continue doing all the things that you’re doing. You can stop. And if you stop doing the right things, you can actually make the entire system run much better.

You don't need to fix something broke by something else that stopped because a third thing …….. One thing you have to do; look at the root of the problem and cut it and you are finally free 

3-3-10 improving systems: Checklisting

For the best SOP to occur, you need to get this pattern out of your brain to the papers. Moreover, you need to put it in clear numbered/bulleted points. Bulleting make it impossible to miss a thing hidden between the lines

There is no need to make stupid, unnecessary mistakes just because you didn't put your tasks in neat, organized points

And you don't just apply this concept to SOP. Make a checklist every  morning with the tasks you should do during the day and you will find this very productive and efficient 

09 March, 2014

3-3-9 improving systems: Standard Operating Procedure

There is no system that can be fully automated. There will always be something fuzzy, ambiguous that can't be systemized and a human factor must be there to carry it out; for example development, research, response to unexpected changes in the environment, some sort of decisions

But in good systems you will find these things repeat themselves over and over and over … and they have a pattern that you can put it on paper, make a checklist or a kind of a flowchart, a diagram, this is what is meant by "SOP"

"SOP" let you define standards easily, qualify it, improve it. It makes it easier for you to get other people to learn these SOPs easily and be trained much faster

So, try to make SOPs for the stuff you can't automate... This will be a great help to you 

3-3-8 improving systems: The paradox of automation

The paradox goes like this: the more efficient is the system, the more automated it is, the more important it is for an expert to be there, the less he has to do; or else the system wouldn't be that efficient

And what happens when a guy just sets there without anything to do? He gets board, he gets less efficient with time and he loses his skills with time

And the funniest yet most dangerous thing is that people tend to forget why they hire him in the first place and keep asking why we are paying him if he is doing nothing, and then they fire him. They will discover how stupid they are as soon as the system makes an error

Don't ever forget why people are so important to be there even if they are doing nothing most of the time, keep them always busy by making them go through quality training, tests … etc. and you will overcome the disadvantage of losing their skill with time 

3-3-7 improving systems: Exponentiation of error

Despite that "automation" is a great strategy; there are some drawbacks of it. One of the major drawbacks is what I called "exponentiation of error"

We know that the more efficient automation is, the less human intervention is. But imagine that for some reason an error has happened within a system lacking a human factor; imagine how many faulty products would it produce till someone discover it and shut the system down or fix it

And imagine if one error would lead to a bigger one … and etc. How big and devastating the end error will be?

So the more complex and automated the system is, the more probable it is for an error to happen, and the more important it is for a human expert to intervene to stop the error and fix it

  That's why there will ever be a pilot and a co-pilot in every plane carrying people no matter how automated and efficient it is 

3-3-6 improving systems: Automation

One of the best ways to reduce friction is automation

-          Human factor are great and essential for certain professions and businesses, but they have a lot of disadvantages:
-          They make a lot of errors
-          They are slow
-          Their work quality is not consistent
-          Their overall quality over time gets worse with time and exhaustion …etc.
Meanwhile, automation overcomes all these mistakes, but it has one restriction >> you must have a pattern, a system (process) to apply "automation". If you have to make different decisions every time in the process; you can't apply "automation"

So, each time you think of reducing "friction", think of "automation"  

06 March, 2014

3-3-5 improving systems: Friction

For any system to continue running you have to keep adding input into it. Without input the system slows down with time till it finally stops.

Why we need to add input all the time? For the same reason we have to hit the ball more than once to across the field to reach the goal: Friction

Friction is another universal concept that applies to the business like anything around us

Most of the time friction is a bad thing and hinders you from reaching your goal, so you have to do 2 things

1-     And the most important thing: is to get rid of this friction as possible as you can. Pave the way to your goal so that you spend less energy, time, power to get to your goal
2-     Keep pushing and adding input, increase the power of your shots to get faster and to add more inertia to every input before it loses its effectiveness

-          The more energy you have to expend to do your work, the less efficient is the system
-          The less energy, time and the better design of the system; the more efficient the system is
Lessen friction is most important with things you do on a regular basis in the system

Notice that friction is not always a bad thing. Think of it like a tool; it can be used to make some good to your business. How?

-          Confirmation and tasks review are made to decrease errors
-          A lot of papers and operations to go through when returning goods
-          Processes you through when you apply to a scholarship or a good job- are used to decrease and filter out some of the enormous number of applicants

Always keep in your mind the friction theory, and use it in your favor all the time to either slow down process or removing it to make things go smoother and faster with less energy and time 

3-3-4 improving systems:Diminishing effectiveness

Imagine that you have 1$ …then you earn another one … that would be great looking at the initial input you have ...but with time when you have like 600 dollars and you keep increasing them by one dollar; that wouldn't give you the same feeling

This is called "Diminishing Returns": with time and incremental increase in the output, the input no longer has the same effect as before

 You have to understand this universal concept; that everything even the 100% perfect static system will eventually come to satisfaction and the challenge is to be responding to the ever-changing environment and to figure out new ways to keep gaining money 

And you will use this concept a lot, everything lose its effectiveness with time 

3-3-3 improving systems: The critical view

A pattern noticed in every system we have, especially the complex systems:

Most of the output depends on a small number of inputs, and the rest of input is in charge of the smaller number of the output

Most of your costs come from a few things, and the rest come from various small things

Most of the sales come from a specific area/s of a few number of customers, and the major part of the customers give you the rest ... and so on

You will find this concept applicable to most of the systems in life. This will help you greatly in identifying priorities and provide most of the positive results with the least efforts and least percentage of input 

3-3-2 improving systems: Optimization

The wrong thing that people tend to do when they try to "optimize" a system is to make everything better at once

While optimization is really about taking one step at a time
-          Take a variable
-          Minimize its input, maximize its output … or vice versa
-          Go to the nest variable … do the same … and so on
What to choose first? The constraint has the first priority to be optimized

One of the benefits of optimizing one variable at a time is to be perceptive and understanding to the changes that a variable is making to the rest of the system parts 

3-3-1 improving systems: Refactoring

It is a term for ungrouping/grouping various system parts
Refactoring goal is to make the system run as efficient as possible. That is done by analyzing the system; deconstructing it, then look at it in different ways trying to figure out how to group things in a way that make it so efficient

This needs a very deep understanding of the system components and what it is supposed to do …. Then the keen eye to figure out different patterns and solutions to make the system better and an execution plan to actually apply the suggested changes