71: Turn Your Problems Into Systems with Joe Newton

15
Oct

Joe Newton is the owner of EIJ Solutions, a process consulting company that empowers entrepreneurs to find freedom through their business. We talk about the SYSTEMology framework, the benefits of having a systems champion, and practical steps towards business process optimization. 

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Turn Your Problems Into Systems with Joe Newton

Our guest is Joe Newton, who is the owner of EIJ Solutions, and he helps small business owners get their businesses out of their heads and turn into documented systems and processes that can scale. Welcome to the show, Joe.

Hey, Steve. I’m so excited to be here and get to have a conversation with someone else who loves systems and blueprints as much as I do.

Yes, that’s going to be a blueprint fest here. Love that. So let’s get into it. So first of all, how did you get into systemology and entrepreneurship? Tell us a little bit about your journey, Joe.

So the quick story is I started like a lot of people do. I tried to fail in as many ways as possible, as quickly as possible, so that I could learn what not to do. And that looked a lot of different ways. So I’ve been heavily involved in real estate over the years. And I had a partner who I ended up paying to give me my equity back and walk away. And yeah, so I had a lot of those times like many of us do where I was just trying to figure it out.

But a big turning point for me happened when I signed up for a 90-day bootcamp with a guy named Joshua Smith. And if any of your listeners are out there by computer, you can Google Joshua Smith real estate or GSD mode podcast. And you’ll see a guy who is big, muscly, bald, tattoos. And I’d say he cusses like a sailor, but he could probably make some sailors and truck drivers blush, depending on the day. Not your prototypical business leader.

But the reason I signed up for that bootcamp was I saw someone who was operating at a high level in the real estate industry. And I saw that he was consistently able to build teams and get a consistent result from them. And even outside of that, he was also building other companies and industries that had nothing to do with real estate. And again, seeing a consistent result. So during that bootcamp, I learned a ton, but one of my biggest takeaways is he started talking about systemizing his business and why it was so important to have systems and processes.

And I could not have told you what a business system or process was at the time. And I probably only partially understood it, but I knew there was something in that. And that launched me into years of digging into how to do this. How do I bring this into my own business? And I began reading books like the E-Myth and Traction and Built the Last and all of these great books talked about systemizing. You need to systemize your business.

So that got me to a place where I was chewing on this a lot over the years and started to create and implement it within my business. But bringing us to today, one of the big turning points was when I found out about the systemology framework, which is one of the blueprints we’re gonna talk about today. And systemology at its core is a system for systemizing small businesses. And so it was a simple way that I could now help myself and now help others to systemize their business and solve that problem. So that’s the long answer to a short question.

Systemology is a simple way to systematize, presented in a really simple way for those not well-versed in complex ideas. Click To Tweet

Okay, so I’m very curious. You know, the E-Myth obviously was the first one to my knowledge that to small business owners to systemize their business. Obviously, traction does it to some extent as well. How is systemology different and what you know, how does it, you know, how does it present this whole conundrum of systemizing a business in the length of a book, because for E-myth, it’s maybe 10 pages. At the most, traction is probably five. A systemology is at least 150 pages. So give me a little, the rundown of how to systemize a business in the systemology way.

And I think you shared one of the big problems that I was having, is I was reading these really great books, but all of them said you need to systematize, and maybe they would give you just a little inkling of how you could do it. But there wasn’t a resource out there that said, hey, here’s the A to Z, here’s how you systematize, and here’s it presented in a really simple way. Because I’m not a doctoral student, I’m not really great with these complex ideas. I need simple and systemology is a simple way to do that.

And one of the best ways I think presenting this is to start off with the four stages of business systemization. And what this is, it’s a framework for you to look at and know, okay, this is where my business is today. And here are a couple of simple steps I can take to get it where I really want it. So the first stage of the business systemization pyramid is this. So imagine that pyramid and at the bottom you have the base which is the survival stage. And this is the stage, it’s not bad.

Most of us go through this when we’re starting off a new business. There’s a lot of inconsistency when it comes to certainty, the team is making everything up. You know, we’re throwing things at the wall, we’re figuring out what works, what doesn’t. For performance, we’re mostly just firefighting. We’re putting out fires, we’re greasing the squeaky wheels. And for buy-in, when it comes to systemization, most times the team hates even the thought of systemizing because that’s just one more thing that’s gonna slow me down from getting done the things that I need to do to deliver for my customers.

And what we see at a high level is that the biggest problem during this stage when it comes to systemization is that the owner becomes the bottleneck. So everything revolves around the owner. So all of the big decisions need to go through the owner, all of the key client relationships are centered on the owner. So everything has to go through the owner. Now, after we get through stage one, and we admit we have a problem. So the owner is the bottleneck. We move into stage two. So the next level up is the stationary phase. And usually we’ve started to see some consistency within our business.

So maybe we’ve solved our leads problem and we’ve leveled off. So we’re not just firefighting every day. But as far as certainty goes, all of the systems, if there are any, are stored in our employees’ heads. So we have key people in our team. Maybe there’s a salesperson who he’s getting results, but how he’s doing it is all stored in his head. Or one of the things, if you walk into a business who’s in this stage, a way to know that they’re in the stationary phase is that you see sticky notes everywhere. You’ll see sticky notes on the monitor, sticky notes on the desk. We have passwords on sticky notes. We have key things to ask during sales call on sticky notes. There’s a lot of sticky notes that are within our team’s desk at that point. For performance, sorry, go ahead.

In the survival stage, the owner becomes the bottleneck, and the biggest problem is that everything revolves around the owner. Click To Tweet

Let me take a, just to slow you down a little bit. The first stage, the survival stage. You said that survival, people are just trying to keep their heads above the water, just to defeat the fires every day, and then they are confronted with the need to build systems, but the owner becomes a bottleneck because they have to approve everything. Give me a little bit more detail there. So what do the employees do at this stage? How do they tackle it? Is it just the description of a stage when there are really no systems, just the idea of a system? So, please explain it me.

Yeah, at this stage, most there’s not really any systemization at this stage because it’s at the beginning of the business. And it’s really key. if we’ve started a business that the business owner needs to have their hands in all the pies at the beginning. They need to have that very close touch on the pulse of what’s happening. But everything is changing on the day to day because we might not have a system or a process for how we get leads. So we’re figuring out, okay, how do we get leads? How do we convert those leads? How do we then deliver the product at a certain level. All of these questions are usually being figured out or answered during the survival stage. So there isn’t a whole lot to systemize when you’re first entering in that stage.

So essentially the owner, basically everyone goes to the owner for every question, with every question, and then the owner is the bad guy because they have to answer everything. There’s no system. If there is any system, it’s in the head of the owner and therefore basically it’s the genius with a handful of helpers.

Exactly, yes.

In the best case, yes. Okay, so and the next stage, the stationary stage is when you have stationary all over the place, you have sticky notes everywhere, so people are starting to kind of have an outline of the process, but it’s essentially very ad hoc, you know, trying to have some kind of repeatability, but it’s not managed in any way.

In the stationary phase, there's some consistency, but systems are often stored in employees' heads, and sticky notes are prevalent. Click To Tweet

It’s very key person dependent at this point, because you’ll have certain people within the business, like we mentioned, maybe it’s the salesperson, maybe it’s your operations or operations person who are figuring out what works and what doesn’t. So they might’ve created some email templates for themselves, or they might’ve created a document that gives them an outline, or they have those sticky notes. But it’s the most dangerous time for you to have a business with employees who use mass transit, because if that one person gets hit by a bus, you might lose a whole department at that point.

It is dangerous. So what happens after the stationary? What’s the next stage?

So after we have the stationary phase, and I do want to add for that phase, when it comes to your culture and your buy-in, you’ll have some people who are in to creating processes and systems, and some who are out. And the way we move from stationary to the next stage, which is scaling. So we’re scalable is where we want to get to once we get out of stationary. And the way we do that is we begin to identify who those key knowledge workers are within our business. And we extract that process from them. And that can happen in a myriad of different ways, whether that’s asking them to do a screen share and just talk out loud through the process that they’re going through.

Or if you have people who go out in the field, you say, ”Hey, will you wear a GoPro and just record yourself doing this task and talk through that?” But any way we can, we want to get that knowledge out of their head and document it in some way, form, or fashion. If we start to do that, that’s what’s going to allow us to get to that scalable phase, which when it comes to certainty, we have partial documentation. It might not all be in the same place, and it might not all be created with the same formatting, but we do start to have partial documentation, even though they’re clunky solutions when it comes to the performance of the business.

So, when you say document, do you mean like write it down or you also mean document by way of videos and checklists and screenshots. So, is this a homogenized or an organized documentation? Or is it just getting documentation in whatever form.

No, to get out of the stationary, it’s probably not super well organized. And in 2021, you’re going to see a lot of people utilizing Dropbox or G-Drive or some of these other solutions to where they’ll have a folder, maybe they have a marketing folder and maybe they have an operations folder and maybe they have an HR folder. And then within the marketing folder, they’re gonna have email and onboarding and they’ll have folders within folders. And I’ve even seen some people in this stage to where they’ll have a Word document that outlines what the key systems kind of are, and then there are different Word documents within that folder for each one of those. So, they’ve started to document in different ways and extract those, whether that’s a video or a Word doc and starting to organize it, but it’s usually a very clunky application. Does that make sense to you?

Yeah, it does. So I’ve got the raw data in different various forms, and then what’s next? Is this a scalable already if I have that?

At this point, you can begin to become scalable. So you have the option to start scaling, and that’s gonna be the key activity that we take during this stage, is gonna be the organizing of that. So the best thing that you can do to get out of the scaling phase and into our next phase is to take all of that extraction that you’ve done in the different forms and figure out how do we take the friction out of this process?

Because when it comes to buy-in during the scaling phase, is constant reminding becomes constant. You’re always having to tell people, hey, do it this way, hey, go back to this, do it that, no, don’t do that, do this. And if we can begin to organize that and take away the friction, that’s what’s gonna allow us to go from scaling to what I used to call the sellable phase. But now after meeting you, I think I’m gonna change it to the buyable phase. To have Test the script with an F.

It to the buyable phase.

Yeah.

Thank you for that, yes. Buyable phase, yes.

And I’ll tell real quick, that was such a light to me. I was like, you know what, that’s right. You can stick a for sale sticker on anything, but there’s a real difference between that company and the one that people actually are like, hey, that’s an asset I would like to own. I’ll pay you money for it. So our top of the pyramid is that sellable or that buyable phase. So once we began to organize our system, so we’ve extracted them from our key knowledge workers, and we’ve organized them in a way that reduces friction so that people actually want to utilize them and don’t have a problem with finding the information that they need, we enter into that sellable or buyer.

In the sellable phase, major systems are completely documented, operations run with precision, and culture transforms from constant reminding to 'this is the way we do things here. Click To Tweet

So now we’ve smoothed out everything that is a major system has been completely documented. When it comes to precision, we’re running like a Swiss watch and your culture, your buy-in has moved from constant reminding to you hearing the phrase, this is the way we do things here. We go, we check our systems, this is the way we do it. Okay, boom, everyone’s on the same page. And from here, you enter into the key action being optimizing. So we create dashboards and we go to that next step to tweaking the systems so that then we can accomplish the next goals that we have for our company in whatever way that might manifest itself.

So, when you complete the sellability or viability phase, although viability involves other things as well.

Right, yeah. These are high level terms, right?

Yes. So when you get to this fourth S, like the peak of the pyramid, where it’s the way of your, you know, it’s ECMA, Inc way or whatever it is. What does it look like? So how do you know that you’ve got the way down? What does it look like? To you as the expert, you walk into this company, or you walk out of the company having completed this phase? What does what is the system of my scalable or actually sellable company look like?

Great question. And I think that is good to remind everyone that in these four stages, we’re talking about business systemization. This is not complete business as a whole. There are a lot of factors that go into having a business that is sellable or is viable. But when it comes to systems, some of the key attributes of a company who’s entered into this phase, they have well-documented systems. And what I mean when I say well-documented, usually they have some sort of simple technology to where their systems, their policies, and their training live.

And it’s in a place to where they’re organized in a way that they take away the friction so people not only want to use but it’s it’s easy to use. So they have a place that that is is where all of their their systems live and are easy to use. When it comes to the cultural side of that we’ve trained everyone to check here. So what we see a lot especially in the earlier phases, are that business owners, even unknowingly, will train their staff to come to them for the answers, as opposed to training them to look in the documentation or look in the system.

I’ll give you a quick example of this. So I was working with a client recently and he had a new offering with his business that was just taking up a ton of his time. I asked him, I said, what about this specific new offering? Where’s the time suck coming from? As he talked through it and processed with me through this, he started describing how clients, they would have an offering, it was a pool repair offering. He would have these clients and they would say, hey, we have this problem. He would have a tech go out and the tech would say, this is our solution for you, you need to replace this pump or this filter or this section.

But they would continue to get pushback and any escalation, undoubtedly, the owner would end up on the phone and being the one to talk through the client saying, well, how old is your system? What’s this? Okay, well, this is why we offer this X, Y, and Z and transition them into that sale. And as we dug deeper into that, what he found out, what he realized was, he had been telling his employees that, hey, I’ve got the knowledge of the pool industry. I also have the customer service skills.

So I’m the one that you should come to when you have this problem. Instead of creating a systems culture, so a sellable business that is at that level, what they would look like is you would have your employees, they might come to you and say, hey, we have this problem with a client, can you help us? And his first response should have been, have you checked the systems? Have you gone to a system hub, a process street, whatever technology solution, have you looked here for the answer?

And if the answer is no, you should have said, hey, go check there and see if there’s an answer. And if they go and they check the systems and come back and they say, hey, the answer is not here, then they know, okay, let me come in and I’ll help solve it this time. But after that, get with what I would call the systems champion and have them extract that process. So, okay, we ask this question, this question, this question, we do X, Y, and Z, which solves this. So now there’s an answer for his team to utilize, and he can train them to now use that system just like he does. So when it comes up, he points them there, there’s the answer, he doesn’t get pulled in and he can focus on being the visionary and doing those key skills that he’s good at.

Okay, that’s really cool. So how does this system get managed? So you mentioned the champion. Is this like there is a champion for each system? Is there like a czar for the whole system? I’m seriously asking.

Yeah, no. It’s a great question.

The other question is, what is the management process? Is there a management process for the whole system, repository, whatever it is, to keep it up to date.

What we’re really talking about here at its core, is that we don’t want to just create systems and processes that are really well done. Because one of the myths we see is people think, hey, if I create amazing systems and processes, they’re documented, they’re kept in a technology that’s easy to use, then people are going to use them automatically. And that’s a myth, because if we don’t have a culture that’s built around systems, then we’re gonna always be constantly reminding people things aren’t gonna get updated, which I think is at the core of your question.

How do we build that culture and that consistency to not only create systems, but to make sure that they’re updated? And I would say a couple of things. We could probably have a whole conversation just about this one issue, but the first step is the leadership team, whether that’s just the owner or you have a board, whatever size you’re at, the leadership team making an intentional decision that we are going to make systems a priority within our business. And this is something we’re going to invest in. So that’s step one.

The next step, and this is gonna be the hardest one for those visionaries out there. I’m in Texas, so I call them the visionary gunslingers. They have a million ideas, they’re brilliant at what they do but they’re always ready about that next thing is to lead by example. The leadership team first needs to make the intention, we’re going to do this. Then they need to be the ones who once systems are and processes are in place, they actually follow them. The big thing we see with those visionaries, you’ve decided we’re going to be a systems oriented business.

We’re going to create these systems. So we’re starting to have that well oiled machine. We have an integrator in there, but then the visionary or the business owner gets a new idea for say a new sales funnel that he’s gonna create. And he’s gonna have all these amazing leads and it’s gonna be a wonderful opportunity for revenue. Instead of following the system that’s in place and putting that down on paper, bringing it to the quarterly meeting so that the leadership team can decide that that’s going to be a rock that they want to implement.

Leadership must make an intentional decision to prioritize systems and lead by example, following and reinforcing established processes. Click To Tweet

And then bringing that to the team, the visionary or the leader, he goes straight to the marketing department and says, hey, I need you to create a landing page for this. No, no, don’t finish what you’re doing. This is key, this is important, this is priority now. Create this landing page, create the sales funnel, and then on and on down the road. If he does that, everyone on the team sees, hey, he’s not prioritizing the system, why should I? Whether it’s a conscious decision or not. So that’s why number two is so important, is leading by examples. People have to be bought in because if they’re not, it’s never gonna become part of the culture. We’re never gonna hear that’s how we do things here.

Okay, is there a number three?

I had a couple others. And again, these are just a couple of high-level things. But the next thing I would encourage, a practical step, would be having someone who is a systems champion or, depending how authoritarian you are, a systems czar. And that would be someone in your organization who is the person whose systems is part of their business. Another big myth that we see is that the business owner should be the one to identify and create the systems.

And as we kind of mentioned before with the visionary, usually they’re the worst person to create and document the systems. Ideally, you want to have that systems champion, that person who is more detail oriented, who values systems and processes within their job and within the organization, and has the bandwidth to actually take this on because it is a little bit of a project. And if you have, yeah. there and championing systems, now you’re gonna have someone who is always waving that banner and that flag.

Something else that you mentioned, and I think this is important, if you want to get to that point to where you have a viable and sellable business, is yes, on the one hand, you have the documented organized systems, but at the other, you’re going to need a project management system or software. So you’re going to need that Asana, that Monday, that ClickUp, whatever it is. So you have your who does what by when. So you need the accountability just like with any other project within your organization. But that accountability is always pointing back to the systems culture and they’re feeding each other.

So just to repeat that I heard correctly. So you appoint the systems champion, they’re going to be obsessed about turning everything into systems. But then you also need a project management solution, probably a software that will keep people on task that they will be updating their systems on a regular basis. What about optimizing so you you you finish the four steps the force. First step was basically it’s just the state of nature.

So, it’s the chaotic survival situation and then people recognize the need. That’s the stationary sticky note stage and then they start to scale it and then make it sellable. And then you said that after comes the optimization, so how is the optimization different from the sellability, having all the systems together in one place with the czar or a champion, and the project management? How is the optimization and what does it look like?

Yeah, and this is where it’s going to start looking a little different for each business and industry, but I’ll give you some of the key points that are going to be the same for most, if not all businesses. And the first one of those is after, for our clients. So we come in and we help them identify the mission critical systems and we document those and we start to integrate a systems culture within their business. One of the next things that we’re gonna do that’s really gonna be key for optimization is we create a dashboard for their business.

So that’s going to have those numbers, those KPIs in your business, the lead and lag numbers that are going to begin to help us to diagnose what’s going on. And, you know, anyone who’s read the four disciplines of execution, you know, it’s just having those, those winnable numbers within our business. When we’re first starting off, if it’s a smaller business, I’ll ask the owner, if they were on a desert island and they got a bottle that was delivered to them, you know, a message in a bottle and it had five numbers on it, what five numbers would they need to have to know the health of their business?

So that’s where we begin. It’s just a simple dashboard that’s gonna help us have a pulse on what’s happening within the business. And eventually, when we find the key systems within our business and the key numbers, we can even bring that down to having a number for each system, which will tell us, okay, this is what we need to tweak within the business. And that’s where it begins to get a little bit different for each business, because every business is going to have different goals.

So you might have one business whose goal is to take a certain percent of the market share so that they can exit at a certain point. But you might have another business who says, hey, I wanna build this to where it’s a cash machine and my main goal is to be able to step out, but I wanna have key cashflow. Those two businesses are gonna have very different goals. So the way that they fine tune their systems are gonna be a little bit different.

But basically. the idea is that you got your systems, they are managed, the project management solution. And then you start to measure those systems you’ve got your dashboard. And then you look at the numbers and the numbers are not good enough, then you take the systems to produce better numbers. And then it becomes a continuous continual process of optimization, something like that and then your dashboard is going to be scale for an IPO or whether you want to just have a family business, high margins, whatever it is, it’s going to be optimized to produce that result for you.

Exactly. You are a good listener, Steve. I see why you must be an awesome consultant. You’re like, let me just concise that down for you. But yes, that is exactly what we’re talking about when it comes to the beginning of the optimization process.

Okay, well, that’s very attractive, certainly, as a business owner. This is what you want. You want systems, you want them to produce the numbers that you need to grow your business, and you want to have a mechanism to constantly improve it and fine-tune it. So, if listeners would like to learn more and would like to have that systemologized system in their business, then how can they find out more about systemology as a framework, as well as reach out to you, maybe you can help them to implement it. Where do they find you?

So the first thing, if you just want to learn more about systemology and just begin to put this in your own business, I highly recommend Systemology by Dave Jenyns. A great book, easy read, it’s on Audible, put it on there while you’re driving or running, and then you’ll have a basic blueprint for how to begin this in your own business. If you do have questions or you would like some help for this, I’m more than happy to get on a phone call with you and talk you through it or even share. We have a PDF, which is our system for systemizing. And if you go to eijsystems.com/mb. So for management blueprints, I’ll put a link there and you guys can sign up. We can have a quick call together and more than happy to answer any questions you have or help you any way that I can.

Okay, management blueprint, I love that. Thank you for eijsystems.com/mb. That’s great, my business was also called MB Partners. So it’s a double win for me. So thank you for coming on the show, Joe. I really enjoyed talking about systems. I know it’s maybe boring for some people, but those people probably don’t own a business and they can afford to treat it as a boring subject. But for those of us who need to run things without being a slave to it, we need systems. So thanks for sharing this and please check out Joe’s website. He’s also on LinkedIn. You can reach out to him, Joe Newton. And if you enjoyed the show, please don’t forget to rate and review us on Apple Podcasts, subscribe us on YouTube and stay tuned next week because we’ll have another framework being dissected with an entrepreneur that’s going to come on the show. So thanks for coming, Joe, and thanks for listening.

 

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