How to Build Systems (So Your Business Runs Without You)
Summary
TLDRIn this insightful video, Ryan Deiss challenges the conventional wisdom of documenting every aspect of business operations. He introduces 'value engines' as a more effective approach, focusing on visual systems that empower teams to scale businesses without the need for exhaustive checklists and SOPs. Deiss outlines three core principles for documenting systems, emphasizes the importance of differentiating between value drivers and value chains, and stresses the necessity of visualizing processes for optimization. The video offers a step-by-step guide on mapping value engines, from identifying critical tasks to conducting stakeholder reviews, ultimately leading to a streamlined and efficient operational system.
Takeaways
- π Over-documentation can be a pitfall; focus on creating visual systems instead of checklists and SOPs for every aspect of the business.
- π Ryan Deiss emphasizes the importance of identifying and mapping 'value engines' which are the critical components of a business operation.
- π Three core principles for documenting systems: only document the critical, understand the difference between value drivers and value chains, and visualize to optimize.
- π The 'E-Myth' suggests systemizing everything in a business, but in practice, this can lead to unused documentation and wasted time.
- π Value drivers are key advantages that contribute to a business's success, while value chains are a collection of these drivers that create and deliver value.
- π Shifting focus from individual value drivers to value chains is crucial as a business scales, ensuring a holistic approach to business operations.
- π― Visualization is key to understanding and optimizing business processes; if you can't visualize it, you can't fully understand or optimize it.
- π Define value engines as visual representations of how a company creates and captures market value, covering customer acquisition, fulfillment, and innovation.
- π Different types of value engines include growth engines for customer acquisition, fulfillment engines for post-sale processes, and innovation engines for product development.
- π The process of mapping value engines involves identifying the engine, defining start and end events, brainstorming tasks and activities, and using shapes to represent different process elements.
- π A stakeholder review meeting is essential to ensure that all critical aspects of the process are captured and no steps are missed.
Q & A
What is the main argument against creating extensive checklists and SOPs for every aspect of a business?
-The main argument is that documenting everything in a business can be a significant waste of time and resources, as not all documentation will be used. Instead, the focus should be on creating visual systems that enable people to run and scale the business effectively.
Who is Ryan Deiss and what is his experience in managing businesses?
-Ryan Deiss is the speaker in the video script and he, along with his partners, manage 17 companies across a 200 million Holding Group. They specialize in systemizing businesses for scale and exit.
What is the 'e-myth' mentioned in the script, and why is it considered a myth by the speaker?
-The 'e-myth' refers to the idea from the book 'The E-Myth Revisited' that to be truly free as a business owner, one must document and systemize everything in the business. The speaker considers it a myth because, in practice, attempting to document everything often leads to unused binders of procedures and checklists, which is not efficient or effective.
What are the three core principles for documenting systems in a business as outlined by Ryan Deiss?
-The three core principles are: 1) Only document the critical, avoiding the 'e-myth' of documenting everything. 2) Understand the difference between value drivers and value chains, focusing on the latter as the company scales. 3) Visualize to optimize, ensuring that all key processes are understandable and can be improved through visualization.
What is a 'value engine' in the context of the video script?
-A 'value engine' is a visual representation of how a company creates and captures marketplace value. It includes the processes for attracting new customers, fulfilling promises to existing customers, and improving or creating products and services.
Why is it important to differentiate between value drivers and value chains according to the script?
-Differentiating between value drivers and value chains is important because while value drivers are specific advantages that contribute to success, value chains represent a collection of these drivers that combine to produce overall business value. Scaling a business requires a shift from mastering individual value drivers to mastering the entire value chain.
What are the three types of value engines mentioned in the script?
-The three types of value engines are: 1) Growth Engine, which visualizes how to attract and convert new customers. 2) Fulfillment Engine, which documents the delivery of promised value post-sale. 3) Innovation Engine, which visualizes how offerings are created, updated, or improved (not detailed in the video).
How does the process of mapping a value engine begin according to the script?
-Mapping a value engine begins by identifying the type of engine (e.g., growth or fulfillment), defining the triggering and ending events, brainstorming tasks and activities between the start and end, and using shapes like squares for tasks and diamonds for decision points.
What is the purpose of a stakeholder review meeting in the context of mapping a value engine?
-The purpose of a stakeholder review meeting is to involve everyone involved in the process to ensure that all critical steps are included and to identify any missing components of the value engine map.
How does the script suggest documenting only the critical aspects of a business process?
-The script suggests conducting a value engine audit to identify the critical 'power stages' that cannot afford to fail, and then documenting only those stages with checklists and SOPs to avoid overwhelming the team with unnecessary documentation.
Outlines
π The Myth of Comprehensive Documentation
Ryan Deis, managing partner of a 200 million Holding Group, challenges the conventional wisdom that businesses must document every procedure. He recounts his own experience of shutting down his company for a month to create exhaustive documentation, only to find it unused and a waste of time. He introduces the concept of 'value engines' as a critical yet often overlooked component of a business operating system. Deis emphasizes three core principles for effective system documentation: 1) Document only the critical to avoid the 'E-Myth' of documenting everything, which can be impractical and inefficient. 2) Understand the difference between 'value drivers' that give a business an initial edge and 'value chains' that combine various value drivers to produce sustained value as the business scales. 3) Visualization is key to optimization; one must be able to visually represent how a company creates and captures market value.
π Mapping the Value Engine for Business Growth
The video segment explains the concept of a 'value engine,' which visually represents how a company creates and captures market value. It outlines the three types of value engines: the growth engine, the fulfillment engine, and the innovation engine. The focus is on the growth engine, which visualizes customer attraction and conversion. The process involves identifying the triggering event (how customers become aware of the business) and the ending event (typically a sale). The speaker uses 'Mommy Fit,' a fictional e-commerce company targeting stay-at-home moms, as an example. The mapping process starts with sticky notes and a whiteboard, asking 'then what?' to chart the sequence of events from the initial customer touchpoint to the sale. The session also discusses the importance of differentiating between value drivers and value chains, and the necessity of visualizing business processes for effective scaling and management.
π Brainstorming and Refining the Value Engine
This part of the script delves into the practical steps of brainstorming and mapping out the tasks and activities that occur between the start and end of a value engine process. The speaker introduces two shapes used in mapping: squares for tasks and diamonds for decision points. The process involves asking 'then what?' to chart the sequence of actions, such as a customer seeing an ad, registering for a challenge, and potentially purchasing a product. The script emphasizes the importance of documenting current practices rather than ideal ones to ensure the map reflects actual operations. It also stresses the need to involve stakeholders in reviewing the map to ensure all critical steps are included. The goal is to create a visual representation that can be optimized and understood by all team members, ultimately leading to a more efficient and effective business process.
π Streamlining Documentation Through Value Engine Audit
The final paragraph focuses on the importance of auditing the value engine to identify critical stages that require detailed documentation. It suggests conducting a stakeholder review to ensure all essential steps are included in the map. The speaker then recommends creating checklists and standard operating procedures (SOPs) only for these critical 'power stages.' This targeted approach avoids the inefficiency of documenting every aspect of the business. The process concludes with finalizing the value engine map into a flowchart tool and integrating it into the company's operating system for easy access and reference. The speaker reiterates the importance of visualizing and optimizing business processes and offers resources for further guidance on scaling a business using a comprehensive operating system.
Mindmap
Keywords
π‘Checklists
π‘Standard Operating Procedures (SOPs)
π‘Value Engines
π‘Visual Systems
π‘Critical Processes
π‘Value Drivers
π‘Value Chains
π‘Growth Engine
π‘Fulfillment Engine
π‘Innovation Engine
π‘Stakeholder Review
Highlights
The video argues against the need for excessive documentation in businesses, advocating for visual systems instead.
Introduces the concept of 'value engines' as a critical component of a business operating system that is often overlooked.
Presents three core principles for effective system documentation in businesses.
Dispels the 'E-Myth' that every aspect of a business must be documented for success.
Shares a personal anecdote about the futility of documenting everything in a business.
Explains the difference between 'value drivers' and 'value chains' and their importance in business scaling.
Emphasizes the necessity of visualizing business processes to optimize them effectively.
Defines 'value engine' as a visual representation of a company's marketplace value creation and capture.
Differentiates between three types of value engines: growth, fulfillment, and innovation.
Provides a step-by-step guide on mapping a value engine using sticky notes and a whiteboard.
Advises on focusing on documenting 'what is' rather than 'what should be' for practical optimization.
Suggests holding stakeholder review meetings to ensure no steps are missed in the value engine mapping.
Recommends auditing the value engine to identify and document only critical stages with checklists and SOPs.
Advocates for a selective approach to documentation to avoid overwhelming and unused checklists.
Instructs on how to finalize value engine documentation into a flowchart tool.
Details the process of integrating value engines into a company's operating system for accessibility.
Encourages taking action by mapping and visualizing business processes without documenting everything.
Transcripts
stop creating checklists and standard
operating procedures that your team will
never use in this video I'm going to
show you why you don't need to document
everything in your business and instead
I'm going to show you how we create
visual systems that enable our people to
run and scale our businesses without us
so if you've been told that you need to
create checklists and Sops for literally
everything that your company does this
video is for you now if you don't know
who I am my name is Ryan dice my
partners and I manage 17 companies
across our 200 million Holding Group so
we know a thing or two about systemizing
businesses for scale and exit and what
I'm going to show you now is the most
critical piece of a business operating
system that everyone forgets about
they're called value engines all right
before we get into the nitty-gritty of
how you actually go about mapping and
documenting what we call Value engin I
want to give you three core principles
they really Define how we go about
documenting systems in our businesses
and frankly why it works a lot better
than the way that everybody else uh
tells you core principle number one is I
want you to only document the critical
and this is important I refer to this as
the e- myth myth now if you have not
heard of the book The eth you probably
have been living under some business
Rock somewhere it is one of the uh most
read most recommended business books of
all time and for good reason it's a
great book it has a lot of great ideas
but unfortunately the core idea of that
book is that you as a business owner if
you want to be truly free need to
document and systemize literally
everything that happens in your business
and while this is generally true it
doesn't actually work that well in
practice especially if you do what I did
which is shut down your entire company
for a month to do just that now this is
not an exaggeration I did that I
literally went on vacation while I was
on vacation I read the emth I got you
know engaged I got frankly a little bit
too excited as entrepreneurs are apt to
do and I remember coming back from
vacation walking in on Monday call
calling an all hands companywide meeting
and declaring we're not going to do
anything new at this company until
absolutely everyone in the organization
has documented absolutely everything
that they do well when I made this
announcement a couple things happened
number one some people panicked cuz they
thought that they were all getting fired
and I was having them just document
their stuff before I showed him the door
and another group was just frankly
ticked off that I was asking them to
waste time creating a bunch of
documentation needless to say nobody was
happy but we powered through we pressed
on I was able to kind of rally everybody
to the cause and when we were done like
I said about a month later we had it
literally binders filled with colorcoded
tabs and all these beautiful amazing
checklists that documented everything
that we did in the company I felt so
good about it I felt so proud of it and
this is not an exaggeration literally no
one ever looked at those checklists ever
again it was one of the single biggest
waste of time core principle number two
is you need to understand the difference
between value drivers
and value chains now this is really
important because when you first started
your business there's a really good
chance that you were successful because
one or two specific value drivers and a
value driver could be something like
maybe you're really good at marketing or
maybe you're really good at sales maybe
you're really good at fulfillment um
maybe you had a particular um
proprietary piece of intellectual
property something that nobody else had
Standalone all of these little key
advantages are what's known as value
drivers and there essential if you want
to be successful the challenge is is
that entrepreneurs as their companies
scale they never get out of the focus on
the individual value drivers and what we
need to do as the company scale if we
want to start working above our business
not just in the business we need to
shift our Focus to Value chains and so
where a whereas a value driver is one
particular value driver uh a value chain
is a collection of value drivers to
varying degrees of importance that com
bind or what really produced the value
in the business in other words it's not
about just getting one thing right it
really is about getting a whole lot of
little things right this is one of the
most difficult shifts that Founders that
entrepreneurs need to make this shift
from value driver Mastery to Value chain
Mastery but that's what we're going to
be accomplishing here now core principle
number three is you've got to visualize
to optimize I've said it before I'm
going to say it again you cannot
optimize if you don't understand
something and you can't say you
understand something if you can't
visualize that thing so you might be
able to explain to me how your company
works but can you show me I submit to
you if you cannot show on a simple
diagram and a simple flowchart how your
company creates and captures Marketplace
value there's a really good chance that
you don't fully understand it if you
don't fully understand it really good
chance that you can't fully optimize it
but good news we're going to be solving
for all of that in this video so let's
get into it all right so before we dig
into too much I should probably Define
exactly what a value engine is so a
value engine is simply A visual
representation of how a company creates
and captures Marketplace value basically
how do you go out there and get new
customers and clients how do you fulfill
the customers and clients that you
already have and how do you create or
improve the products and services that
you have now this is important because
kind of these are the three things that
all companies do right all companies
make stuff all companies sell the stuff
they make and all companies fulfill the
stuff they sold what you need to
document are two or three of those
valuing we're going to get uh into the
order in just a second when you actually
get into this uh I'm going to be demoing
I'm going to be kind of showing you um
my impromptu whiteboard and I'm going to
show you how we use sticky notes it's a
really simple process you know when
you're done it eventually turns into a
you know prettier more professional
looking flowchart like this you know or
like this so to get started with this
all you will need are number one some
sticky notes you're going to need a
Sharpie and you're going to need to
whiteboard some type of writing uh
surface I want to go back to the
different types of value engines cuz
there are really three different types
of value Eng that you need to know about
the first type is the growth engine and
the growth engine visualizes how you go
about attracting and converting new
customers or clients so if I were to ask
you right now how do customers happen in
your business how do clients happen in
your business there's a really good
chance you could tell me but could you
show me second important type of value
engine is the fulfillment engine as the
name suggests fulfillment engines
visualize they document how you deliver
upon the promised value so whatever it
is that you sold in the growth engine
the Fulfillment engine is going to show
this is what we do after the sale is
made the third type the one that we're
not going to get into in this video is
the Innovation engine and The Innovation
engine documents it visualizes how you
create how you update how you improve
your offerings depending on your type of
business The Innovation engine could be
really really important if you're a
product based business business if you
do manufacturing if you're a software
company and you want to show how you go
about uh creating new features then
Innovation could matter because if you
document how customers happen and if you
document how you serve those customers
once you have them what you've
effectively done is you've you've
documented you visualize the entirety of
the customer journey and that is what we
want all right so let's get into the
step by step of how you go about mapping
your very first value engine before I
show you here though I did want to let
you know uh I wrote a comprehensive
report on exactly how we do this I will
link up to the report in the description
but while I'm going to show you if you'd
rather read through how this happens I
Do cover this uh in great detail so if
you want to do this with your team uh
just know that that is there that is
available uh inside this report step
number one is we simply need to identify
what the heck is the engine uh that we
are mapping so if you look over here
you're going to see here growth engine
mommy fit so in this case we're dealing
with a fictitious business called Mommy
fit they sell Fitness training and
equipment to stay-at-home mom e-commerce
D Toc company let's go with this you
know as the example so I just wrote up
here growth engine and then the the
particular uh brand now I'm going to
encourage you to start with your growth
engine as well step two is we want to
define the triggering and the ending
event so the triggering event speaks to
what starts this entire process now for
a growth engine we answer that question
really by by saying like how do people
become aware that we exist so you know
maybe you run advertising maybe you
sponsor events um maybe you buy lists
and hand those over to your sales team
uh maybe you're almost exclusively
referral driven or you deal with walk-in
traffic the point is there is some way
that people find out that you exist
similarly we also need to define the
ending event we need to decide ahead of
time when is this particular value
engine going to be done typically growth
engines are done when the sale is made
when the contract is signed the
triggering event for a fulfillment
engine is usually a sale is made
fulfillment engines tend to to begin
where the growth engine ends that's why
I say if you do these two you combine
you have the entirety of the customer
journey and as for when a fulfillment
engine ends that's going to vary from
business to business what we usually
like to say is we're going to have a
fulfillment engine end when we ask for a
testimonial ask for a customer story
because you're unlikely to do that until
the promis value has been delivered but
again let's say for right now here we
are we are mapping this growth engine
for mommy fit we're going to say how do
people become aware that mommy fit
exists and it's really really simple um
they're going to start with Facebook ads
uh they also run some Google ads and
they do some Instagram stories and real
so we're going to put that here we're
also going to go up here we're going to
write the word start trigger event done
what about the ending event and in this
case we're going to say that the ending
event again is a purchase was made
purchase was complete we're just going
to put that over here for now put it
somewhere over here in the right hand
lower right hand corner you might wind
up moving it around later on so there
you have it we got the triggering event
uh we have the ending event now what we
need to do step three is we need to
begin to brainstorm the tasks and
activities between the start uh and the
end and to do this there's really only
two shapes that you need to know about
shape number one is just the square and
the square is a simple task or activity
something happened the second shape that
you need to know about is the diamond we
use diamonds when it's what's known as a
Gateway or a decision diamond in other
words when there's kind of a fork in the
road but the way that we go about
mapping this is we just simply ask one
question over and over and over again
and that one question is then what now I
know that seems a little bit silly but
follow along with me here somebody saw a
Facebook ad a Google ad an Instagram
story are real then what happens and if
you're doing this with your team that's
just the question you'd ask okay team so
this is where it starts then what now if
I were doing this with my FIT they would
tell me um well then what happens is
we're going to send them to the 7-Day
mommy fit challenge right because that's
what this uh company does they they
drive ads into a registration page where
people are signing up for this 7-Day
challenge where they're getting free
videos uh and things like that people
see these ads then they go to this
particular sign up page great got it
then what now in this case the team if
they're clued in are going to say
something like well it depends and when
you hear it depends that is your signal
to turn the square on the diagonal and
in this case it depends on what well it
depends did they register or not because
if they didn't register right then in
that case we're going to need to run
some retargeting ads right so we we've
got all these right here and they are
driving toward the 7-Day mommy fit
challenge page the question then is did
they register well if the answer is no
they did not register then we're going
to run some retargeting ads and Those
retargeting ads are going to hopefully
send the traffic back over here to this
page so this is the flow they go through
if the answer is no now what if in fact
uh they did if they did register we're
going to deliver the series right pretty
simple if it's a yes and they did
register we're going to deliver the
7-Day Challenge Series that that's going
to happen in this stage but you can see
here this diamond shape if you get to a
point where there's a fork in the road
you go I don't know it kind of depends
if they opt in this happens if they buy
then this happens if they don't then
this happens if they ordered you know
the the Blue version then this happens
if it's a red one then it's going to be
this other one anytime you reach a fork
in the road that is a signal to turn
that square uh on a diamond and to show
how the different flow is going to
happen look none of these steps no core
value chain in your business is just a
perfectly straight linear process
there's always going to be Little Forks
in the road then what happens well um
hopefully they click on an offer link
because in every single one of these
challenge video series we're going to be
encouraging them hey if you like like
this then you should buy our program you
shouldn't invest in our training videos
so that's where this goes next did they
click on an offer link uh yes or no um
if the answer is yes they did well great
now what we're going to do is they're
going to go over here to the workout kit
sales page they're going to go over to
our sales page and they will
hopefully sign up from that um if they
didn't that's okay um we have some
follow-up emails that we're going to be
sending and hopefully at some point you
know if if this right here is a no then
hopefully at some point these follow-up
series will go ahead and bring them back
over here to the workout kit sales page
then what happens well you know it
depends did they buy did they
purchase right did they buy did they
purchase if no again that's okay we've
got some follow-up series uh that's
going to uh follow up with them and if
they did buy then we're going to make
them an offer for the deluxe kit
upsell and at this point whether they
buy this or not we are going to complete
the purchase and we are going to begin
fulfillment and at this point we will
consider this particular process done
this is the end couple of points I want
to make before we move on to step number
four point number one um I want you to
make sure that you're documenting what
is not what should be that is so
incredibly important often times and I'm
going through this with clients or
portfolio companies they want to say ah
well I know we should be doing this we
want to document what is because again
we want to visualize so that we can then
optimize now if you know that you're
going to be doing something soon you can
use a different colored sticky note or
something like that so we need more
traffic great let's add some more sticky
notes to the front customers clients
aren't converting at a high enough rate
okay well maybe we need to add some more
steps to the sales process people are
you know not buying okay maybe we need
to add more followup optimization equals
adding more sticky notes step four
though is going to be really important
in step four I want you to hold a
stakeholder review meeting the
stakeholder review meeting is a fancy
name but basically what you want to do
is you want to get everybody involved in
this process so typically it's going to
be people in the marketing you know in
sales teams if if it's a growth engine
maybe on the product and services team
if it's a fulfillment engine but you
just want to ask him hey team as you
look through this what did we miss and
in this case the good Folks at you know
Mommy fit when they were going through
this they were like hey you forgot about
the weekly workout videos remember how
uh every single week we send out a
newsletter with a new workout video and
every single week that's also designed
to drive here so this is another
awareness piece um and frankly the
people after the email follow-up series
if they don't buy well they're added to
this list as well that's the important
aspect of the stakehold review meeting
you're going to find the different
pieces that maybe you missed out on step
five this one is really really important
and this is when we actually finally get
back to that pesky checklist and sop
front I want to be clear I'm not saying
that your business shouldn't have
checklist and standard operating
procedures I didn't say that I'm simply
saying you don't need to have checklist
standard operating procedures for
everything so what should you have a
checklist and a standard operating
procedure for the way that we do this is
through what we refer to as a value
engine audit I actually describe how to
do this process uh in the operating
system uh case study that I link to
below as well as to another video that
I'm also going to link to you know in
the description but the process is
really really really simple what you do
is you're going to audit the value
engine and you're going to say okay team
of all these different steps and stages
what are the ones we absolutely
positively cannot afford to screw up you
know and and maybe the team goes hey how
we run Facebook and Instagram ads that's
that's really important that's what we
refer to as a power stage so we're going
to draw an as through around that and
same with like this weekly workout video
that's important that that gets a lot of
our prospects who didn't buy the first
time re-engaged cuz you know we found
that people really sometimes need to go
through this challenge a couple times
before they're ready to buy so that's a
really important power State you know
this whole delivery process here aspects
of it are automated but that's that's
really critical we should have checklist
around that and you know same with how
we go about building and optimizing um
our sales Pages that's another critical
component of it right so what we've
identified here is 1 two uh three four
truly critical what we refer to as power
stages now what we're going to do is
we're going to ask the question okay who
on the team owns this hey team who's
responsible for Facebook and Instagram
ads maybe somebody says oh well that's
that's Mary okay Mary the next time you
set up a Facebook Instagram ad campaign
I want you to document exactly what
you're doing don't stop what you're
doing to do it right just do document
while you do now if you do this a couple
things are going to happen number one
you're only going to document the
critical right so what that means is as
a company you're not going to have
hundreds and hundreds of checklists and
Sops that nobody ever looks at and it's
a Giant waste of time right we might
have 10 20 30 but we're not going to
have 100 200 300 step six really really
simple once you've done the um
stakeholder review meeting what you've
identified and documented some of those
power stages I'm going to encourage you
then uh to finalize that into some type
of flow chart tool there's a hundred of
them out there it doesn't really matter
which one that you use uh and then step
seven once you've documented in a
flowchart tool would be to add it to um
your company's operating system so you
can see right here this is an example of
uh you know my company's operating
system and if you go in to to our
company operating system uh into value
Eng you can see here that we've got all
of our different value engines uh that
are here that are reviewable that are
clickable that are linkable that anybody
on the team can dig in uh and they can
access all right so just to round this
out and I know that this is a pretty big
video so thanks so much for watching
really important stuff though but what I
want to be clear is this is how we
document this is how we pass knowledge
down and this is how we create systems
without burning out and without overd
douen uh every little thing also um keep
in mind that value engines and playbooks
are just one piece of a comprehensive
company operating system if you want to
get into all of the other pieces just
know that uh I do have a full video on
how we scaled from 10 million to 200
million using a scalable operating
system so I'll be sure to link that up
in the description as well and finally
obviously if you want uh our help my
team's help mapping your own value
engines your growth engines uh your
fulfillment engines and getting them
installed in an operating system it's
literally what we do with the scalable
company I would love nothing more than
to help you do that and I'm going link
up to that details about that in the
description as well with that said
thanks so much for watching this video
I'm going to encourage you to take
action uh if you got some questions you
got some comments drop them below I'd
love to hear from you uh and get out
there start mapping start visualizing
but don't document everything deal all
right I'll see you in the next one
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