Why Systems Are a Startup’s Best Friend

Kat Denan, Sales Funnel Strategist for Service Based Businesses

Hustle. Growth Hacking. Scaling. As startups and entrepreneurs, we love these things. They’re big and powerful and sexy and they make a difference in your business. All of these things are essential to the success of any startup. But there’s something else that’s just as important, that doesn’t get talked about.

Systems.

We don’t talk about systems. Because honestly…

Systems are kinda boring.

When we think about systems, we think of these massively complex processes. Either software or hardware, or the bureaucratic red tape that comes with government and large corporations.

We perceive systems as immensely complicated things with many moving parts.

Except that’s not actually true. A system can be as simple as having a place to put your keys, or a set way you name your files. It’s a “small” system, to be sure. But it’s effective. Because it’s a repeated action that brings about a desired, beneficial result.

And that’s all a system really is. In fact, eMyth defines a system as exactly that:

“a repeated course of action — a way of doing things — that brings about a result.”

A result like…being able to find your keys before leaving the house every morning…or finding those expense receipts when it’s tax time…or repeatedly generate leads and sales in your business.

…do you see where I’m going with this?

We all know that a high percentage of startups fail.

The causes are wide and varied. Some fail to find product market fit, some fail to scale, some run out of money, while others just straight up burn out. The common approach is to first have an idea, find product/market fit, and then look for ways to scale.

steve blank’s most recent ThinkGrowth piece talks about this process. In it, he lays out the three stages a startup goes through on it’s way to becoming a large company. They are:

  • Search — the search for a repeatable & scalable business model
  • Build — scale by growing customers/users/payers
  • Grow — achieve liquidity & optimize business processes

He describes the Search phase as having “little process”, with the Build phase being when founders should turn their attention to: “culture, training, product management, and (wait for it…) processes and procedures.” Among those processes and procedures he recommends “writing the HR manual, sales comp plan, expense reports, branding guidelines, etc.” essentially, codifying and creating what we typically think of as systems for your business.

These are the “rules” for how things are done.

And he’s right — this is the perfect stage in the business to start bringing in those systems.

But it’s the wrong time to start with systems in general.

Systems should be a part of your business from day one, and I can explain why in two words:

Cognitive. Load.

Cognitive Load Theory states that the brain has two different types of memory: working memory, and long term memory. Think them as the difference between your computer’s RAM, and the portable hard drive you store all of your files on. Where long term memory is, in effect, limitless, working memory can only hold 4–5 pieces of information at once. For a startup founder, this is critical. When you’re juggling not just many tasks, but many business roles at the same time, cognitive load is critical.

Studies have linked heavy cognitive load to decreased academic performance in teenagers, as well as recording negative effects on task completion, an increase in errors, and poorer performance on complex tasks. As any founder can tell you, when you’re responsible for marketing, sales, funding, product development, market research, prototyping, and more, that’s a lot of strain and a lot of cognitive load to take on.

And mistakes can be fatal — in the form of missed deals, lost opportunities, and declined funding.

Systems reduce cognitive load.

We already have systems. Any task that we do over and over often enough, we get better at and we develop a process for. Even if it’s only stored in your head, if a task has multiple steps (like writing a blog post, for instance) we’ll develop our own systems, based on how we like to work and what’s worked for us in the past.

Writing those systems down reduces cognitive load because you no longer have to actively remember the steps.

You no longer have to scramble for formatting and citation rules mid-way through a post. …Or spend three days searching for your article hook.

These systems can take the form of lists, documents, checklists, or whatever works for you.

So long as the steps get documented, I don’t care if it’s on a ketchup stained napkin taped to the wall.

Having those steps — those systems — written down, in some form, removes the need for them to be stored in your working memory. Granted, they’re not in your working memory all the time. If you’ve done this particular series of actions enough times they’ll be stored in long term memory. But whenever you’re actively doing that task, they get brought back out, and you have to actively recall them while simultaneously attempting to do that task.

And when that process is more complex — like having a blog post to write — having a “sub-system” or “sub-checklist” for becomes immensely valuable, in case you miss a step.

Especially if you’re a founder.

Because let’s pretend, for a moment, that you have a perfect memory. You never forget anything, and you’ve never made a mistake due to cognitive overload. Your company has hit the point where you’ve either become profitable, or have secured funding. Now, you’re looking to hire, and say you’re bringing on a marketing person. (Not that I’m biased towards marketing or anything.)

What happens to that new hire if those systems for doing the work are all in your head? How you’ve been creating content, dealing with the press, working any of the marketing channels you’ve chosen…

If there’s nothing written down, no system to follow, your new employee has to either:

  1. Figure it out on their own and devise their own way of doing the tasks you’ve assigned them
    OR
  2. Get that knowledge out of your head somehow and learn how you do it

With a system, even if it’s just a simple checklist, you’ve made it that much easier for your new employee to start doing their job.

This isn’t to say that everyone should follow and use the exact same systems. Far from it. Different businesses have different needs. Different people process information in different ways and have different learning styles . You should do what works for you and your business. Systems need to be flexible and grow with your business.

But when we do work we repeat, we create our own systems. Writing them down frees up precious mental space that we can use for other things — like thinking about what needs to go into your investor’s pitch instead of wondering where you put your last slide deck.

Source: Thinkgrowth

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