Seeing Patterns Requires Perspective
Have you ever walked downtown in a big city? I’ve walked the city streets in San Francisco, Chicago and New York. And you know what I never noticed? The color of buildings. That’s only something you notice when you look at a picture of the city and you can see clumps of white, red or black buildings. This past week I spent time with a lot of folks running businesses around WordPress and one phrase I heard bantered about was the need to work “on” the business instead of just “in” the business. As a systems guy, that’s my natural bent, but I understood what they were saying, because if it’s not your bent, it’s easy to get caught looking at things from the street level.
There’s something else peculiar when you look at things from this birds-eye perspective. You start asking other questions. Questions you never would have asked at the street level. Questions about the correlation between building color and age, or why it feels like the red buildings are all shorter. These are second level or derivative questions.
Derivatives aren’t Easy
If I ask you how many hours a day you work, you could probably tell me. If I asked you how many vacations you take a year, you might give me some guess or average. Those are first order questions. Derivative questions get harder. If I ask you the relationship between the number of vacations you take as time has gone on, you have to do more work. But real value comes from these kinds of derivate questions.
- What’s the rate at which you’re rejecting projects?
- What’s the rate at which you’re generating more than 100% profit from your work?
- What’s the rate at which clients are accepting your quotes within 3 days?
Do you know the answer to these questions?
The first helps you think about “perfect fit” clients and the rate at which you’re honing in on who that perfect customer is. The second relates not only to your profit margin but more importantly to the number of unpredicted events that robbed you of profit. The last one suggests that your rates may be too low if the acceptance rate moves high.
But none of these questions get answered without doing some tracking. And none of them get answered without taking a moment to work “on” rather than “in” your business.
Systems Thinking Applied
There are two kinds of folks in the world: event thinkers and systems thinkers. Most folks are event thinkers – thinking that everything around them, and everyone they interact with are part of a natural cause-effect relationship. They see an event, think of it as an event, and then look for the cause. System thinkers see things differently. They see systems with positive and negative feedback loops and note that these are the factors that drive the interactions around us.
How you think about the world will impact how you think about your business.
You may not consider yourself strategic, but if you begin to see your business as part of a larger system, and watch the factors that are impacting it – both positively and negatively – you stand a much better chance to find the levers necessary for making changes to how well you’re running it.
Let’s look at the simple notion of quoting, which I’ve written about before. Let’s say you start tracking the size of your quotes, the date you delivered it, the date you received an answer, and the date you projected you could start for every quote you delivered. You likely know the natural feedback loops that exist – from price sensitivity to an eagerness to start/finish right away. You probably also know how they impact everything else – the speed at which you receive an answer, and the answer itself. But imagine that you’re tracking it all.
You can now see how small changes – either to price, or to start dates – could influence the speed at which you get answers as well as the answer itself. Those are your levers. But you’ll never get a chance to use them if you don’t even have a baseline to review.
- You need to step out of your business regularly (weekly/monthly) to see things from a different perspective.
- You need to start tracking certain metrics that will help you determine what levers you have to enhance how things are going.
- Systems thinking can help, if you learn it or work with someone who does.
So what are you doing to help you get perspective? Or put another way, what’s stopping you from taking the time you need to get it?