I have run many companies in my life and I have known many more, in them I have realized the importance of certain things, as well as why there are companies that are successful, which even manage to build franchises and others that fail terribly.
There is no magic in this, it is a very precise work of strategy, planning and absolute dedication to all that work.
Surely you have known companies in which the owner, in addition to being the General Manager, is also the Director of Operations, the manager, the quality manager and even the sales manager, an all-rounder. The result is that none of the functions are properly carried out, because there is no clarity about each position’s activities, nor about the limits of their responsibility.
When we do an adequate planning of the structures and processes of a company, we are making it institutional. This is the secret of successful companies, to be absolutely institutional.
The institutional framework consists of having in detail all of a company’s processes, activities, positions, benefits and structures, and following them. All this is recorded in manuals, from the activities of each person in the company, to the limits of their responsibility, so that if something fails, we know in which part of the process it happened, what were the circumstances and, who was responsible?
To make a company institutional, we must at least have the following:
- Organization chart with responsibilities and functions. Here you must state what the organizational structure of the company consists of, as well as what are each person’s activities and responsibilities.
- Processes. A process is a chain of repetitive activities that allows us to achieve some measurable result, we must standardize our processes and also describe them in detail.
- Measurement parameters. The only way to evaluate our results objectively is by measuring them, for that, we need to generate mechanisms that allow us to do so.
Although making the company institutional can involve a lot of work, especially at the beginning, the reality is that once it is established and defined in manuals, activities become much easier, for example, measurements can lead us to identify errors, but also to improve our own processes, which in the long run will be reflected in the success of the company.
I will give you a very simple example, what franchises sell, in addition to the brand, what they sell you are standardized processes, which they will supervise, making sure that you implement them properly.
That is why if you are looking for your company to grow, the first thing you need to do is to make it completely institutional, in such a way that everything works with you, as well as without you being there, which will even help you get a better price for it, if at any time, you intend to sell it.
In my book Worse than you, better than all, there is a whole chapter that covers this topic. Is your company institutional or do you continue to run it as a mom and pop’s store?
