Are you copying the wrong Business Model?
Most Lean Practitioners will shove in your face the power and benefits of the Toyota Production System (TPS) … but is it the best? The foundational tenant of TPS is “Respect for People” which evokes that Toyota believes in lifetime employment of their Team Members. However, in the real world we are seeing an increased use of migrant Contract or Temp labor.
I challenge all of you to look at your organization as if it were a McDonald’s franchise. Do not look at it from the perspective of the menu but rather the processes. The average tenure of a McDonald’s employee is around 6 weeks … so not a lot of time to onboard an employee and have them effectively contributing to profitable production … but it is something that McDonalds has accomplished extremely well.
In his classic business book The E-Myth Revisited, Michael Gerber asserts that process is what differentiates successful companies from the also-rans. Gerber writes that franchises succeed because they have a clearly defined system or process for everything—hiring staff, invoicing, greeting customers, selling, performance reviews, coaching and much more.
Gerber goes on to argue that all business owners should build processes into their business as if they were creating a franchise, even if they have no intention whatsoever of franchising it. In other words the act of defining a process, documenting it, testing it, tweaking it, and coming up with a standard step-by-step methodology for everything in your business as if you were establishing a turn-key, franchisable process, will help your business succeed.
The alternative to managing by processes is managing by the seat of your pants. This might work if you are brilliant, and the sole owner and employee in the business. But as soon as you have one employee and need something done when you aren’t there to supervise, you need a process. Otherwise, your customers will not get a consistent service level or experience with your company.
Most fast-food franchises are successful because of their unwaveringly predictable consistency, not because of their culinary delights. No matter where you go to a McDonald’s, you get exactly what you expect. The restaurant and washrooms are always clean. The employees always wear uniforms. The menu is the same, with perhaps a minor local variation. The hamburgers taste the same—no better and no worse. Employees all greet you exactly the same way and they always ask, “Would you like fries with that?” Think of the incredible efficiencies, performance measurements, and competitive advantages a company has when it has developed those processes and proven repeatedly —in thousands of locations—that it has mastered the best possible way to conduct its type of business.
Process is one of the main reasons that franchises are so successful. Someone buying
and running a franchise is significantly more likely to still be in business three years later compared with someone starting his or her own business in a similar field. Is the franchisee more intelligent, more passionate, or more committed to success than the non-
franchised competitor? Probably not, but statistically the franchisee is much more likely to succeed and earn a better living.
Why the advantage? Because franchisors have developed business processes that enable their franchisees to succeed by stringently following the tried and true.
They even have processes in place to make sure the franchisee follows the processes. They have developed best practices through trial and error and arrived at an approach that works. Not only does it work, but it works consistently. Franchisors have invested the time and money to make mistakes so their franchisees don’t have to.
Assuming that you are not part of a franchise, you and your staff may have some heavy lifting to do to create a business that operates as if it were a franchise. Building documented processes for each part of your business will help you increase sales, reduce costs and expenses, hire the right employees, retain your best employees, partner with the right suppliers and distributors, and keep your customers coming back.
More important to you, a business that is run by systems rather than the day-to-day whims of individuals is easier to manage, easier to sell when you’re ready, and worth far more to a prospective buyer.
How do you get started on this journey? Begin by asking yourself and your management team what I call the Systematic Process Question: In your opinion, what is the one most important part of our business that could benefit immediately from a systematic process that would assure consistently successful results?
We do however advocate that many of the methodologies used by Toyota have significant merit in other businesses just make sure you implement them with a McDonald’s approach. Highly engineered and error proofed to the nth degree.
Even in the spirit of 5S at McDonalds every employee is instructed shortly after hiring that “if you have time to Lean you have time to Clean”. I am always surprised to have employees who worked for McDonalds many years ago able to recite the mantra quickly … while they are struggling to implement 5S within their respective organizations.
In order to obtain consistency an organization needs to invest heavily in process development in order to make it look easy and have it repeatable. Something that many organizations that don’t get it fail to do and view these investments as expenses … while the others that do get don’t hesitate to make the investment quickly.
You would think the level of standardization within McDonalds would stifle innovation? Innovation thrives within McDonalds even at the franchise level but innovation is vetted at the corporate level and if it truly is a good thing it is quickly deployed as a new best practice.
Pick the most important one and turn it into a process. Then ask the question again and again until your business is franchisable. You’ll be glad you did.