The Startup CEO’s #1 Job: Building a Business Operating System

Andy Cook
March 9, 2020
The Startup CEO's #1 Job: Building a Business Operating System

When Haruki Murakami, one of the most popular novelists in Japanese history, decides to write a new novel, he sticks to a daily routine that’s more rigid than most Olympians’.

For six months to a year, he: 

daily schedule of Haruki Murakami
  • Wakes up at 4 a.m.
  • Works for 5-6 hours.
  • Runs for 10 kilometers or swim for 1,500 meters (or both).
  • Reads.
  • Listens to music.
  • And, finally, falls asleep at 9 p.m.

He does this until he uses his very last drop of ink.  

“I keep to this routine every day without variation,” he said in a 2004 interview for the Paris Review. “The repetition itself becomes the important thing; it’s a form of mesmerism. I mesmerize myself to reach a deeper state of mind.”

Haruki, for all intents and purposes, is a machine. When writing, he operates on a single set of unwavering principles. And it’s helped him earn millions of dollars during his career. 

In the business world, companies can operate on the same kind of principles — repeatable processes — to achieve optimum productivity and effectiveness. In fact, GitLab, a DevOps platform, has reached a valuation of $2.75 billion by developing a business operating system handbook that they follow to a T. Let’s look at how you can develop and ultimately implement these processes.

What Is a Business Operating System?

A business operating system resembles a computer’s operating system. Similar to how an operating system manages a computer’s hardware and basic functions, a business operating system is a standard, company-wide aggregation of processes for efficiently and effectively executing anything at your company, such as communicating with your colleagues, setting goals, making decisions, launching products, managing customer relations, and hiring talent.

For instance, if you need to talk to the “directly responsible individual,”  or DRI, for a project but don’t know who it is, your business operating system will help you identify that person.

A Business Operating System Will Help You . . . 

OPERATE BY YOUR VALUES

During his talk about scaling a company with principles, values, and a mission at Launch Incubator in 2018, Intercom’s chief strategy officer, Des Traynor, delved into how your company’s principles are essentially a hack to streamline decision making and, in turn, steer all your employees toward the same direction. 

“Every decision you’re making highlights a principle that you don’t have. If you have to make a decision, why is it that person who came to you for that decision couldn’t make it for themselves? What is it that you know that they don’t know that makes this decision easy for you and hard for them? And is this a permission thing or is this a knowledge thing?” he said. “Always bear in mind, if you want to somebody to make the same decision that you would make, they need to have access to the same information and principles that you have. The only way any of you will go beyond 10 people in your company is by establishing that you need to have principles that you operate on. And those principles need to be codified for the people you hire.” 

In other words, building a business operating system that clarifies your principles will not only help you stay true to your values but it will also help you scale your company.

STREAMLINE EMPLOYEE COMMUNICATIONS

According to Metcalfe’s Law, a telecommunications principle developed by internet pioneer Robert Metcalfe, the connections between the users in your network grow exponentially as more users join your network.

Within the context of business, a network is a company, and users are their employees. And the bigger your company gets, the harder it is to communicate with each other.

In fact, a business with 100 employees spends an average downtime of 17 hours per week clarifying communications, which equates to $528,443 dollars in lost productivity per year.

Documenting your process for communication, especially cross-team communication, will help your company slash the number of hours clarifying communications, streamlining your decision-making. 

IMPROVE YOUR QUALITY OF WORK

After botching the launch of Windows Vista in 2007, Microsoft’s research department analyzed the failed software module and created a statistical model that could pinpoint the variables that led to the highest chance of future software modules having bugs. 

The number one predictor? Organizational complexity. Organizational complexity measures the number of developers working on the module, the number of ex-developers that used to work on the module, the percentage of total employees who work on or have worked on the module, and the distance between the developer and the decision maker within the organization.

Put simply, the bigger a project is, the more hectic things can get. Fortunately, a business operating system can organize a project by documenting its operating principles, goals, roles, processes, and more, which can enable your team to work faster and produce higher-quality work.

How to Build a Business Operating System

IDENTIFY YOUR VALUES

To build a business operating system that will enable you to operate by your values, you need to identify them first. But if you have no idea where to start, consider following the advice of world-renowned author and motivational speaker Simon Sinek: start with why. 

Sinek’s famous “Start With Why” philosophy asserts that the most inspiring leaders and organizations, such as Martin Luther King Jr., the Wright Brothers, and Apple, were all able to build cult-like followings because they developed their core message around their company’s purpose.

By leveraging the deeper meaning behind their brands to emotionally resonate with people, starting with why helped these iconic leaders and organizations cultivate passionate movements for their causes.  

After pinpointing your company’s purpose, you can identify your values by gathering all of your employees, or a person from each team, for a meeting. Then, you can discuss what each of you values about your company and teammates, analyze the pros and cons of these values, refine them, and task your founders to finalize them. 

We followed this exact process at Tettra to identify our core values and operating principles. We even wrote about our values and principles workshop in a blog post and included a downloadable company operating system workshop agenda that will help you identify your own values and principles. 

SET GOALS FOR YOUR COMPANY AND TEAMS

To ensure that each team’s goals aligns with your company’s overarching goals, make sure your company’s goals solve your customers’ pain points. From there, align each team’s goals with your company’s goals.

However, too often in business, we conflate the measurement of a goal with the goal itself. This can incentivize you to focus too much on the results instead of the thing that produces the results: process. To open up this common bottleneck, make sure your teams determine why they want to accomplish their goals and how they’re going to accomplish their goals — not just what they’re going to accomplish.  

In your internal wiki, you can document your company’s goals and each team’s goals so everyone can stay focused on achieving them at all times. 

ESTABLISH STRUCTURE FOR EACH OF YOUR TEAMS

Structure is the hierarchy of your team. By establishing who is responsible for strategy or execution, and who takes direction from whom, you can streamline your teams’ decision-making and boost their productivity. You can also clarify who’s in charge of what by documenting each team’s structure or hierarchy in your internal wiki.

ESTABLISH PROCESSES FOR EACH OF YOUR TEAMS

A process is a series of steps that enables you to complete a desired action. If you can uncover the processes that produce the best results and encourage your employees to constantly hone them, documenting your processes in your internal wiki so everyone will know exactly how to do them will produce consistent, quality results for your company. 

At Tettra, our issue escalation process looks like this: 

  • Enter bug or administrative task as a GitHub Issue.
  • If it’s a level 0 issue (the most urgent issue), call or text our slackbot Jabberwocky or our CTO Shauni. It will be handled regardless of the time you enter it into GitHub. 
  • If it’s a level 1 issue, it will be handled during business hours. 
  • If it’s a level 2 issue, Jabberwocky will complete or delegate it by the end of the week in the next 2-3 days. 
  • If it’s a level 3 issue, it will be prioritized for the next weekly wave. 
  • If it’s a level 4 issue, enter it into GitHub, if it’s a bug, or Trello, if it’s a feature request. It will be prioritized in the future. 

ESTABLISH SYSTEMS FOR EACH OF YOUR TEAMS

Systems are the tools you use to do your work. By establishing how each team should use specific tools to carry out certain tasks within their process, you can streamline it. You can also clarify which tools can execute which tasks by documenting your company’s systems in your internal wiki. 

For example, a blog team’s systems that could execute their blog creation and promotion process could look like this:

  • Brainstorm ideas in Google Sheets.
  • Do keyword research with Ahrefs.
  • Schedule articles on CoSchedule.
  • Write and edit drafts in Google Docs.
  • Publish articles on WordPress.
  • Send email newsletter using Mailchimp.
  • Post articles to social media with Sprout Social.

CLEARLY DEFINE ROLES

Assigning specific responsibilities and objectives to each of your roles lets all of your employees know exactly what they need to do, what they shouldn’t do, and what their colleagues need to do and shouldn’t do in order to achieve their team’s goals. In your internal wiki, make sure to document each team’s roles and DRIs so no one will ever forget what they’re in charge of — and what they’re not in charge of. 

MATCH TALENT WITH BEST-FIT ROLES

After clearly defining each of your company’s roles, make sure you match each of your employees to the role that best suits them. Your business operating system will run more smoothly this way because you’re giving your employees the best chance to hit the ground running and excel at their jobs down the road. 

For instance, who do you think would be a better fit to cover financial topics on your blogging team? The English major or the economics major? We’d probably go with the economics major, too. 

Putting Your Most Effective Processes into Place

Whether it’s in business, writing, or sports, every top performer has one thing in common: an obsession with process. So, before you pull a Facebook and start “moving fast and breaking things,” consider setting up a business operating system. Because slowing down and understanding what your most effective processes are is what will take your company to the next level.