The unspoken fourth S in Strategy, Structure, & Systems is Standards. Without standards, knowing you have the structure and systems to deliver your strategy is impossible. The quality of alignment across the 4 S’s manifests in your profits. The higher your profits, the more likely you are to own a sustainable and scalable business.
Failing to adequately define the 4 S’s for your business is the number one reason small businesses remain small.
Overview
Your strategy is how you promise to deliver value: the things your customers will pay you to have, now and in the future. The better you deliver your strategy than your competitors, the more money you make.
The execution of your strategy occurs with the decisions made and actions taken each day by your employees. The quality of these decisions and actions is shaped by the quality of the structures and systems you have in place to help them accomplish what needs to be done.
The standards you apply to the execution of your systems is how you know how well your employees are contributing to business success.
The advantage that 97% of large-company CEO’s have over small business owners is that they come into their position with well-developed strategy, structure, systems, and standards in place. For most of them, these four S’s have been in place for decades, allowing them to lead an already sustainable business that enjoys economies of scale. Their opportunity and challenge are to refine the products and processes their business has been built on for years. How well their predecessor achieved scalability and sustainability determines how long they must refine before getting replaced.
The management controls substantial businesses use to make more money than they spend are originated and refined through the strategy, structure, systems, and standards they are constantly refining:
Strategy—identifies company direction, including mile markers (goals), to know when you arrive.
Structure—organization of assets (people + equipment) to execute the strategy.
Systems—defined series of actions or steps taken (process) to achieve a particular end.
Standards—are metrics used to measure operating efficiency, performance, progress, and quality.
Most small businesses remain small because they are owned by individuals who don’t appreciate the value of systems, structure, strategy, and standards for owning a sustainable business. They constantly scramble to find cash because they fail to adopt fundamental management routines across their business.
The linkage of strategy to structure and systems is through the standards that confirm execution is occurring as planned. Knowing what success looks like is the start of integrating these core Ss. They are significant for small business owners who spend most of their time deep in the weeds of their business, managing countless day-to-day tasks and transactions. The difference between surviving and making big money is their ability to keep their businesses near and long-term health sustainable.
Those who take the time to define the 4 S’s for their business understand that profits represent the difference between the amount earned and the amount spent in buying, operating, and producing the products and services bought by your customers. They know it is a lagging indicator of the success generated from past decisions. This is why they are continuously refining their 4 S’s. This is how today’s results are better than those of yesterday, last month, and last year.