Monthly Archives: October 2012

Does Systems Thinking Apply To Small Companies?

W. Edwards Deming (Wikipedia) 

The system. W. Edwards Deming claimed that 95% of the performance of an organisation is based on the system, and only 5% is based on the people. I won’t dare go so far as to contradict Mr. Deming, but as a manager in a small company, I am tempted to look at it from a slightly different angle.

A brilliant employee will never perform in a mediocre system, and a mediocre employee will do a decent job in a brilliant system. But if your company is twenty, ten or maybe just five guys (or girls) – surely, people must matter?

You can not blame the worker for wrongdoing, most defects and quality problems are a result of the system. But if you are five guys sitting in the same room trying to make your company succeed – well, you are the system. The five of you. When Joe screws up and says to the other four guys, “Sorry, I’m a victim of the system!” they will probably look around the room and go “Uh, what system?”

But wait a minute. However small a company, there are someone in management, there are someone in sales, you have a customer department, and you’ve (hopefully) got someone actually producing whatever it is you are attempting to sell. Maybe Joe is both management, sales and customer department, but those roles still exist in the company. So however small, your company is an ecosystem. And if you haven’t given that much thought,  possibly not a very good one.

You may just be ten guys, or just five. That doesn’t really matter. You should already be thinking structure. Processes. Quality. Why didn’t Joe tell Pete about the complaint from their most important customer? Why did Pete forget to test the new software that Mike just hacked together? And why did he hack it together when they all agreed last month that the software needed to be robust and well built?

I can hear you shout: “We can’t afford all that stuff, we’re just a small startup company!” Well, to paraphrase old William Edwards Deming: If you focus on quality, quality increase and costs fall over time. However, if you focus on cost, costs will rise and quality decline over time. Surely, that’s not what you want?

So did I answer my own question? Well, kind of. Even though “people are only 5% of the performance”, in those early days you need people who understand just that. That takes us back to where we started, perhaps having gained somewhat of a paradox along the way:

People are helpless to fight a faulty system, but to build the right system, you need the right people. 

@TSigberg