Standard operating procedures and Innovation

This week we continue the discussion on building a successful and sustainable business. I will focus on how to deliver consistent quality while accommodating innovation, which allows continuous improvements and consequently, continued market relevance. In my last trip to the US in October 2017, I was told that 90% of the restaurants that open, shut down within a year. It is not difficult to imagine why this can happen. You see, knowing how to cook, does not necessarily equip you to run a restaurant or to provide meals on a commercial basis. This is because, when you go commercial, several processes come into play, to be able to deliver in a consistent and sustainable way. You therefore need to follow standard operating procedures (SOPs) to deliver consistent outputs.

For instance, when you start a restaurant, people begin to identify a taste with your brand and each time they patronize you, they expect to enjoy the very same taste. A consistent output, is only possible if the exact same quantities of ingredients are used every time. This requires that everything is measured and timed to ensure the same output all the time. Other operational processes such as supplies, storage, order reception, delivery/service, cleaning, décor, costing etc, all have to be consistent too. Consequently, knowing how to cook is therefore just one aspect of an entire value-chain that needs to work efficiently and consistently with other aspects of the process, to deliver a sustainable and excellent customer experience. Having standard operating procedures (SOPs) facilitates sustainable out-put consistency. Many entrepreneurs are also faced with the challenge of high staff turnover, which easily leads to differences in customer experience or deliverables. To avoid this, SOPs also make it easier for new staff to maintain the same standards as previous staff, as they have guidelines to follow. Another advantage of having SOPs is that it makes it easier for entrepreneurs to train staff for the roles for which they have been engaged.

Coordinating all the processes that allow a business deliver effectively to customers can be overwhelming as business grows. Indeed, many entrepreneurs are faced with this situation. They start a business because they have a skill and do not realise all the other aspects of the value-chain required for consistent delivery. Growth happens upon them and things begin to spin out of control. If care is not taken, the business can crash from overwhelming demand because it has not developed the capacity or processes to meet such demand. Apart from having SOPs, another way to avoid this problem is avoid this problem is to buy a franchise, which allows one learn from an already winning formula. Another alternative is apprenticeship, which allows one to learn from practicing in a similar business, before starting independently. So going back to our restaurant example, if you wish to own a restaurant, you start by working in one for some time. Similarly, if you want to run supermarket, it will help if you to work in one ahead of starting yours. Even when there are software available to assist with this, there’s the human angle that cannot be completely codified as people are unpredictable. Apprenticeship, thus exposes you to more facets of a business, especially the various possible behaviours of staff, that cannot be foreseen or coded in any software, and it Is extremely important to know how to manage these behaviours. In addition, you can also learn what not to do, based on what you observed while apprenticing. After gaining some experience through apprenticeship, an entrepreneur is better equipped to design SOPs that incorporate improvements or close the gaps observed while working.

This allows the entrepreneur start on sound footing, as he has both the experience of running the business and SOPs to facilitate staff training in his new business. Entrepreneurs also need to keep in mind that while they initially train their staff on the job, the more one does the same thing, the better one gets at doing it, and so staff will usually discover new and better methods along the line. For best results in an organisation, there should be a process of incorporating these improvements in the SOPs. The process could be such that as employees discover better ways of getting their jobs done, they can discuss this in meetings with their boss and team members and once approved, get the method, incorporated into the SOPs for that job. SOPs, should therefore be a living document, that should be periodically updated and standardized. This will eventually lead the business to become a world class organisation, built on best practices as the years roll by.

In trying to ensure things turn out right, entrepreneurs, including big multinationals, sometimes swing to the extreme of wanting to control processes so tightly, that there is no room for employees to apply their initiative or discovered improvements, as they are compelled to follow SOPs strictly or face terrible consequences. In such cases, the business loses the opportunity to become enriched by new ideas from staff, who go through a learning curve as they repeat the same tasks daily and gradually learn better and more effective ways of doing things. It is therefore in the interest of an organisation to have a well understood process of incorporating new ideas into the SOPs.Indeed, staff should be encouraged to come up with ideas to improve what they met on ground, over time. Further, once these ideas are approved and they deliver improved results when incorporated into the SOPs, they should be rewarded. This will encourage other staff to bring in new ideas and improve the performance of the organisation.

To have an innovative organisation, there should be an incentive for staff to keep coming up with better ways to get their jobs done. The criteria for approving and incorporating new ideas should also be spelt out as much as possible and the reward has to be meaningful. Knowing that one can contribute to the organisation, provides an intrinsic motivationfor staff. Combining this with an extrinsic financial reward will usually have a strong impact on staff commitment and motivation and consequently, have a significant impact on productivity and profitability of an organisation, while entrenching a culture of innovation and continuous improvement.

Dr. Henrietta Onwuegbuzie is a globally certified Management Consultant and a Senior Lecturer in Entrepreneurship at Lagos Business School: Twitter: @honwuegbuzie; email: honwuegbuzie@lbs.edu.ng