We have arrived at the final and perhaps most important part of the setup phase: Systematicity.
Up to this point, we have focused on the elements that define the stages and details of the path ahead. Purpose, Goal, and Dream explained to us where we want to go, the points where we will take breaks along the way, and the horizon in sight. Living data-driven showed us the map of our journey, our core capabilities, and how far we can advance in a single stride. Scalability explained our expansion capacity and our efficiency framework, while sustainability told us how to keep walking the path no matter how long and arduous it may be. Structures provided us with what we need to wear along this journey, our tools and equipment, and our vehicle. So, where does systematicity fit into all of this?
Systematicity is the act of walking itself. No organization, no project, no enterprise can progress solely through action and effort. A system, a functioning mechanism, is always the most fundamental necessity. Many enterprises have done everything else—or most of it—right, but because they failed to build their systems, they rotted away without ever taking a single step on the path they had mapped out so brilliantly. If a system-based operation is like getting into a car and covering distance, an operation dependent on personal effort and demands is like walking barefoot.
A system does not necessarily require an organization. Nor does it always mean software, technical infrastructure, or an algorithmic or hierarchical approach. Systematicity, in its simplest form, is the automation of the way work is done by placing it into a specific framework and standard. For instance, if agendas such as reports that need to be sent, field visits that need to be made, or pages that need to be written are always executed via an alert, an order, or a reminder, then there is no system in place. It means progress relies on individuals, necessities, and sequential, one-off actions. This is unacceptable.
Systematicity requires planning. What must be considered while building a system are essentially questions based on the other elements of the setup phase. When these questions are answered, systems can be established quite easily within almost any organization. The questions to ask are:
- What should the system look like to best serve the purpose, drive us to the goal with the least fatigue, and retain its functionality even when we reach our dream destination? This is the ideal system.
- Is this system aligned with the established reality? Perhaps the ideal system required a 40-person team structure or an AI-powered painter sketch robot. But if we have no budget, this is impossible. Straining our budget or resources to achieve it will also shorten the lifespan of our enterprise. Therefore, when building a system, one must act in accordance with reality.
- Is it aligned with the results derived from data? Systems are dependent on data. An employee who constantly misses deadlines cannot be assigned reporting and presentation tasks within the system. An HR department management system cannot be built on software that frequently crashes, nor can a painter who wakes up melancholic every morning systematize painting every single day. The system must be compatible with the outcomes of the data, not in conflict with them.
- Is this system scalable? In other words, it must be determined whether the work currently done by one person can be done with the same efficiency by three people tomorrow when the volume of work expands, or whether software currently used for system logging or management can be used with the same effectiveness when the volume grows. A system that cannot scale at the same rate as the enterprise is not only temporary but also not a true system; rather, it is a patch.
- Is this system sustainable? The sustainability of the system must absolutely be questioned. If a system is not sustainable, once it is built, it will cause much bigger problems compared to having no system at all.
- Is this system compatible with the established structures? The system must be directly compatible with the built structure. If there is a mechanism that does not fit the hierarchy or the organizational structure, it will cause a massive loss of efficiency. Trying to operate a system with a multi-step approval mechanism in a setup that relies on a single decision-maker or supervisor will lead to collapse.
A system built properly through the answers to these questions becomes the primary engine and gear of the enterprise's growth. An unsystematized operation means an impending collapse born of unmeasurable effort and a lack of accountability. So, as always, what examples can we provide for this?
First, let's look at what happens where there is no system.
Perhaps the world's most famous example of a system is a cord. In the Toyota Production System founded by Taiichi Ohno, any worker on the assembly line can pull the Andon cord and stop production if they spot an error. Maintaining quality was not left to the eyes of a manager, the visit of an inspector, or someone's attentiveness on that particular day. The authority to spot and stop an error is embedded into the process itself. At Toyota, no one needs to remind anyone of anything to catch a mistake. Reading the reminder test in reverse, this is the system at its best.
This same setup did not exist on Wall Street in 2012. On the morning of August 1st, Knight Capital, one of the largest traders in the US stock market, was supposed to deploy a new software release to eight servers. A technician deployed it to seven but skipped the eighth. On the eighth server, an old piece of code that had been deactivated years ago but never deleted was sitting there, and a signal sent by the new release woke it up. The code began sending an endless stream of orders. In about 45 minutes, the company lost approximately 440 million dollars. There was no genius hacker or natural disaster involved. There was simply a process that relied on a human saying "I did them all," unsupported by any mechanism that would automatically catch the incomplete deployment. The company managed to secure about $400 million in bailout financing from investors within a few days and stayed afloat, but it lost its independent identity by merging with GETCO in 2013. Any process that relies on a reminder only works until the day that reminder is forgotten.
Systems are not just the business of organizations, either. The routine an individual builds for their own work is also a system, and we find its most striking examples in professions often associated with inspiration. When Haruki Murakami is writing a novel, he wakes up at four in the morning, writes for five to six hours, runs ten kilometers or swims in the afternoon, reads a little, listens to music, and goes to sleep at nine. He maintains this routine without alteration not just for a week or a month, but for a period ranging from six months to a year. In his own words, the repetition itself becomes the important thing; it is a form of self-hypnosis, a way to reach a deeper state of mind. Recall the painter at the beginning of the text who wakes up melancholic. Murakami does not wait to see what his morning mood will be; he forces his mood to conform to his routine. He imposes this order not only on his writing but also on the body that will carry it. He says that writing a long novel is like survival training, and that physical strength is just as necessary as artistic sensitivity.
At the opposite pole stands Douglas Adams. No one doubted his talent; the mind that wrote The Hitchhiker's Guide to the Galaxy had built one of the world's most beloved fictions. However, deadlines were never a source of order for him. He is famous for saying that he loved deadlines and the whooshing sound they made as they flew by. When the fourth book in the series, So Long, and Thanks for All the Fish, was delayed in 1984, his editor locked him in a hotel room and refused to let him out until the book was finished. Adams handed the pages he wrote to his editor one by one. The same method was repeated for the later Dirk Gently novels. There is no system here, only a patch: the order the author failed to build himself was replaced by an external lock. And a price was paid for this. According to some commentators, these books, written in a compressed timeframe, lacked the fictional rigor that his ambitious ideas demanded.
The ultimate test of scalability, on the other hand, was passed by a hamburger joint. In 1948, brothers Dick and Mac McDonald closed their restaurant in San Bernardino for three months and completely rebuilt the kitchen. They narrowed the menu, assigned a single task to each employee, and turned production into a mechanism operating on the logic of an assembly line. This setup, called the Speedee Service System, allowed them to sell a hamburger for 15 cents. In 1954, a milkshake machine salesman named Ray Kroc saw that this small restaurant was running eight mixers simultaneously and traveled to San Bernardino. What Kroc saw wasn't a hamburger; it was a system. In 1955, he opened his first franchise restaurant in Des Plaines, Illinois, and required his franchisees to strictly adhere to this setup. By the time he bought out the brothers' share for $2.7 million in 1961, there were 228 restaurants. If the work of one person can be done by three people, and the work of three people can be replicated in the same way across three hundred branches, there is a scaled system in place.
When a system conflicts with the goal, however, it turns into a disaster. Wells Fargo is the starkest example of this. The bank called its branches "stores" and aimed to sell eight products to every customer. The target was set from the top, the reality of what employees could actually achieve was ignored, and pressure became the modus operandi. As a result, employees opened millions of accounts without customers' knowledge, forged signatures, and altered personal information. The scandal, which broke in 2016, led to the departure of two CEOs and top executives from the bank, and eventually to a $3 billion settlement in 2020. There was no lack of a system at Wells Fargo. The system existed, and it was working perfectly. The problem was that the system did not serve the purpose; meeting a quota had replaced the actual goal. This is why an incorrectly built system can be worse than having no system at all.
The price of an operation failing to fit the structure was paid by a 233-year-old bank. Barings, founded in 1762, was Britain's oldest merchant bank. Nick Leeson, the general manager at the Singapore office, was both making the trades and running the back office that handled the logging and settlement of those trades. In other words, he was both the player and the referee. He hid his losses in an error account numbered 88888. When the Nikkei collapsed following the Kobe earthquake in January 1995, the losses spiraled out of control. The resulting loss was roughly £827 million, exceeding the bank's capital. Barings was sold to ING for £1. Leeson described this setup as a bizarre structure that allowed him to run his own business without anyone interfering. The Bank of England inquiry attributed the collapse to a failure of controls. When oversight is not hardwired into the structure, it remains nothing more than an expectation of goodwill.
Let's close the chapter with a system that faced perhaps the most difficult test of all. Chuck Close was a painter who depicted faces in massive sizes with photographic precision. His method was to divide a photograph into a grid and work on each square individually; he broke the work down into small units that could be completed on their own. He relied not on inspiration, but on sequence. He used to say that inspiration is for amateurs, and the rest of us just show up and get to work. On December 7, 1988, a spinal artery collapsed, leaving him paralyzed from the neck down. After months of rehabilitation, he started working again by holding a brush with a device strapped to his wrist. He adapted his method to his new body and continued to produce for more than three decades until his death in 2021. With his paralysis, his pictorial language changed as well; it evolved into a more mosaic-like, fragmented expression. A painter's strength and inspiration can both run out. But a system that breaks the work into small steps continues to walk, even when its creator is knocked down.
