The Six Ds of a Successful Business

Pay Attention to the Last One!

Which D Are You Stuck On?

In this episode, as we quite often do on this show, we’re going to talk about business building, and we’re going to lay out 5 levels of business development so you can figure out where yours might be, or said more succinctly, where you might be as the owner in the process. The 5 levels we’re going to talk about on the show today won’t necessarily tell you exactly what to do, you’ve still got to do that on your own, but they will hopefully help you rethink how you might or might not be evolving the business. Of course, not everybody wants to evolve or grow their business, and that’s ok. Even those people can gain some insight into things they could be doing differently to help in some small or big way.

What we’re talking about are the 5 D’s of a business: the doing, the deciding, the delegating, and the designing and directing phases of your business. I learned these from Mike Michalowicz, the creator and author of the Profit First system, the Pumpkin Plan, and Clockwork, which is the book that discusses 4 of these D’s. After learning the 4 D’s, which are really just ways to say and look at things we’ve been teaching and talking about for years, I had a real learning moment, and a bit of an epiphany. The learning moment I had was around the second and third ‘D’ in the 4 D’s, the deciding and delegating parts of a business. I have since added my own ‘D’, which is the directing part of the process.

If you’ve been studying the topic of business growth and development, you’ll be very familiar with the concept of delegation of tasks and responsibilities. In fact, delegation is one of the most important aspects of freeing yourself from the day-to-day stuff that keeps you trapped in an endless cycle of doing, which is the first ‘D’. However, I realized that most people get the delegation part wrong and how we can fix that, which we’ll talk about a little later in the show.

So, what are the 5 D’s, and how can knowing them help you run a better business, make more money, live a more enjoyable life, and build something that is scalable and salable? The 5 D’s, again, are the doing, the deciding, the delegating, and the designing and directing phases or functions of a business, and the goal should always be to move as quickly from the doing to the designing and directing of the business. My goal whenever I’m working with somebody, typically a small businessperson, is to move them from the doing of the work to the designing and directing of the work being done. Not that everybody has to get to the designing and directing phase, but to at least know that if you don’t get there, you will always be somewhat stuck in the doing, deciding, and delegating phases. You might go your whole life never reaching, or even aspiring to reach, the designing and directing phases of your business, but if you don’t at least know about them, it’s very difficult to get there and free yourself from the day-to-day grind of the doing.

So, let’s talk about the first D, the doing part of the business and work. Almost every entrepreneur begins their journey in this phase. Michael Gerber described this in the E-Myth as the entrepreneurial seizure when somebody gets sick of working for somebody else, they think they can do it better than the boss, and they set off to start a business doing the thing they do day to day for somebody else. Thus, a small business is born. The entrepreneur is typically the one doing the doing all day every day and the business is essentially a job, just one with their name on the paperwork and all the risk on their shoulders. This is the vast majority of real estate appraisers, bakeries, and even many small cafes and restaurants.
In fact, here are some stats on small businesses:
• 55% of people start a business because they want to be professionally independent.
• Personal funds are the main source of funding for 77% of entrepreneurs.
• Entrepreneurs work 52 hours a week.
• 48% of entrepreneurs are happy.
• 25% of entrepreneurs are struggling to find qualified employees.
• The average startup capital is $10,000.
• The median income of an entrepreneur is $59,000.
• Female entrepreneurs own 9.9 million small businesses in the US.
• A staggering 99.9% of the millions of companies in America are small businesses.
• 83.1% of business owners started their companies from scratch.
-Stats from TeamStage

If not out of sheer necessity at the beginning, it’s typically out of a lack of business building skills that keeps the founder in the doing role. Not that it’s a bad thing initially, it just shouldn’t be where one remains forever if they want to have more than just a job. If you’re trying to build something of real value that can sustain you, feed you and your family, and give you what you wanted in the first place, which was freedom, then you owe it to yourself to consider the other D’s and how to move through them.

The next D in the process is what Michalowicz calls the deciding phase. This is where I had an epiphany. The deciding phase is where you realize you can’t do it all yourself, so you hire some people. Maybe they’re people to help with back-office tasks, maybe their other doers of the ‘thing’, like you, but they’re help for you and very welcomed help, at least at first. At first, you realize just how much you were doing because the new hires start to take some things off your plate. After all, you’ve been listening to some great business building podcasts and they’ve been screaming at you about the power of delegation and how you must automate, delegate, or eliminate almost everything that can be. You hire some folks and pat yourself on the back for following through on that delegation piece of the puzzle. However, something interesting happens. You realize that you’ve just added complexity to the mess because all of your task rabbits are now coming to you daily, maybe hourly, with questions and problems to be solved. It’s in that realization that many small business owners say, ‘screw it!, I’ll just do it myself because it’s easier that way!’

The problem with this thinking is that that’s not what true delegation looks like. What I just described is the process of creating more decisions for yourself. That’s why Michalowicz calls it the deciding phase. You haven’t given your people full ownership of the process, and the mistakes they might make, so they’re constantly coming to you for answers on the things they don’t want to get wrong. This creates a hundred more little decisions for you to make throughout the day and week. These were things you previously handled yourself without missing a beat. Now, you have to stop, listen to issue, make a decision, give an order, and wait to see what they come back to you with.

The takeaway is that, unless and until you give somebody full ownership of the process, and all the mistakes that may occur in the process, you’ll always just be creating a big bucket of more decisions for yourself. To move to the next D, which is true delegation, you’ve got to reward the employee for taking ownership of the task, not just the outcome. If you only give them ownership of the outcome, when they mess up or don’t live up to your ideal, they’ll feel it and likely hear it. This breeds hesitancy in the person who is supposed to be helping you, which means they’ll be coming to you every time to make sure they’re doing it right. You haven’t delegated at this point; you’ve only created another layer of management for yourself. They’re going to make mistakes and errors, and that’s how they grow, just like how we grow.

Celebrate and reward when people take ownership of the process, and even celebrate when they make a mistake. Mistakes are opportunities for growth and coaching, and mistakes are evidence of progress on the road to success. True delegation is not just the removal of the task from your task list, it’s the removal of the decision-making process that comes with the task. The goal is to shift the responsibility from you to them. If people are punished for making wrong decisions, they’ll keep coming back to you for the right decisions every time and you’ll never be able to move to the next level.

The next level, or D, is the designing phase. The designing phase is that phase in your life and business when you’re spending more time on designing the flow and the processes of the business, and less time on the doing. Preferably, If I get my way with your business, you’re not doing any of the doing at this point. Some of you resist me with everything you’ve got on this and insist on doing the doing, at least a little bit. You’ll insist that it’s because you’re needed for your expertise. What almost always gets revealed over time is that it’s an identity issue. It feels really good to be needed and to be recognized for some kind of specialized knowledge. You’ve gotten so used to be applauded for your expertise that, when you move to the designing and directing roles, and not doing, the evolution of your identity hasn’t caught up yet. You still see and think of yourself as the doer. That’s what you’re known for and it’s what you’ve built your identity around.

If you want to go to new levels in anything in life, you’re going to have to get comfortable with evolving your identity as well. If you can’t imagine yourself as somebody other than who you are today, you’ll never be able to grow and sustain some new level. If you can see yourself as the business builder, instead of the doer of the thing the business does, you can delegate effectively and move on to more important roles like process and systems building, and then directing the flow of all the things the business is designed to do. When you’re in the designing and directing roles, your job is to manage and make decisions based on the numbers, make it rain from time to time, direct the flow, and make adjustments to the system from your vantage point of somebody who works on the business, not in it.

I’ll say it again, a successful business cannot rely on you to operate daily. That doesn’t mean that you don’t add tremendous value by being who you are, it means that the day to day cannot rely on you for its success. If it does, what happens if you can’t run the business?

Now, to be clear, Mike Michalowicz stops at the designing phase. He calls that the 4th D. Doing, deciding, delegating, and designing, with the designing part being the epitome of success. I disagree. I think there are actually 2 more D’s in the process, one of them being the directing phase. At some point, the major designing is done and now all you have to do is direct the flow. Like directing the orchestra. The practice time is over and it’s time to direct the performance. The other D in this process is ‘done’. It’s finished, it’s done, it’s doing what it needs to do without you and you’re done. Now, you can sell the business, you can keep the business, you can walk away and get checks in the mail each month, you can start another business, but it’s effectively done and any further input from you would just be considered meddling for your own amusement.

Doing, deciding, delegating, designing, directing, and done. Speaking of done, until next week my friends, I’m out…

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