Have you ever wondered why Switzerland is such a successful country?
Or one of the reasons that Switzerland is obsessed with neutrality?
This has inspired John Warrillow to come up with a term called the Switzerland Structure.
The Swiss obsession with neutrality inspired the name of one of my core ideas for creating a valuable company. “The Switzerland Structure” is a way of evaluating your business to ensure that neutrality allows you to minimize your dependence on any one company or individual. I’d recommend you consider the Switzerland Structure in all areas of your business:
Large companies understand the issue of dependence. Their entire processes are focused on minimising dependence as these create weaknesses.
Even the contracts they sign are designed to cover these risks…
So what are the three most important risks? Employees, Suppliers and Customers.
Very often small companies and entrepreneurs have their day to day crisis dealing with these issues.
How do you design your business so as not to be dependent on any particular employee?
Do you have an employee or manager you are so dependant on that if they left your business would fall apart?
Are you dependant on a programmer without whom your website and your online business would fall apart?
Are you too dependant on a single supplier for a key item? What would happen if they were to go bust or if the relationship fell apart?
Do you have a single customer who is responsible for a large proportion of your revenue? What would happen if they ceased to be there? Could you pay your monthly bills?
Do you have a single customer who you can’t afford to turn away and have to put up with their demands?
Now, in the beginning, it is hard not to be overly dependant on one or all of these….
When a company begins, it is very dependant on its core team, suppliers, customer and especially the entrepreneur.
Once your business outgrows that infancy stage, it is necessary to move from ad-hoc to formal systems and processes.
Many of the businesses I advise, I often have to take them to the next stage from being centred on the entrepreneur and need to put in formal processes and systems.
As part of this, we have to change the dependencies on these key suppliers, customers or employees.
However if we were to take it to the next level, is the business too dependant on the entrepreneur?
Initially the entrepreneur wishes to be irreplaceable. After all, it is nice to be wanted; and even though they complain about the fact that they work long hours and they can’t find the right staff to delegate to, underneath the bravado, deep down they love the need to be needed.
In every role I take on, I have sought to make sure that I did myself out of a job.
I realised this when I built a system for one of my first employers and they needed me back to make changes…. At that time I felt great that I was irreplaceable, but in hindsight I had not left behind a team that could manage and upgrade without me…
I now measure my success by the fact that the team/business could take it forward. In fact, every project/programme manager’s objective is to build something so that he is no longer needed. After all, if you want to be promoted or move on to another more exciting assignment, you need to make yourself replaceable!
If an entrepreneur wants to build a business, then at some point he will want to have a business that can operate without him on a day to day basis.
If he/she wishes to sell their business, or even be able to take a holiday then they need a business that runs like clockwork for day-to-day operations.
Too often the lone entrepreneur becomes the keyman without who the business cannot run. All the key decisions and relationships rest on the entrepreneur and so it is not possible to swap them out without the business falling apart.
This means that they cannot maximise value or make an exit. Holidays are complicated.
Steve Jobs’ biggest challenge was, “Would the business continue to grow and thrive without him?” Bill Gates had a similar challenge in being able to exit Microsoft.
Now, building a business is like bringing up children. In the beginning you enjoy and dote on taking care of them. But do you still want to doing that when they are adults?
Likewise, An entrepreneur’s value comes in starting and building a business and the measure of success is that it can is due course operate without them.
Building a valuable business may mean building a business that does not need you day-to-day….