Every Step in Your Firm Needs One Owner
In his 1776 book, The Wealth of Nations, the economist Adam Smith discusses the process of pin-making. Even in 1776 it was not a revolutionary piece of technology, or a terribly complicated one. But he reasoned that if one person, untrained in the art of pin-making, were responsible for every step of manufacturing a simple pin … which is a little metal pointy bit with a nub on top … they might be able to make, on a good day, one pin each day.
A small factory of ten workers, on the other hand, with work divided between them, would be able to produce the equivalent of 4,800 pins per person. Or 48,000 pins in a day.
Not 10 pins, not 200 pins. 48,000.
Those ten workers didn’t work longer hours, nor were they more talented than the lone individual. Each of them owned a step. One drew the wire, one straightened it, one cut it, one sharpened the point, and so on.
Now, if you’re reading this and you’re looking wistfully over your monitor or your phone and thinking about what that 4,800x efficiency boost in your firm would do to your bottom line … I too am a music maker and a dreamer of dreams and I salute you.
Come on back for the moment and let’s get there together. And for the sake of conversation let’s talk about your firm as though you’re running a pin factory.
You are the single person attempting to make a pin all by yourself.
You are not unskilled, but let’s not get hung up on that. You are one person though, with limited time to become an expert at every step of what’s needed. When you started your own firm, you necessarily had to create the whole pin from start to finish. You fielded phone calls, you attended networking events, you managed your web presence, your sales funnel, and so on … all in addition to serving the clients you managed to land.
Was it efficient? Absolutely not. But it worked.
As the business grew beyond what you could manage yourself, you likely thought that you could hire and improve the resulting output of your firm. Maybe you didn’t think you could get 4,800x more out of it, but you probably thought you’d be able to scale linearly with each hire.
But you were building the business on the fly and you didn’t have the luxury of hiring an expert to take over one or two specific tasks in your firm. You had too much work on your plate and you needed someone to relieve you, so you hired someone for the overflow. And since the overflow didn’t only consist of a single type of work, that person just did what was needed.
Which is how you wind up where it’s just you and your new hire making pins. And instead of 1 pin per day, you’re making 1.5 … or if you’re doing exceptionally well, close to 2. Two people and not quite two pins. Every hire after that followed the same pattern, and the overlap grew with each one.
That’s the problem. Headcount isn’t what unlocks nirvana. Neither is extra effort. Smith’s factory got to 48,000 because every step had a name next to it. Your factory has steps with four names and some steps with none.
The answer is simple to map out, more involved to implement.
Look at your own firm and map out how work flows through it. Use whatever you can come up with in a few minutes. Then ask yourself three questions:
Who does each step today?
Who owns it, meaning who's accountable when it goes wrong?
What does it cost when the wrong person does it?
That third question is key. If your time is worth $400 an hour and you're spending five hours a week on work someone at $35 an hour could do, that's roughly $1,800 a week of the most expensive labor in your firm doing the cheapest work.
When you finish answering those questions, put one name next to every step. And just because your firm is small enough that one person necessarily owns multiple steps doesn't mean that it's wrong or that they won't develop expertise. What matters is that every step has exactly one owner.
That doesn’t mean only one person can do the work of that step, just that one person owns it and is accountable for how it gets done, whether it gets done, and whether or how it improves. Many can be responsible for the work, only one is accountable.
It's easy to understand conceptually that people who take things over will do it their own way, often better than you can, and then continually get better at it. It's far more difficult to actually hand something off completely and let that happen. That's the implementation part.
Ownership drives expertise, which your business will benefit from in the form of more pins per day.
This week, take a few minutes and draw the map. Then focus on any step that has multiple names next to it, or none. Ensure there’s a clear owner, someone who is accountable, then move on to the next one. You might not immediately reach 4,800 pins per person, but you’ll definitely feel the improvement.