What is a business operating system? How does accountability improve a company?
Claire Hughes Johnson notes that your operating system—the set of underlying norms that outline how your company functions—allows your company to function effectively. She discusses three subsystems that are essential to your operating system: constructing strategy, ensuring accountability, and fostering communication.
Here’s more on the three subsystems of a business operating system.
Subsystem #1: Strategy
What is a business operating system’s first subsystem? First, Hughes Johnson explains that companies need a dedicated system for determining their strategy because they’re liable to run amok without such a system. At its core, a company’s strategy involves decisions about where to allocate resources (especially people and money) by deciding which potential sources of growth deserve more or less focus.
To make these decisions, Hughes Johnson advises company leaders to reflect on their financial status and goals for the next year. Then, leaders should make projections about the potential costs and returns of different projects to decide how many employees, and how much money, to allocate to any given project. For example, if Meta expected its virtual reality platform to generate 10% of the company’s revenue, it might not be strategically prudent to allocate more than 10% of its total budget to the virtual-reality team.
(Shortform note: In The Infinite Game, Simon Sinek offers higher-level advice for those creating a company strategy. He argues that executives should treat business as an infinite game—one with no fixed rules and no endpoint, like politics—rather than a finite game, which has rules and a fixed endpoint, like chess. Executives who conceive of business as an infinite game, he argues, are more likely to make decisions that keep their companies afloat in the long term (even if that means accepting financial risks in order to proactively pivot the business), whereas those who treat business as a finite game are more likely to make short-sighted decisions that are only helpful in the short term.)
Subsystem #2: Accountability
To best implement your strategic plans, Hughes Johnson points out that you need clear accountability standards that identify who’s responsible for which aspects of a project; otherwise, task assignments won’t be clear, leading to shoddy execution. For instance, if Google’s self-driving car team didn’t clearly delineate who was responsible for which aspects of the project (such as the software, the lane assist, and the steering), the team would be in disarray.
(Shortform note: Clearly assigning responsibilities within a project can create a strong hierarchy and boost accountability. However, some experts warn that strict hierarchies can create problems when there’s not enough communication between subteams. For example, if Google’s lane assist team members talked only to their manager and not to members of other teams, features that require cross-team coordination—such as the use of lane assist and automatic steering to keep the car in its lane—may be slower to develop.)
Further, to retain strong accountability throughout the course of a project, Hughes Johnson recommends that you meet with your team each week to review progress. She explains that such meetings are pivotal for keeping team members in the loop, as well as affording the team a chance to re-evaluate their approach if the project is proving unsuccessful.
(Shortform note: Business experts offer a wide array of tips for optimizing the effectiveness of these weekly check-in meetings. For example, they recommend keeping the meetings concise and targeted because employees’ time is valuable. They also suggest helping employees prepare for the meeting by clarifying the specific items that employees need to report on ahead of time.)
Subsystem #3: Communication
Just as team meetings keep members on the same page, company-wide forms of communication keep your entire company up to date on key developments. Hughes Johnson explains that by creating clear lines of communication, you can cultivate trust from your employees because they won’t fear missing out on important information. And although she acknowledges that every company has different communicative needs, she asserts that candid, easily accessible information is essential to every organization.
(Shortform note: Although Hughes Johnson offers general advice for communicating with your team, she doesn’t discuss specific mediums of communication. Business experts point out that different modes of communication—such as face-to-face, email, or instant message—are appropriate in different settings. For example, because most employees’ email inboxes are swamped, it can be better to communicate via a direct message platform if you need an immediate reply. Additionally, face-to-face communication is preferable for conveying crucial information when it’s important to avoid any ambiguity.)
