The Business Growth Stack, and The Role of Judgment
Updated: Jun 2
Updated June 2, 2021
There is a lot of conversation these days about Business Operating Systems, which have generated great productivity improvements for many companies.
Unfortunately, I hear time and again from business owners that the Operating System is not enough…but they aren’t quite sure what is missing.
They say something like, “We put it the Operating System, and it was great. Our meetings got more focused. Accountability grew. Productivity zoomed. But now that system just seems…limiting. Like it’s actually preventing us from focusing on the things that matter.”
How could that be, if the point of a Business Operating System is to increase focus?
The Business Growth System
You can only understand the limitations of an Operating System if you know that there is another system – a Business Growth System – that needs to ride on top of it.
Whereas the Operating System focuses on productivity, the Growth System focuses on potential. And, as you can imagine, what it takes to unlock potential is dramatically different than what it takes to increase productivity. Conversations about potential are more about the unknown, and exploration, and discovery, and evaluating opportunity and risk – and those conversations can be very different than how to do better on what you’re already doing.
Most importantly, judgment plays a much bigger role in the Growth System than it does in the Operating System.
The Importance of Judgment to Growth
In broad terms, 80% of a Business Operating System can be reduced to a playbook. Hold effective meetings, assess staff, clarify priorities. Simply having a meeting once a week – regardless of the agenda – will increase productivity over not having a meeting. Adding a set agenda to that meeting – one that 10,000 different businesses can use without changing it – will increase productivity more than not having that agenda.
But the realm of growth potential is different. To the extent there is a playbook, it does not get you very far to an answer – in fact, an insight in one company can be completely unhelpful in another company. What’s important in unlocking potential is judgment – the ability to look in the right places, see the right things, know the right moves.
When you apply judgment, you get wisdom, and insight, and foresight. Judgment is what “whisperers” have.
And to think that an Business Operating System will do what a sage does is dangerously deceptive – because you’ll think you’re better than you are, and overconfidence is the source of many problems, especially in the realm of potential.
So, if you want to grow, your (80% playbook / 20% judgment) Operating System needs a (80% judgment/20% playbook) Growth System to supplement it.
The Business Growth Stack
If you’re talking about systems these days, you’ll likely need to talk about a “stack,” because any system that is solving a complex problem can’t do it on its own.
This principle applies to business growth, and so let’s define the Business Growth Stack that an owner needs.
At the bottom of the Growth Stack is the Functional System, which is driven by action and activity. It makes sure work gets done, by managing the 3 universal functions that every business must have – Revenue Generation, Production, and Finance & Admin – and adding in Accountability.
In the middle of the Growth Stack is the Operating System, which is driven by systems and playbooks. It focuses the energy of the company, by defining and energizing the business’ management, processes, team/organization, and accountability.
At the top of the Growth Stack is the Growth System, which is driven by judgment, insight, and foresight. It creates the “special sauce” for the business, by defining and energizing the business’ culture, strategy, leadership, and management.
Did you notice that Management is in both the growth and operating layers, and that Accountability is in both the operating and functional layers? Those act as interfaces between the layers – they translate the decisions made in the upper layer to the action needed in the lower layer, and provide information from the lower level up to the next level.
This stack provides a guide to business owners to evaluate their capabilities and needs.
For more description of the stack, download our ebook, Executive Introduction to The Growth Stack.