What is a Business Operating System?

Picture this — you boot up your work laptop on a groggy Monday morning and it just doesn’t load. The lights aren’t on and no one's home. Your operating system has left the building.

Just like your laptop can’t run without an operating system, nor can your business.

Businesses that lack an operating system lack functionality, stability, efficiency and productivity. All these directly impact a company’s profitability.

This is why it’s so vital to have an effective and efficient business operating system in place, and it’s precisely what we’ll be looking at in this resource.

We’ll be starting with the obvious… what is a business operating system?

What is a Business Operating System?

Your Business Operating System (BOS) is your unique way of doing things. It’s how you think, feel, and act in all you do both individually and as a team. It creates a competitive advantage. It’s what keeps you in business and growing.

So when it’s broken or under-performing it’s a serious situation that if left unchecked eventually leads to decline and failure.

Your BOS includes your people, organisation structure, communications, processes, mindset and culture, all aspects of doing business.  All businesses are a collection of people. Your Business Operating System defines how well your staff work as a team towards a common goal.

Key Components of a Business Operating System

Generally speaking, there are five main categories all the various factors of a business operating system fall into. These are:

• Processes

• Systems

• Roles

• Skills

• Structure

• 
  

Processes

Put simply, work processes are the way you do things at work.

They’re also a huge risk factor for companies, especially when they’re first setting up or in harder economic conditions.

In an effective business operating system, your processes will be clear, documented and easily replicated so they’re as streamlined as possible. Not only this, but they’ll be continually reviewed to discover opportunities for development to continue ensuring your company is moving forward, not just making do.

Systems

The systems element of business operating systems is an all-encompassing term referring to both hard and soft systems. For example, hard systems could include your payroll or CMS, while soft systems could include your employee progression or compensation systems.

In an effective business operating system, these systems should be well-thought out and designed to create predictability and stability. Things shouldn’t be done ad-hoc as it creates chaos and breeds dysfunction within businesses. 

Roles

Particularly for newer businesses, it can seem like roles in a company are a more fluid concept. But this can cause issues, especially when it comes to ownership of issues. 

Roles shouldn’t just be a forgotten job description. Instead, they should ultimately help accomplish your company’s mission.

In a comprehensive business operating system, clear roles need to be defined and stuck to. This allows employees and owners alike to make better business decisions.

Skills

With clear roles, you can define the clear skills needed to achieve those roles. This ensures you hire the best and most suitable talent for the job; and deploy those skills where they will be most productive for your business.

With clear processes and systems, employees can become more productive. But there’s one final key component, without which, your business operating system is bound to struggle.

Structure

So many businesses, large and small, lack structure as part of their organisation. Or where they have structure, it is a dated hierarchical concept of command-and-control where ideas and communication are stifled. 

Structure dictates processes. It dictates systems. It shapes and defines your company culture and ultimately, your bottom line. 

Examples of Effective Business Operating Systems

There are no end of incredible business operating system examples across various industries. But perhaps none is no more famous than the Toyota Production System.

Toyota Production System

We could write about the Toyota Production System (TPS) all day, but in brief, it is a business operating system developed by the car manufacturing giant that incorporates all of the company’s practices and philosophies. This includes everything from the sourcing of materials all the way through to interactions with customers. 

TPS was a huge driver for the more industry focused ‘lean manufacturing’ production method.

Lego

Lego hasn’t remained one of the most popular children’s toy companies by accident. It all comes down to an incredible business operating system that allows for operational excellence and a memorable customer experience. Quality control and manufacturing excellence through state of the art technology are at the forefront of the Lego BOS. But this is alongside defined customer service processes that create unforgettable experiences and lifelong loyal customers.

Starbucks

It would have been a miracle to make it through this resource without mentioning at least one franchise because business operating systems are what make franchises thrive. Defined processes, systems, roles, skills and structures are what make the Starbucks experience what it is.

Their business operating system is why you can walk into any Starbucks, anywhere in the world, and have the same great experience that allows the company to keep on thriving.

The Benefits of an Improved Business Operating System

Now you know what a business operating system is, what the key components are and have some examples of effective business operating systems, let’s look at the benefits.

Let’s think of your business operating system as the engine of your business. The benefits of improving the engine of your business should be obvious. They include increased sales, higher profitability, lower costs, improved staff engagement and higher levels of customer satisfaction to name only a few.

But perhaps the most important benefits are less stress, a more rewarding working environment and the freedom to work fewer hours.

A high performing business operating system enables you scale up and grow, or alternatively, easily define an exit strategy if that’s your goal.