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The Resilient Entrepreneur, Edition #58

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Hi there

I hope you had a great week!

Here are the topics in today's edition:

• Why Kaizen Isn't Just for Factories: How It Can Transform Your Business and Life
• Folders Are Dead. So Why Are We Still Using Them?
• The Compliance Trap: How Business Bureaucracy Became a Profitable Scam

Please reach out if you have comments, questions, or suggestions for articles!

Talk soon 👋
Tom

KickKerK

LEADERSHIP FOR RESILIENT ENTREPRENEURS

Why Kaizen Isn't Just for Factories: How It Can Transform Your Business and Life

A mindset of constant improvement can unearth and fight hidden inefficiencies everywhere.

Where it comes from

​Kaizen is a continuous improvement method originally invented in Japan after WWII. It aims to remove waste (or “muda”) in small steps, and all workers should be involved in finding and implementing improvements.

The method is popular with companies, as it can uncover untapped optimization potential directly at the base and doesn’t cost a lot. Furthermore, it has an element of cultural change, as employees of all levels are involved.

Where I learned it

In 2011, I started working as a Business Engineer Ground Services at Swiss International Air Lines. My main task was to improve the ground and airport processes at all the stations the airline was flying to worldwide.

The method? Kaizen.

The training? On-site in Japan, at a Toyota plant. The course instructor was a Kaizen practitioner since the first days of Kaizen, calling himself the father of moonshine.

The reactions within the company? Lots of resistance. Not another management fad. The transfer of the Japanese culture will never work in the Western world. No time for week-long Kaizen workshops. How should we ever save money with small improvements when we burn millions of liters of kerosene each day?

My favorite Kaizen improvement was fuel savings of more than 1m USD per annum by optimizing zero-fuel weights on long-haul flights. It took months to achieve these efforts, and they were sparked by a simple side comment from a station manager during a Kaizen workshop, saying that zero-fuel weights would be wrong all the time. This meant that aircraft were fueled more than necessary, burning more fuel than necessary. Not nice for the environment, and not nice for the cash management of an airline.

That’s what Kaizen can do to an airline that burns millions of liters of kerosene each day. Kaizen won’t save your company or the planet, but it pays off handsomely if done consistently and with an open mind.

How I use it today as an entrepreneur

Almost 15 years later, I have long quit that job that first got me involved with Kaizen. I have also long ago quit the world of large corporations to become an entrepreneur.

What has stayed from my 2-year full-time involvement with Kaizen?

As an entrepreneur and an engineer by training, I am a firm believer in continuous improvement. No matter if it’s capital efficiency in my company or energy efficiency in my solar power plant at home, I am constantly improving all aspects of my life.

​Entrepreneurship is a rollercoaster. Even if you lead by example, plan diligently, and offer a compelling product, things will not go according to your plans all the time. Kaizen can be one element of getting things back to plan: The step-by-step approach advocated by Kaizen can be applied to almost anything.

Looking to improve the performance of your team? Start optimizing the performance of the lowest performer in your team instead of embarking on an all-encompassing performance initiative. When the performance of the lowest performer has been improved, move on to the second-lowest performer. And so on.

Looking to improve your cost base? Start optimizing the largest cost blocks. Here is a recent example from my daily life as the Founder & CEO of Yonder, a B2B SaaS company: Office space has become cheap and abundant over the last few years, as many companies never fully returned from the remote work mode after COVID-19. It’s the same for us. Our office is big and pricey, and many alternatives at a quarter of the price are available within walking distance.

Looking to improve your personal work organization? Start by eliminating time-wasters and energy drains. Even if you think you’re well-organized, you’ll find many forms of waste you can eliminate step-by-step. Welcome to personal Kaizen.

You see, you don’t need to talk about the 7 mudas, 5S, or the 4 M’s operations reliability all the time to live and breathe Kaizen in your daily life.

Kaizen is a mindset, not an activity, and it will unlock significant results over time.
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LIFE HACKS FOR RESILIENT ENTREPRENEURS

Folders Are Dead. So Why Are We Still Using Them?

A modern approach to organizing and accessing digital information

In the good old times, a document was in a folder, or it wasn’t. “It’s in the blue folder in the cabinet behind my desk”.

Offices were lined with folders. Moving offices was sweaty work. My first summer job was to move folders from one office building to another.

That was in 1997.

Enter digital transformation. With all the changes that came along with it, somehow the folder survived. This has made it easier to move your office — just take your laptop, leave the old office, go to the new office, and continue working.

That might seem like an advantage, but digital folders introduced huge disadvantages. Why? Nothing illustrates the digital document journey and its challenges better than the folder.

Let’s start from the beginning.

Digital Information Management 1.0

Paper documentation was phased out in many use cases 10–20 years ago. However, it was replaced by Digital Information Management 1.0 — replacing paper by PDFs or OneNote.

Example 1: Aviation

In aviation, paper operation manuals were replaced by PDFs on a laptop. The only advantage was the weight reduction, which translates directly into lower fuel consumption. Every kilogram you fly from Zurich to New York uses 1/4 kilogram of fuel — no matter if it’s one kilogram of payload, aircraft, fuel, or operations manuals.

This is how operations manuals looked like at the turn of the century:

Example 2: Personal Notes

In personal information management, replacing paper often meant replacing the beloved Moleskine notebook with OneNote:

Likewise, the only advantage was weight reduction, plus the very limited search functionality in OneNote. No longer would you search frenetically in your Moleskine notebook when you have last met with the person you’re talking to right now — only to find out that those notes are in the previous Moleskine notebook (which sits at home on the bookshelf).

Getting from 1.0 to 2.0

Let’s face it, Digital Information Management 1.0 as described above barely helps to manage information. It just facilitated the move away from paper, but it is a long way from using the full potential of digital information management.

And the folder stayed, albeit in an electronic form.

Because blasting out PDFs is dirt cheap, Digital Information Management 1.0 has led to a surge in information overflow: Because it’s easy and cheap, organizations don’t think too much about what information might be useful for which user group — they just blast it out. This feeds the vicious information overflow circle, leading to two dangerous habits:

• End users ignore information they get from their organizations because it is either irrelevant or simply too much to read anyway
• End users start summarizing and duplicating information that they deem important. Organizations have no control over summaries and duplicates.

When I started being involved in digital information management in the airline industry some 15 years ago, we would throw some 1'500 PDF documents at our crews, with some of these documents being well over 100 pages long. To make things worse, we updated those documents regularly. So every time the crews received an update, they complained about the (missing) relevance for their daily work, the efforts to find the changes within the document, and the sync times to receive the new documents on their devices.

As an active reserve officer in the Swiss Armed Forces, I have the same challenges as the mentioned airline crews: I still get paper documents delivered to my mailbox — field manuals, new regulations, and technical information. All these documents are also available as PDFs, 2'400 documents with a total of 150'000 pages. How on earth should I read all this information, or decide what is relevant for my role?

In personal information management, information overload is mostly generated by the individuals themselves. How many times have you written down something during a meeting, just to be sure that you won’t forget? How often have you been able to retrieve the written-down information at the right moment?

Digital Information Management 2.0

How do we get out of the information overload trap, or in more technical words, from Digital Information Management 1.0 to 2.0?

From my experience, there are two key concepts for Digital Information Management 2.0: A modular approach, and using the power of the link.

Modular Approach

Modularization means breaking down documents and pages into granular blocks, or modules. Therefore, a document or a page is just a collection of modules. Nevertheless, a collection of modules can be displayed to resemble pages — albeit those “pages” might have different lengths.

A modular approach has the following advantages:

• Modular documents can be filtered to show only essential parts of a document for a specific use case. Filtering happens dynamically, by selecting one or multiple tags. This is how context is created, and information overflow is reduced.
• Modular documents can be searched just like legacy PDF documents, but search results can be filtered using the same tags as described above to narrow down search results for a specific use case.
• Instead of creating duplicates of the same information in multiple documents, modules can be reused across multiple documents. In this way, updating the information in one place automatically updates the information everywhere — either immediately upon update or after the relevant authority or department has approved the update in the workflow.
• Change management happens on the modular level, directly in the context of the digital document — no more emails saying “Please change the second paragraph on page 53.” Once a change request is entered directly on the affected module in the workflow, all pre-consultation, approval, and editing work can be done directly on the module. Once published, old and new versions of a module can be displayed to the end users side-by-side, and different user groups can be notified only about changes that are relevant to their work.

The Power of the Link

In Digital Information Management 2.0, each module is linked to other modules. That’s how context is created, and the illusion of pages and documents is presented to end users.

Remember the folder? While the relationship between document and folder was 1-to-1 in the paper days, the relationship between digital documents is now many-to-many: Each module can contain hyperlinks to many other modules, irrespective of what folder they are stored in.

Here is my thesis: folders are too rigid in a digital, hyperlinked, modular information landscape. Typically, folders are nested, and you need to know exactly how to navigate to that sub-sub-sub-folder to find the required piece of information.

What can you do? Use tags instead. You can still display tags hierarchically in a way that they resemble folders.

The best example of this is Gmail. Whilst you might think that your emails are organized in folders, they are tagged, with the tags being displayed hierarchically. This has the great advantage that you can tag each email with as many tags as you want, and you will still find it under all of the tags-displayed-as-folders.

Creating a folder or tag hierarchy is a recipe for disaster. It won’t take long before you confuse yourself and don’t find your information anymore. The quick cures are shortcuts on your desktop, duplicating information, or asking your intern to reorganize the folder structure on the file server.

Instead of using folders or hierarchical tags, use flat tag clouds. To give structure and filter possibilities, just apply multiple tags to each piece of information.

There are many more use cases for links in digital information management, especially when links are configured to trigger actions when the link source or the link target changes:

• Changes in rules, laws, and norms trigger change requests in your company documentation: Instead of passing an Excel list with all the changes to your compliance team, the compliance team is notified automatically about the modules requiring updates due to changes in rules, laws, and norms.
• In a multi-language environment, documents tend to become inconsistent over time, as updates in the different languages aren’t performed by the same teams. Just like for changes in rules, laws, and norms, a change in the master language of a document can automatically trigger a change request on the corresponding module in dependent languages.
• A user’s favorites and the list of changes are just collections of links, presented to the user in an actionable way.

Practical Hints

From my experience, “big bang” doesn’t work when migrating from Digital Information Management 1.0 to 2.0. Going step-by-step is a much more promising approach to transforming information management. You should spend enough time and thought on the concepts before starting the journey:

What tags will you need? How large or small shall your modules be? What’s the most efficient workflow to handle change requests? What user groups exist today, and will they change in the future?

All these questions should be answered thoroughly and if needed with help from an experienced specialist — if those questions remain unanswered, the introduction of any new information management software will end in chaos and dysfunction.

Last but not least, digitization is a means, not an end. So, therefore, when migrating from Digital Information Management 1.0 to 2.0, make sure you don’t lose your team.

While a consumer decides for just him- or herself if a certain note-taking tool is compelling, large organizations procure information management tools for many people. And there are always some employees who don’t like change. There are also always employees who cannot follow the rapid change anymore. Both types of people are part of your organization, so make sure you don’t leave them behind.

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INSPIRATION FOR RESILIENT ENTREPRENEURS

The Compliance Trap: How Business Bureaucracy Became a Profitable Scam

Why entrepreneurs are stuck in an endless loop of ticking boxes and paying fees

“We can’t proceed before we have received those extra 912 documents.”

“You can’t be our supplier without an ISO 27001 certificate.”

“Can you put this information in a formal document?”

“Just tick this box.”

I’m sure you have heard similar statements in your daily entrepreneurial life. As the Founder & CEO of Yonder, a B2B SaaS company, they are my daily bread and butter.

Do such statements create any value for your company? It’s a rhetorical question; they don’t create any value. So why do entrepreneurs have to battle such topics all the time?

It’s simple: There is an entire cover-my-ass industry behind those topics. They camouflage as compliance, due diligence, or insurance. It’s a perfect two-way vicious or virtuous circle, depending on which side you stand on: Vicious circle for entrepreneurs, virtuous circle for compliance, due diligence, and insurance providers.

I Cover My Ass

Switzerland, my home country, is heavily over-insured. People have been well off for decades, and they are rather risk-aware by nature. They want their asses covered, and they are willing and able to pay for that coverage.

An Eldorado for insurance companies.

What is insurance for private households is compliance for companies. Many companies are paying meticulous attention to being compliant at all times and not even coming close to breaking a contract clause of a minor supplier contract.

An Eldorado for compliance providers.

I Cover Your Ass (And Make Money with It!)

Assisted by ever-growing legislation on corporations, compliance providers don’t have to do much sales other than lobbying parliament to pass new compliance laws.

Once that’s done, they can go around their customer base and tell them in dark visions what new regulations have been passed, and what consequences companies face if they don’t comply.

To make it easier for their customers, their business model usually comes in the form of recurring audits — at the threat of loss of certification if you don’t perform (and pay) for the recurring audits. And whilst getting paid to perform the recurring audits, providers have plenty of opportunity to deep-sell further compliance products based on all those new regulations that have been passed since the last audit.

It’s hard not to call this business a Ponzi scheme — because at some point, it will collapse.

Who Is Suffering?

Like in any fraudster scheme, it’s the simple people who are trapped in it accidentally that suffer the most: Entrepreneurs who try to put all their energy into building and selling an innovative product, but still have to comply with laws and norms.

What Needs Change?

It’s a fact that the compliance industry has better lobbyists than the entrepreneurs’ guild in Europe’s parliaments.

Maybe if times become tougher due to geopolitics, wars, and other crises, this will deal a blow to the compliance industry.

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About Me

Growing a company 📈 in uncertain times 🔥🧨 is like running a marathon—it demands grit, strategy, and resilience.

As a tech entrepreneur 💻, active reserve officer 🪖, and father of three 👩👦👦, I share practical insights and experience on entrepreneurship and resilience in The Resilient Entrepreneur, my weekly newsletter.

When I'm not solving problems, I recharge and find inspiration in the breathtaking mountains 🏔️ around Zermatt 🇨🇭.

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