In this episode: Can a company succeed without detailed standard operating procedures? Jon Peyton argues it can’t scale without them. He explains how SOPs let you replicate yourself, create quality control and protect profitability. He also shares the lesson that changed how his companies deliver work: good and on time beats perfect and late.
Key insights
- If you’re the only one who knows how to do something, you can’t scale. A detailed SOP lets someone else replicate your work.
- An SOP should be detailed enough that a new employee could follow it and land within 5% to 10% of your result.
- SOPs create leverage, efficiency and quality control, and quality control feeds back into better SOPs.
- Build customer check-ins into your process so you get buy-in along the way instead of costly rework at the end.
- Your documented systems are intellectual property that adds value to the company, so protect them.
Episode timeline
- 0:00 Can you succeed without an SOP?
- 0:53 A complicated toy and a late night of assembly
- 4:02 Knowing how versus knowing how to succeed
- 4:25 You have to replicate yourself
- 6:24 Documenting every step
- 8:00 The backbone of the organization
- 8:37 Detailed enough for a brand-new employee
- 10:19 One owner for SOP changes
- 10:55 Quality control as a feedback loop
- 12:15 Kodak and the cost of not adapting
- 13:53 How SOPs drive profitability
- 16:03 Jon’s struggle with perfection
- 19:38 Good and on time beats perfect and late
- 24:35 Your SOPs are intellectual property
The episode in brief
Read the instructions. Jon recalls assembling an elaborate children’s toy late one holiday night, assuming it would take an hour. Two and a half hours later, he had learned to read the manual first. A flat-pack table might need three pages of instructions; a complex product needs far more. Business works the same way.
You can’t scale by yourself. Jon started his firms with decades of experience. He could deliver quality work himself, but to grow he had to replicate himself, and telling someone what you want isn’t enough. When steps are left out, quality slips. For something like an investment analysis, he had to write down every step so others could produce nearly the same result.
Make it detailed. A real SOP isn’t “deliver X to customer Y.” It’s click this button, open this report, enter these inputs. A new employee should be able to follow it and land within 5% to 10% of your result, with experience covering the rest. When several people suggest changes, one person should own the final revision so you don’t end up with several versions.
Quality control closes the loop. With an SOP in place, you can trace a poor deliverable back to the step that was skipped, or see when the process itself needs to change. Jon points to Kodak and Polaroid as companies that didn’t adapt quickly enough. A strong feedback loop helps you spot waste and changing customer needs before competitors do.
Why it matters for profit. Variance across teams leads to overages in hours and costs that eat into margin. Leaders at every level should keep reviewing procedures. Without enough detail, you’ll hit a ceiling on how far you can scale, because no one else can take work off your plate.
Good and on time beats perfect and late. Jon used to chase perfection, even if it meant delivering late. Clients often couldn’t tell the difference between 80% and 100%, but they always noticed delays, and their own timelines depended on his. Now his companies build in check-ins, deliver work that is 80% to 90% complete for input, and finish together. Think of building a house: if the foundation is cracked, the framing comes down.
Your SOPs are your IP. Documented systems are part of why clients choose you and part of what a buyer values. Protect them with the confidentiality terms covered in Episode 15. Then ask: could your team keep things running if you took a three-month sabbatical?
Key action items
- Document one core process step by step. Choose the process that depends most on you and write it down at the click-by-click level.
- Test it on someone new. Have a team member follow it without help, and fix every gap they hit.
- Name an owner for each SOP. Assign one person to collect feedback and publish revisions.
- Add client check-ins. Build at least one midpoint review into your delivery process.
- Run the sabbatical test. List what would stop working if you were gone for three months, and document those processes first.
Listen next: Episode 19: Entrepreneurship: Are You Lying to Yourself?
This episode is educational and isn’t legal, tax or financial advice. Speak with your own attorney and advisers about your situation.