Designing processes can be tricky. Often, people create individual processes to solve specific problems. Running around plugging holes might feel effective in the moment, this piecemeal approach is counter productive.

When you focus only on individual problems, you risk creating a heavy and cumbersome process. Over time, these processes can feel authoritarian and arbitrary, leading to frustration and disengagement among your team. Instead, it’s crucial to adopt a systems thinking perspective.

Systems thinking helps solve complex problems by looking at how the components of a system interrelates. The systems thinker evaluates actions in context of all the other actions, activities that take place. To apply systems thinking to your policy creation instead of focusing on isolated incidents, consider the overall problems facing your business. Ask yourself:

• What outcomes are we trying to achieve?
• How can we create those outcomes effectively?
• What else will happen if we implement this policy?

By shifting your focus to the larger issues at hand, you can design processes that are not only efficient but also aligned with your business goals.

Evaluate the underlying causes of problems rather than just treating the symptoms. This way, you can create policies that genuinely add value and support your team, rather than constraining them.

Company culture isn’t what’s written in your handbook. It’s how your people live every day. Culture is the collective behavior and attitudes, the norms and standards. Policies and formal rules can help reflect and reinforce the culture, but they are not the culture itself.

This confusion is seen yesterday’s Wall Street Journal headline, “Netflix’s Extraordinary Parental Leave Was Part of Its Culture. That’s Over.” The author implies that this signals a culture change. But the parental leave policy isn’t their culture. Netflix has a culture of “freedom and responsibility.” Netflix may have thought that the policy wasn’t driving the culture they wanted. People were using the freedom part without taking responsibility. Removing their unlimited parental leave policy doesn’t change their culture. The culture at Netflix was already built around the idea of taking the time you need and being responsible about it.

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Everyone hates oppressive processes, but somehow we keep managing to create them.

Process should add value, not prevent it. Lightweight processes can drive a business forward. But when policies are layered on top of each other, it leads to a bureaucratic bulk that’s a drag on productivity.

No one intends to build a cumbersome bureaucracy. Policies are a response to corporate trauma. A Bad Thing happens. You create a system to prevent that problem. At some point, more Bad Things happen and your new system didn’t stop them. You react to the trauma with more policies.

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Add-on products won’t help you grow. They’re limited to your current customers and only some of them will buy an add-on. Your total market is constrained.

Creating and selling add-ons to existing customers is easy. It’s hard to envision how you’d sell a standalone product.

Add-on sales can boost revenue, but this isn’t sustainable growth. Some customers won’t buy this, so the add-on will grow more slowly than your main product. Even if the combination attracts some new customers, you’re still mostly selling to existing customers.

While add-ons don’t work as a growth lever, they can help you reach more customers by unbundling your product. They are a powerful pricing and packaging tactic. By splitting your product into a lower core price and paid extras, you can still capture the higher revenue from those that need the extra capabilities while still serving a broader market.

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When your next product is going to use your same technology but sold to new people (the Same Product strategy) the product must truly be the same. You can expect to make product changes, of course. You might add features. You might re-package and re-brand the product. You might change how you sell it. But it’s important to keep the main benefits and the core technology the same. These are the soul of your product.

If you try to change the core product concepts and sell to a new audience, you’re changing everything about the product. It’s no longer a market expansion where you use your existing knowledge for a new market. With no overlap between the old and the new, you’re not gaining leverage or efficiencies. You’re just doubling your work.

It’s easy to mess this up. You find a similar market that needs your product. But they need some tweaks. The more you dig in, the more differences you uncover and the more changes you make. Eventually, you’ve created a completely different product and sold it in a different way to different people. The new product has a different Product Soul. There’s so little overlap that the two products might as well be separate companies.

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Startups often need to introduce a second product sooner than expected to sustain growth. Because you’ve tightly defined your market and ideal customer, you can quickly saturate that market.

The early adopters you mostly sold to begin to dry up. You targeted a tiny niche. As a startup, you needed to focus on the few people who needed something badly enough to take a chance on an unproven company. But now, you’ve seen success, defined a market, and competitors are starting to appear. They’re putting pressure on your first product.

Growth slows unexpectedly. There isn’t a new product on the horizon. This is a stall that can kill a company.

A second product is the cure. But when is the right time to add one? And what should it be? There’s a framework I like to use to pick when to launch that product and identify the right second product.

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