Productivity and Process Discipline: Where SMEs Are Struggling - and What Works
For many small and mid-sized companies (SMEs), productivity isn’t failing because people aren’t working hard. It’s failing because the way work gets done hasn’t evolved at the same pace as growth, complexity, and external pressure. Consequently, they may be working harder than ever before, but with less to show for their efforts. I’ve found this true with some of the relatively early-stage companies I’ve worked with; they are resistant to change processes that worked, but make not stand up at scale, or have not considered how to adapt their processes because they’re working flat out.
For early-stage companies, as companies move from founder-led execution to scaled operations, cracks begin to show, not in strategy, but in process discipline, clarity, and repeatability.
Where companies feel the productivity strain
1. Work is reactive, not planned
Many SMEs operate in a constant state of urgency; in some cases, it’s almost a badge of valor. Early in my career, I was asked to turn around a division in a telecom company where everyone worked weekends and overtime. No one appreciated their effort: not the customer, not the leadership team, and certainly not their families. Everyone was exhausted; I exaggerate slightly when I say they resembled extras from The Walking Dead. I literally told them they’d be fired if they showed up on the weekends. After we had a few weeks of just 5 days a week, we reviewed output; they were completing just as much as before, but their quality rates improved by 34%. From a personal perspective, I did not have to repeat myself because everyone’s short-term memory was shot, and morale improved.
Priorities shift daily
Teams respond to the loudest issue, not the most important one
Firefighting replaces planning
The result is high activity with low throughput. Teams are busy, but outcomes lag, and so does morale.
What drives it
No clear operating cadence
Weak demand forecasting
Leadership is pulled into day-to-day minutiae that should be delegated
2. Processes live in people’s heads
Early growth rewards flexibility and heroics. But over time:
Knowledge becomes tribal
Processes vary by person or location
Outcomes depend on “who’s working that day.”
This situation creates fragility. When a key employee leaves or takes a vacation, performance drops. I worked with a professional services firm that had acquired another company, and as part of the post M&A effort, they took the opportunity to optimize their processes. In working with their analysts, everyone had a different approach to deliver essentially the same outcome - they were afraid to take vacations; one woman even expressed concern that if she decided to have a family, her clients would suffer, as no one knew how she engaged her clients. I worked with them to find common ground, core parts of their effort that were repeatable across the team, and areas that could be customized. As could be expected, employee morale improved with that long-awaited vacation, and tied to that was a welcome bump in client satisfaction.
Common signals that this is going on
“That’s how Sarah does it” instead of documented workflows
Inconsistent customer or product quality
Long onboarding ramps for new hires
3. Tools were added, but workflows weren’t redesigned
Many SMEs have invested in:
ERP or accounting systems
CRMs
Project management tools
AI or automation pilots
But productivity doesn’t improve because tools are layered on top of broken processes. Perhaps it’s my engineering training, as this one gets me. Companies spend a fortune trying to solve problems without taking the time to identify the root cause. In many cases, it’s not the tool, it’s the workflow. An optimal process goes a long way to increasing productivity, and then that tool can supercharge the effort (good and bad). Too often, multiple and often redundant tools are implemented, and sometimes for the flimsiest of reasons, such as "we’d lose our budget if we don’t use it".
What leaders see
Duplicate data entry
Low adoption of “standard” systems
Teams reverting to spreadsheets and email
Technology without process discipline adds complexity instead of reducing it.
4. Metrics exist, but don’t drive decisions
Most companies track data. Fewer use it effectively.
Some common challenges:
Too many KPIs, not enough insight (pick a few)
Metrics reviewed monthly—after decisions are already made
No clear link between metrics and accountability
Without a small set of operationally relevant measures, teams default to intuition and habit. Two challenges I’ve seen recently: 1. quantitative becomes qualitative, “well, we’re red, but by next week we’ll be amber, so let’s just make it amber now,” and 2. too many metrics (some conflicting) produce a muddled story, and then no one knows what to believe or how to respond.
5. Decision rights are unclear
As organizations grow:
Decisions that once took minutes now stall
Leaders get pulled into approvals that shouldn’t require escalation
Teams hesitate, waiting for direction
This slows execution and frustrates high performers. I’ve seen this challenge both from an individual perspective, where the manager was new to the management role and did not understand how they fit in, and the micro manager who, despite telling their employees they were empowered, the employees begged to differ.
What works
The SMEs that improve productivity are not doing more; they’re doing less, but better. They know that not everything is a Priority 1.
1. Ruthless simplification of priorities
High-performing SMEs limit focus to:
3–5 enterprise priorities per quarter
A short list of “must-win” initiatives tied to specific targets: cash, customers, or capacity
Everything else becomes secondary, and life suddenly becomes much simpler and laser-focused.
Why it works
Teams can align effort
Tradeoffs are explicit
Progress is visible week to week
Everyone is aligned on the targets, the tradeoffs that must be balanced. Everything is simpler because it can all be boiled down to the core truths for the team that everyone understands.
2. Lightweight process standardization (not bureaucracy)
What works is not heavy documentation, but:
Clear “standard work” for repeatable activities
Simple decision trees and checklists
Ownership is defined at the process level, not just the role level
The goal is consistency first, optimization second. Teams must be nimble. Many an organization fears being “operationalized” because they are afraid of adding complexity or losing that magic that got them here. Done right, the opposite is true; structured operations allow the team to deliver consistent high-quality work, and Sarah can take her vacation.
3. Weekly operating cadence with real signals
Companies making progress tend to adopt:
Weekly reviews of a small set of leading indicators
Clear owners for each metric
Fast corrective action when thresholds are missed
This shifts management from reporting with more of a rearview perspective to course correcting and focusing on the outliers, not on business as usual. No one wants a meeting for the meeting’s sake, but a collective gathering that allows focus on what needs attention while recognizing what is working well.
4. Redesigning workflows before adding tools
Before new systems or AI:
Processes are mapped end-to-end
Non-value-add steps are removed
Handoffs are clarified
Outputs are identified
Only then does automation deliver productivity gains. Otherwise, a company is just automating a bad process, which translates to more and faster subpar effort.
5. Clear decision rights and escalation paths
What works:
Explicit clarity on who decides, who inputs, and who executes
Fewer decisions pushed upward
Leaders focus on exceptions, not routine approvals
Rapid correction when things go sideways
This approach increases speed without sacrificing control. Where I’ve seen this at its best is in a team that is tightly coordinated, with clearly defined roles and responsibilities, and there is confidence that the right people are in the right place.
The leadership shift that matters most
Productivity gains don’t come from asking people to work harder (and longer). They come from changing how leadership operates:
From heroics → systems
From activity → outcomes
From intuition → disciplined signals
From control → clarity
For many SMEs, this shift marks the difference between sustained scale and chronic strain, from a place of drudgery to somewhere where contributions and input are measured. It’s not always easy to visualize the future state, but steady steps in this direction rapidly build momentum.
Why this is a governance issue (not just an operations issue)
(You know I could not miss an opportunity to bring in a governance perspective.) Boards and investors recognize that:
Weak process discipline creates hidden risk
Productivity gaps erode margins silently
Growth amplifies operational fragility
Productivity is no longer an internal efficiency topic - it’s a value creation and risk management issue.
1. Scalability and Unit Economics
“If we doubled our sales volume tomorrow, would our G&A (General & Administrative) expenses double too, or do we have the process discipline to capture operating leverage?”
Why it’s asked: Boards want to see EBITDA expansion. If headcount must grow at the same rate as revenue, the business isn't scaling - it’s just getting bigger and more expensive.
2. Key Person Risk (The "Sarah" Test)
“Which 20% of our workforce is carrying 80% of our institutional knowledge, and what is our documented 'Plan B' if those individuals walk out the door?”
Why it’s asked: In family businesses, this is often a long-tenured employee. In startups, it’s frequently the founding engineer. Both represent a massive single point of failure.
3. Digital ROI
“We’ve invested $[X] in our tech stack over the last 18 months. Did we achieve our anticipated ROI; can management point to a specific reduction in cycle time, or a measurable increase in output-per-head resulting from that spend?”
Why it’s asked: Boards want to know if the tools actually fixed the process or just masked the mess.
4. Leading vs. Lagging Indicators
“Our monthly financials tell us what happened 30 days ago. What three 'leading indicators' is management reviewing weekly to ensure we hit next month’s numbers?”
Why it’s asked: If the Board only sees failures after they hit the P&L, management isn't "running" the business; they are "reporting" on it.
5. Decision Velocity
“What is the average 'Time to Decision' for a standard capital expenditure or a new hire? Where do these decisions get hung up?”
Why it’s asked: In startups, the bottleneck is often the founder. In family businesses, it may be a lack of clear authority. Both instances kill the company’s ability to compete.
When a Board asks these questions, management often feels defensive. LouAnn acts as the "Operational Translator" who turns Board concerns into actionable work streams.
1. The Operational Health Audit
LouAnn provides the Board with an objective, third-party assessment of the "operating plumbing." She identifies where tribal knowledge is creating risk and where "hero culture" is stifling scale.
2. Professionalizing the C-Suite
She coaches management teams (especially in family businesses or first-time startup founders) on how to move from intuitive leadership to data-driven discipline.
3. Board-Ready Reporting
LouAnn helps management build the dashboards that answer the Board’s questions before they are asked—focusing on throughput, cycle times, and process health rather than just lagging financial data.
How LouAnn Conner and SagaciousThink Can Help
Productivity challenges stem from growth outpacing your "operating plumbing." LouAnn Conner and SagaciousThink act as the bridge between your high-level strategy and the disciplined execution required to realize it.
Operator-First: Determine how work actually flows — factoring in customer demand, cash constraints, and leadership bandwidth.
Built for Scale, Not Bureaucracy: Design "Lightweight and Sticky" processes that your team actually uses.
Governance-Ready: Align your operating cadence with what your Board or investors need to see, turning "operational noise" into "value creation."